Thursday, August 5, 2010

Raising the Bar in an Outsourcing Relationship ~ Maintaining Accountability Standards

A crippling downturn and the ensuing unprecedented financial crisis that followed left the economies of many countries in an abysmal state leading to many hard hitting business decisions. Companies have now had to look within to trim the fat and cut cost. In such an environment outsourcing has been looked upon as a favourable option for several process oriented tasks. A key requirement of outsourcing a legal process is the roll out of a specifically structured outsourcing arrangement that would govern this crucial relationship from the very onset.

As the demand for cost-cutting and subsequently outsourcing increases, the LPO landscape is dotted with numerous players – big and small – competing for their share of the pie. This increasing competition has led vendors to accelerate not only their turnaround times for deliverables but also sometimes leads to compromising quality for the sake of volume. This anxiety to deliver faster means that some outsourcing contracts can go awry, but by investing time and effort at the early stages of the contract, such mistakes can be avoided. To begin with, before a company even considers outsourcing a function in the legal department, executives should ask themselves whether they understand the current cost of that function and should map out its processes. Creating a comprehensive description of the function that is to be outsourced is essential so that in house counsels are able to effectively explain their requirements to their provider. Once the contract is signed, it is important for LPO vendors and buyers to continue to work closely together as business conditions and requirements shift, and as people and cultures evolve.

In an age where some of our biggest financial institutions failed due to lax accountability standards, we must be now more accountable than we have ever been in the past. Many companies view the outsourcer as a detached entity that, once briefed, should be able to run with the project with minimal involvement on part of the in house team, but outsourcing a process does not mean outsourcing accountability or competency. Accountability is the requirement, when undertaking an activity, to expressly address the concerns, requirements or perspectives of others and is seen a major purpose of external quality processes. In order to succeed, the LPO vendor will need regular, ongoing input and feedback from the client. In an interesting article available here, the author, Julia Staunton Hardinger, Esq, has developed a list of rules to follow for attorneys who wish to outsource part of the discovery process while still meeting the high level of professional responsibility imposed by the ethics rules of the ABA. These include:

  • Conducting extensive quality checks and making timely adjustments accordingly
  • Giving the first assignment to yourself.
  • Maintaining constant contact with your team

To ensure accountability, buyers must consider protection of their assets in the outsourcing contract. For example, intellectual property and confidential information should be protected through appropriate confidentiality measures, along with personnel screening tests. Thus, good governance processes built on a framework of accountability are critical to a successful outsourcing relationship.

1 comment:

  1. There has been a big discussions and debate on this but still we are believe that the results is positive. :-)

    Peace!
    Outsourcing Philippines

    ReplyDelete