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Sears, CSC Launch Word War



By Larry Dignan

  Table of Contents:
  1. Sears, CSC Launch Word War
  2. ' Keeping an Outsourcing Deal '

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

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Sears, CSC Launch Word War - ' Keeping an Outsourcing Deal '


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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.

—Don't make deadlines.

Ending an outsourcing contract can more often than not be handled behind closed doors, Allen says.

Customers always have leverage on outsourcing companies and can get favorable terms as long as a service provider's up-front investment is recouped and the balance sheet remains intact.

"The client always has the right to leave," Allen explains. "But you can usually get a win-win as long as the sides are mature and prudent about it."



 
 
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