The Only Constant: Pricing For Change In Outsourcing Arrangements

INTRODUCTION

For lawyers specializing in outsourcing transactions, it is by now a truism that one of the most challenging aspects of the transaction is the need to provide for change during what can be a very lengthy term. Outsourcing contracts may run for a period of seven to ten years, or more; to put that time period in perspective, some outsourcing arrangements, in particular those with a significant development (or "build and implement" component), can take more than a year before the services component even commences — and even in that limited time period, significant changes can take place. These changes may result from internal developments (for example, a merger, divestiture or other corporate reorganization, or refocusing of the customer’s business) or external developments (for example, the introduction of a competing product or service on the market).