There are 3 basic types of outsourcing agreements

a) The Standard Vendor Agreement – for one-off or pilot or long terms, sometimes called MSA or Master Services Agreement

b) The Partnership – for short-term projects it could be fixed price bid, or staff augmentation etc.

c) The Alliance – for long-term projects – sometimes called Relationship, Technology partner as well.

Many of the contracts fall under one of these umbrella for sure. There are many more by different names that both clients and their outsourced providers have tried to come up with but they all are different names to help them socialize with their fraternity.

The standard vendor agreement is the most common – most often it covers a gamut of services and could have sub-contracts for various services with a rate table. I mentioned on my previous blogs how rates work – tiered, blended etc.

Some firms give up their infrastructure for upkeep with defined SLAs while keeping the application development under their control for better control of their products and applications. Sometimes the assets are also transferred or assets are owned by the principals while outsourced providers help manage them. Legacy applications are at times outsourced completely for maintenance with SLAs to concentrate on core production platforms and services. KPO and BPO are again best taken up differently with more specific SLAs. Call centers being unique need a separate set of SLAs as well.

The bottom line is to do as much research as possible upfront before signing these contracts. Start slow and don’t fall into the trap of signing an omnibus contract. The cookie cutter approach of one rate fits all services is not worthy though some IT providers are selling it. Engage a consultant, do your due diligence and go with what is appropriate for your business keeping in mind the size, complexity, maturity, experience, depth of the IT provider etc.