Managing to comply: outsourcing arrangements

Negotiating any significant outsourcing contract can be a major undertaking. The sheer effort required makes it tempting to think of signing the contract as mission accomplished – a time to celebrate and order newly branded mouse mats, mugs and tee shirts rather than the start of the next phase of the journey. But the signature of the contract really is only the end of the beginning, writes Dan Burge of Denton Wilde Sapte.

Although the average duration of outsourcing deals has been steadily dropping over the last few years, most transactions are still best viewed as long term relationships, which require active ongoing contribution from both parties. Indeed, as well as providing guidance on the content of outsourcing agreements, the MiFID Implementing Directive also provides that a “firm must use due skill and care and diligence when… managing… a service provider.” But what does that really mean?