Legal issues- Offshore Software Outsourcing.
Legal issues in outsourcing are of absolute importance for any organization. They make the foundation for any deal and act as a binding factor between two parties involved in trade with each other. The importance of legal issues in Software outsourcing can certainly not be undermined when two companies from different countries decide to jointly carry out their business for mutual benefits.
Following are the legal issues to be taken care of, for successfully striking a deal for outsourcing software development.
Who owns the information?
A dispute on the issue of owning information could prove fatal for both the companies. In that case, amendments could be brought about in the outsourcing contract. Both the companies should decide the ownership of the data & information mutually. It has to be explicitly mentioned who owns, what information?
Time frame for the contract
It’s in the benefit of both parties to decide the duration of the outsourcing contract, and more importantly time of commencement. This would reduce the confusion when the service provider gives document relating to service specification to the client. Time duration of the contract varies. It depends on the type of service outsourced and various specifications from the client. The performance should be a consideration while renewing the contract.
Licenses
Licenses play a very important role in all the software-outsourcing contracts. They become all the very more important when there are more then two parties involved in the business. For example, the service provider might further delegate the work to a third party. In this case a license would prove to be of great help. It would even mention the resources the third party plans to use, in order to accomplish the task. The licenses should be flexible. Service provider might have to make some amendments in the license, as per the needs of the client.
Issues relating to third party involvement
As mentioned in the above point, third party involvement is quite common when it comes to the business of outsourcing. The outsourcer and the service provider have to be absolutely clear as to who would administer control over the third party. The maintenance contract is generally taken care by the outsourcer. As the service provider is in the direct contact with the third party, he should be in charge of day-to-day proceedings.
Service Level Agreements
Service level agreements (SLA’s) are made to confirm the minimum service that an outsourcer would provide to the purchaser. Areas like, system availability, quality standards, response time etc, would be part of this document. The performance of the outsourcer is generally checked by the satisfaction that a service provider has. Analysis of performance data, could also be used to judge the service provided by the outsourcer. But it’s easier said then done. Reviewing the performance of an outsourcer is not always very easy. Though the document would act as a cushion for the service provider, he should be ready with the practical solutions in case there is a problem with the outsourcer in providing services. Both parties should make sure that constant review of the document is done. It should be changed as per the changing needs of both the outsourcer as well as the service provider.
Request for information & Request for proposal stage
There are certain issues, which need to be taken care off before the actual contract is signed. Such things come under RIF (request for information) & RFP (request for proposal) stage. Some of these issues could be system specification and the service specifications, which need to be clearly defined in initial stages.
Issues relating to security, and system access
This is one of the most crucial issues to be dealt with, when a contract is to be signed. Problem of security and vulnerability of ones system creates disputes. Defining the degree of access to be given to the service provider, by the client requires a lot of planning, & implementation. Access to the system should be given in such a way that, needed confidentiality is maintained still the performance of the service provider is not affected. Mentioning such details in the contract would give greater transparency to the proceedings. Confusions can be avoided.
Issues relating to ownership of the Assets
Many a times it could happen that service provider might have to use the resources of the outsourcer in order to perform certain tasks. In such cases ownership of asset need’s to be properly defined. Either the outsourcer could buy the assets, or rent them. Whatever might be the case should have a mention in the contract.
Intellectual property rights
Issues relating to Intellectual property rights are creating waves in the outsourcing industry. Confusion could be created due to the sharing of systems and resources by both the parties. Both the parties must make a conscious effort that no breach of law takes place in this regard.
Issues relating to the Human resources of a company.
Companies commit a blunder by ignoring the all-important issue of the human resource of the company. Due steps have to be taken to ensure that continuity is maintained by the employees in there work . Service providers should have the knowledge of HR practices followed by the outsourcer. Transition period is critical. A shift from service provider’s payroll to outsourcer’s payroll could be disturbing for an employee. Mentioning these issues, well in advance could reduce chances of dissatisfaction among the employees. Companies should take the aid of employment law specialists for privacy and legal issues. In case the outsourcer requires certain people from the work force of the service provider, it should be ensured that requirement for the people, be informed to the service provider in advance.
Contingency management
It is not always necessary that desired targets be achieved. The contract should also have provisions stating, what if the desired performance is not achieved. This would keep the relationship between two companies going.
This article courtesy of http://indiasoftwaredevelopment.com/legal-issues-software-outsourcing.asp