Outsourcing is a word quite commonly used in the business world owing to its importance. Every employee working in a private or public limited company is familiar with this term. Outsourcing means contracting out. Outsourcing has become a widespread practice where companies transfer some part of their work to outside companies that are more competent and specialize in various fields. This practice not only reduces cost but also saves time by having the work completed by a firm that provides specialized services. For example, hiring a full-time accountant can be expensive whereas outsourcing the work to an accounting firm can be cost-effective as well as efficient. Similarly, many times manufacturing companies outsource the production of various units to outside suppliers to avoid the production cost. Building a setup for the manufacture of delicate and sensitive components internally can be a tough task. Hiring employees having specialized degrees in certain fields, setting up infrastructure, labor costs, and other expenses cumulatively have a great impact on the production cost.
As outsourcing is really common in businesses, so it is vital to be familiar with the legal terms relating to outsourcing. An outsourcing services agreement is a document having legal validity that binds all the parties to strictly follow its clauses. This not only reduces the risk of fraudulent activities but also ensures timely disposal of the work. Whereas verbal agreements are only valid between very close parties having great trust in themselves and are often involved in business contracts. But it is always wise to have a written agreement to avoid ambiguities and quarrels later on. Such a disturbed environment can also have a bad impact on the employee’s morale.
Here is a preview of a Free Printable Outsourcing Services Contract Template created using MS Word,
Now outsourcing agreements and their various clauses depend upon the requirements of both parties that are going to enter into a contract. Requirements like the time within which the client wants to have its work done by the service provider, the fees that the outsourcing firm will charge, the quality of the service being provided by the outsourcer, etc have to be considered while drafting an outsourcing service agreement. This task of drafting the agreement can either be taken up by the board of directors or a lawyer can be hired for this task to carefully scrutinize all the clauses. This minimizes the risk of legal complications that can be raised afterward. So it is always considered wise to have it proofread by a specialist, who has command over the drafting of various contracts of a sensitive nature.
All of these precautionary measures are considered essential for companies to follow because both parties/companies are equally responsible. The client can deny the payment if work isn’t done according to his standards and similarly, the outsourcer can delay the completion of work or manufacture substandard products. So negligence can be done on the part of both companies. But it is very rightly remarked by someone that “risk can be minimized but cannot be eliminated.” This remark is applied almost everywhere. So a proper well-written agreement having all the necessary terms and conditions does reduce the risk of fraud and ensures its timely disposal.
Here is the download link for this Outsourcing Services Contract Template,
