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Outsourcing Fundamentals

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Review & Recover > Mediation

Using Mediation to help resolve disputes

Some level of dispute is almost inevitable in the long term relationship that is BPO. The parties should, using the governance framework and the relationship built up in normal times, sit down, talk through and resolve any differences that arise. Occasional, this doesn't work.

Mediation is an option when a neutral third party might help you resolve differences. This page covers using mediation for BPO situations. There is ample information about mediation on the internet. I have covered the topic here as a reminder that it has a place in BPO disputes, and to provide a process that is more specific to BPO where most information available is focused on employment or family situations.

Mediation is a good option when:

  • Parties fail to resolve an issue through their normal governance processes.
  • The dispute, which may have been triggered by commercial, technical or legal issues leads to a point where the parties do not seem to acknowledge each other's issues. Instead they retreat to a position of strength and prepare for battle.
  • The alternative looks likely to be either termination of the contract or resorting to legal action - something neither party really wishes to do.
  • Both parties would like the contractual relationship to continue. If only….

Mediation provides:

  • An independent neutral third party to facilitate
  • A process
    • to explore assumptions and understand perspectives
    • To help develop mutually acceptable ways forward
    And it is not:
  • Binding.
  • Aiming to identify rights and wrongs.

A large majority of disputes using mediation are resolved.

The mediation process

Agreement to use mediation

Mediation is not used as often as it should be because perhaps the hardest step is for the parties to agree to a process when focussed on arguing about issues. One party needs to say "we are not getting anywhere and we need help." It may help if the issue is raised a level above those normally involved in order to take this step.

Setting up the Mediation process

The mediator must of course be acceptable to both parties. There will be an initial meeting of the mediator with each of the parties to:

  • Understand the details of the dispute.
  • Agree the objective and a process for the mediation initiative.
  • Identify appropriate people to be involved in the process - those bringing sufficient knowledge and with the right level of authority.

These initial meetings also allow the mediator to get commitment to the process that makes it "safe" for both parties. There must be commitment that the mediation will not have impact on any subsequent litigation should the mediation fail, and that neither party is making an admission of guilt by entering into mediation.


With the complexity of BPO agreements and services, the mediator should review contractual and operational service documentation prior to the mediation meeting. Although the mediator is not responsible for providing solutions, he or she is helped by understanding the background and language.

Mediation meeting(s)

At the initial meeting of the client, service provider and mediator:

  • The mediator will set the scene and control the process.
  • Each party in turn will give their perspective on the dispute while the other listens.
  • The parties can then discuss how the issues might be resolved. The mediator will facilitate the discussion, checking for agreement and disagreement as it proceeds.
  • At points, the mediate will decide a time-out would be helpful or time to have private meetings with the parties.

Private meetings

The mediator is likely to meet with each of the parties to clarify any areas, further understand the issues, test sensitivities and start to explore what 'better' would look like. The private meetings help to bring out any points one party felt unable to discuss with the other. In order for this to work, the content of the private meetings is not disclosed by the mediator to the other party without their permission.

Offer development and refinement

On the basis of the information and opinions gathered the mediator will develop proposals and test with the parties. The mediator makes the offers irrespective of source, and not either of the parties and only then when he/she thinks they will be well received by the parties.

Having a mediator take responsibility for the initial proposals makes their adaptation and refinement an easier process. The way in which this process is run will vary by situation, but certainly will lead to the client and service provider talking through and committing to the agreed course of action.

Settlement agreement

The settlement agreement documents the actions that the parties have both agreed will be taken. It will of course cover the steps to resolve the issues. It may also cover any changes agreed to rebuild the relationship and help deal with future issues.

The settlement agreement may need to be a legal document and hence have had lawyer review and finalisation, but at least the first draft should be written by the mediator and not the legal representative of one of the parties.