As businesses continue to expand and grow, many are choosing to outsource certain shared services functions to other companies. Shared services outsourcing can help companies reduce costs, increase efficiency, and improve the quality of their services. In this article, we`ll take a closer look at shared services outsourcing contracts and how they benefit businesses.
What is a Shared Services Outsourcing Contract?
A shared services outsourcing contract is an agreement between a company and an outsourcing provider. The contract outlines the terms of the outsourcing arrangement, including the scope of work, the payment structure, and the performance metrics.
Under a shared services outsourcing contract, the outsourcing provider is responsible for performing certain functions that were previously handled in-house by the company. These functions can include IT support, finance and accounting, human resources, and procurement.
Benefits of Shared Services Outsourcing Contracts
Shared services outsourcing contracts can provide numerous benefits to companies that choose to outsource their shared services functions. Some of the most significant benefits include:
1. Cost Savings – Outsourcing shared services functions can help companies reduce their costs. The outsourcing provider can often perform the same functions for less money due to economies of scale, access to specialized skills and technology, and lower labor costs.
2. Increased Efficiency – Outsourcing shared services functions can help companies improve their efficiency by allowing them to focus on their core business functions. The outsourcing provider can handle administrative and support functions, freeing up time and resources for the company to focus on growth and innovation.
3. Improved Quality – Outsourcing shared services functions to a specialized provider can help improve the quality of the services provided. The outsourcing provider can bring expertise and experience to the table, ensuring that the functions are performed to the highest standards.
Key Elements of a Shared Services Outsourcing Contract
When negotiating a shared services outsourcing contract, there are several key elements that should be included. These include:
1. Scope of Work – The scope of work should clearly outline the services that the outsourcing provider will perform. This should include the specific tasks and responsibilities, as well as any limitations or exclusions.
2. Performance Metrics – The contract should include performance metrics that the outsourcing provider must meet. These metrics should be tied to the company`s goals and objectives, and should be measurable and achievable.
3. Payment Structure – The payment structure should be clearly defined in the contract. This should include the pricing model, payment terms, and any penalties or incentives tied to performance.
4. Intellectual Property – The contract should address any intellectual property issues related to the shared services functions. This should include ownership of any proprietary technology or data developed during the outsourcing arrangement.
Conclusion
Shared services outsourcing contracts can provide significant benefits to companies that choose to outsource their administrative and support functions. By partnering with a specialized provider, companies can reduce costs, increase efficiency, and improve the quality of their services. When negotiating a shared services outsourcing contract, it is important to include key elements such as the scope of work, performance metrics, payment structure, and intellectual property provisions. By doing so, companies can ensure a successful outsourcing arrangement that meets their needs and goals.
