Have I Got a Market Competitive Agreement? When to Consider Renegotiation, Restructuring or Renewal

With a large number of contracts approaching their natural end dates and a focus on ensuring that existing agreements are delivering efficient and cost effective services, 2013 is likely to be a bumper year for the number of outsourcing contracts that will undergo some form of renegotiation. While such work represents its own challenges to client organizations, the opportunity to assess whether agreements are market competitive and ensuring that best value is delivered should not be ignored.

While a large part of renegotiation activity will be driven by contracts nearing the end of their original term, other business demands also contribute to this statistic, including changes in business strategy, changes to the scope of services sourced, issues with pricing, the introduction of new technology and work practices and rationalization of the number of service providers. Such disparate drivers — coupled with demands to manage risk, time and budget — force organizations to think ever more carefully about their approach to re-contracting.

When a client organization determines it is time to revisit the negotiating table to address these concerns or opportunities, this is also the opportune time to assess whether the sourcing agreement is market competitive. This ISG white paper explores when it makes business and operational sense to change the status quo.