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Outsourcing Fundamentals

Independent guide to Outsourcing: BPO strategy, Service Provider selection, contracting and implementation projects. Assessing and improving your current service.

Contract End > Introduction

Dealing with the approaching end of a BPO contract

Every BPO contract has a final end date, perhaps after one or more extension options. After this date your provider will no longer be obliged to deliver your services, at least not at the commercial terms agreed for the contract. This event may represent unwelcome additional work and distraction from other important business, but it also brings the opportunity to review and refresh your services and to take advantage of innovations and developments that weren't part of the agreement.

This section is about getting the most out of your BPO contract coming to an end, and avoiding the potential pitfalls.

The options available

Extension: Where you have a good working relationship with a provider, then contract extension is a very good option. This avoids transition costs and risk of transition to a new organisation and newly set up processes. You still need to understand changes in the market since the original deal and your business needs so that you can decide on your objectives for a refreshed agreement.

Go back to the market: If you have not been satisfied with the services from your provider, then it may well be appropriate to seek alternatives. Of course there is a cost to making the change, but it is much simpler to transition to another provider than to set up an initial BPO service.

Bring back in-house: Finally, there may be good reasons for wanting to have an internal service rather than continuing with outsourcing.

In the last analysis I read, about 80% of BPO contracts were extended and most of the rest replaced by another provider. There have been some highly visible cases of bringing services back in-house, but these are relatively rare.

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How this section is structured

  • Preparation: covering when and how to analysise your situation, and comparing the alternatives available.
  • Renewal: On this page, I provide an overview of contract extension and going back to the market with your requirements. I have not covered bringing services back in-house.