Contract Finalization And Transition

The terms agreed upon by both parties in the previous phase will make-up the provisions

of the legal agreement and will form the basis of the legal documentation, which will embody the existing pact between them. This document will bind both parties upon execution. Finalizing a contract involves agreeing on the dates of the contract. There is usually a separate date for the signing of the contract which announces to the public the existence of the said contract and the effective date.

However, in some contracts, terms dictate that the pact becomes effective upon affixing of the signatures of authorized party representatives. There is also a third date. This date signals when the supplier can start providing outsourced services for the buyer firm. nnThe finalization of the contract then makes way for the phase of the outsourcing process, and that is the transition phase.

Transitionnn

The transition phase involves the transferring of staff (if needed) and the responsibility of the services mandated by the outsourcing contract between the parties. It normally takes at most four months after the outsourcing party first takes over the service, and begins just after the agreement becomes effective. Under this phase, the parties have to make certain that possible problems from the agreement will be minimized or, on the extreme, can be easily addressed when they arise. Most of these problems were already identified under the deciding stage, so the only thing both the outsourcing and the contracting party should focus on is the formulation of steps to mitigate or control the impact of these potential problems.

Dr. Miriyala and Ms. Hufford's paper proposes some steps that the client of an outsourcing company can take in order to address these risks.nnOne step dictates that parties should put emphasis on the terms of the contract, including risks and mitigation measures. According to the paper, most of the times, the parties of an outsourcing contract fail to put into actual practice the risks and the mitigating measures that they have identified and formulated before the final contract.

This is because most companies just file contracts just to satisfy the legal requirements for such an agreement. Both then mistakenly assume that they won't need to refer to the contract, except perhaps if some dispute arises especially over money. Because of this, they actually are exposed and, some times, encounter the risks that they themselves have identified.

by: Lawrence Perry

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