Business and Legal Factors

Management needs to review a range of considerations in deciding whether, how, and how much to outsource. Particular attention must be given to the structure of the outsourcing contract and the viability of the deal. Typical business and legal factors include

• cost savings (based on explicit cost analysis),
• avoidance of expenses (such as a need to replace aging infrastructures or renew major lease commitments),
• viability and reputation of the service provider,
• financial analysis and assumptions for comparing the vendor's contract price (and related price adjustments) to the customer's current fully-allocated costs,
• suitability of the scope of the contract to the anticipated resource needs of the customer,
• flexibility as to scope, duration, termination, intellectual property, future pricing, and future services,
• risk management in the contract,
• governance for a "win-win" approach,
• any unusual enterprise-specific considerations concerning the economic risks of transferring certain functions to the service provider,
• regulatory considerations,
• human resources management,
• integration of outsourcing with other business processes that are in-sourced or outsourced, or both, and the
• relationship of this outsourcing transaction to other infrastructure strategies, such as mergers and acquisitions, divestitures, spin-offs, split-offs, bankruptcy reorganization, strategic alliances, joint ventures, and other special situations.