Gone are the days when a company could outsource the “people” that perform a business process without considering, and likely including in the outsourcing arrangement, the digital enablement of the underlying workflows and activities.
While there may be some “lift and shift” of personnel and manual activities, business process outsourcing (BPO) providers are promising big savings and improved outputs tied to the design and implementation of enhanced digital solutions, including AI, automation, and robotics that monitor, quality-check, facilitate, and sometimes even perform the applicable business processes.
So what does this mean for the outsourcing contract? How do the contractual requirements or provisions change?
Set out below are 10 of the key areas in the typical BPO contract that may be impacted by the convergence of digital solutions and BPO services:
- Transformation projects, timelines, and investment
- Longer terms to allow for digital enablement
- Initial savings commitments and dependencies
- IT and Infosec requirements and signoff
- Ongoing innovation requirements
- IP considerations (e.g., who owns the “bot”?)
- Additional scope for technology services and service levels
- Impact of the potential for improved quality as well as systemic errors
- Liability and insurance considerations
- Exit implications (e.g., vendor-hosted tools and data, vendor proprietary and third-party tools in the customer environment)
It is important for the customer and vendor teams structuring and negotiating the BPO contract to consider the added consequences of the BPO provider also providing IT solutions and services. The reality is that most services (including legal services) are becoming more and more digitally enabled, requiring sourcing lawyers, procurement professionals, and business stakeholders to think more broadly and holistically about the services being provided and the potential contractual and risk impacts.
The Morgan Lewis team actively considers and provides thoughtful leadership on legal issues impacting the outsourcing industry. Check out our other posts regarding BPO transactions.