By Ben Trowbridge
In dreamy moments, the mind of an outsourcing lawyer wanders to the mythical perfect negotiation process, whereby the deal gets done quickly and smoothly, with appropriate involvement of all stakeholders and necessary experts, and whereby both customer and supplier have ended up feeling that they have signed a good deal which will be the basis of a lasting relationship. However, later on the “reality” of everything often sets in, creating worry and stress. It really doesn’t have to be this way, with a bit of thought and planning, some of the more common “faults” can be avoided.
The Basic Faults
Negotiating for ‘Victory’ - There is a temptation to see negotiating contracts – whether for BPO deals or otherwise, as being a form of combat, with points to be fought over and “won.” Needless to say, this makes the process of bringing the contract to finalization a good deal more torturous, with adversarial positions being adopted which often spills over into the operation of the project itself. The legal profession is far from the exempt of blame in this respect, although the overall position is improving as the lawyers who have genuine experience in BPO deals and the issues which they raise grows.
What is important is that both parties realize that a “bad deal” for one party will inevitably be bad for both parties in the long run. With this being such a simple factor, it is often overlooked. This leads to frustration on the part of the customer and potential conflict as each and every request for services seems to result in the submission of an expensive change control note.
Forgetting what Negotiation will Involve - In the early days of the procurement process, it is easy to forget what a task the process of getting to a finalized contract will be, and to plan accordingly. In particular, never forget that although the contract ultimately may result in just a couple of inches of paper, the crafting of just a single paragraph in it can frequently take hours of painstaking assessment and negotiation. Thinking the contract can be completed in just a couple of days is a common mistake made too often. The net result is a project which initially lacks momentum and proceeds at a relatively slow pace, only to explode into a frenzy of activity in the last couple of weeks prior to contract signature, with the negotiation teams locked into a long series of late night/early morning meetings.
Equally, remember that if individual issues or areas of work are being divided amongst different teams, they need to be coordinated and guided as to the use of common terminology and formats etc., so as to make the ultimate task of collaborating their various outputs together an achievable project. Unfortunately, when this doesn’t happen, a lot of revision and “rework” has to be done.
‘Deal Tourists’ – With BPO deals currently being amongst the “hottest” projects on the block, there is a growing tendency to see people involved in their negotiation who have limited (if any) knowledge of what is actually required in order to bring the process to a successful conclusion, but who simply like the idea of getting such a contract under their belts.
On the legal side, we also see M&A lawyers tasked with the negotiation of BPO deals, working on the assumption that as such projects will habitually involve the transfer of staff and/or assets, they are sufficiently similar to a business sale to mean that the skill sets from the M&A world should be directly transferable to the negotiation of an outsourcing contract. The impact of such “deal tourists,” however, is that the negotiations are disadvantaged by a lack of real appreciation for market practice and norms, with positions taken in the negotiations which would never have been put forward by more experienced BPO negotiators who would have already understood how unreasonable some negotiations can be.
Equally, while such inexperienced negotiators may be able to cogently argue their case on the basis of the contract provisions put in front of them, what they lack is the crucial appreciation of what is not in the contract as then drafted, but which should be included.
The Way Forward
Ultimately, there is no substitute for experience, whether that be from the consultants engaged to help structure the overall procurement process, or the legal team engaged to assist on the legal and contractual issues. Choose your advisers carefully, and they should be well placed to help you avoid some of the pitfalls outlined above, and ultimately guide your BPO project to a faster and more efficient conclusion.
Ben Trowbridge is CEO of Alsbridge, Inc.