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Why a Solid BPO Agreement Is Very Important When Outsourcing


BPO AgreementIt is no secret that now all business organizations are going digital and digitizing their documents with the help of reliable document scanning services provided by BPO companies. According to Accenture’s Technology Vision 2016 report, 25% of world’s economy will be digital by 2020. The world is now witnessing a major technology revolution and emergence of many digital platforms comprised of cloud services, artificial intelligence, cognitive computing, predictive analytics and intelligent automation.

In June 2016, a research report from Gartner, a leading IT research and consulting company, pointed out that the total BPO spending will approach $3.8million by 2020. This spike in the future is due to the increased demand for digitized in almost of sectors of the economy. The digital platforms help in replacing traditional business processes in areas such as accounting, HR, supply chain, procurement and so on.

Digitization of documents ensures efficiency, productivity, compliance, data-driven insights and improved outcomes. However, the legal aspects in BPO can be complex. A BPO deal requires transfer of assets such as software, people, data and equipment to the vendor and the vendor in turn makes a long-term commitment with the client in the form of a BPO contract. The technical, business and legal planning of BPO transactions should be done carefully.

Considering the legal angle, businesses require tactical guidance in many significant areas including:

  • IP or intellectual property: BPO contracts should be drawn up with stringent attention to ownership of IP assets and granting of proper cross licenses among the customer, vendor and third parties. If you fail to address IP ownership, it could result in unforeseen license fees and even loss of valuable company assets.
  • HR or Human Resources: Many BPO contracts involve transfer of employees to the vendor. Employers must consider the prospects of employee claims and also the need to offer appropriate laying-off packages for departing employees. They should ensure that existing employment agreements and union contracts are not disturbed.
  • Data: BPO contracts also require transfer of business data to vendors who will be responsible for storing, managing and securing the information. If the hosted facilities of the vendor are in a foreign jurisdiction, regulatory compliance obligations as regards data security, privacy and technology export may be considerable.
  • Tax: The service delivery and service receipts will impact tax liability significantly. Proper structuring of transaction will minimize tax exposure.
  • KPIs or Key Performance Indicators: A good BPO agreement will include service level assurance from the vendor. Creating Key Performance Indicators is time consuming and requires cross disciplinary effort among the business team, technical team and legal counsel.
  • Decommissioning: It is important that BPO agreements include standard decommissioning provisions.
  • Remedies: The agreement should also include suitable remedies for customers to address any failure of the vendor.

Choosing the right business process outsourcing services is very important. It ensures a valuable BPO agreement that is beneficial to the business organization. With a reliable service provider, the business can enjoy all the benefits of outsourcing with perfect peace of mind knowing that the BPO contract drawn up is foolproof and advantageous in every way.

About Rajeev R

Rajeev R

Manages the day-to-day operations of MOS from NY. With an interest in information technology, Rajeev has guided MOS to extensive use of digital technology and the internet that benefits MOS as well as MOS clients.