Keeping an Outsourcing Deal

By Larry Dignan  |  Posted 2005-06-09 Email Print this article Print

Millions of dollars are at stake as Sears—freshly merged with Kmart—and CSC battle over the language of an outsourcing contract.


Here's how not to get distracted, should your outsourcing deal unravel:

—Talk about the end, at the start.

According to Allen, an exit strategy should be laid out in the original contract.

TPI, which counseled JP Morgan Chase on its recently terminated contract with IBM, advises that outsourcing customers outline terms to rehire employees, absorb assets and establish business continuity procedures. "The fact that Sears and CSC are in court indicates that the contract didn't properly account for changes," Allen says.

—Have proof ready.

Don't play the "for cause card," unless there's objective evidence the provider failed to deliver. Buzek says it's going to be tough for Sears Holdings to prove that CSC botched a 10-year contract in the first year—especially when the merger with Kmart could be construed as a convenient excuse for termination. "Sears didn't give CSC a chance," Buzek points out.