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Inflexibility in BPO Agreements

44 Comments · Business outsourcing

It is necessary that BPO agreements be designed to provide for adequate flexibility in order to withstand both the dynamics of the business environment and the pressures that are inherent in such a contractual agreement.

Typically, BPO contract agreements are crafted on certain key assumptions pertaining to technologies, business conditions, personnel, and other relevant issues. But these assumptions are likely to change with time.

No matter how detailed the contract or favorable the terms, BPO agreements cannot anticipate all of the changes that occur in a dynamic, global business environment.

This inability to anticipate changes tends to ensure that one, if not both, of the parties will become disenchanted with the relationship over time.

Long-term contracts that back flexibility significantly increase the likelihood of dissatisfaction between the parties and can adversely affect the relationship.

Once the contract is in force, there is a great temptation for both parties to suboptimize the relationship and attempt to better their lot-often at the expense of the other party.

The best way to reduce this temptation is to craft a contract for a long-term relationship with short-term SLAs that can be adjusted to meet changing conditions.

The long-term provisions in the contract spell out the spirit and intent of the parties. The short-term SLAs can be adjusted to include changing metrics and measurement instruments, as well as clanging strategic goals of one or both parties.

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