Outsourced IT Services Termination: Navigating The Rough Seas

Introduction:

You are a company that has eagerly outsourced its IT services function, expecting significant improvements in efficiency and ROI. However, after a period you realise that the expected improvements have not materialised and are unlikely to happen with the current service provider. You start thinking of either bringing the service back in house, or transitioning to a new service provider. Then, you dig out the contract, brush the dust off, and head to the termination provisions. It is only then that you realise that it is going to cost you a lot of money and expose you to risks in disengaging from the current service provider.

Why did this happen? This is usually because the mechanisms and costs for disengaging have not been clearly defined in the contract. In this article we will highlight the key risks to consider while drafting provisions related to termination of an IT services outsourcing contract from the perspective of the customer.