Smarter Outsourcing: An executive guide to understanding, planning and exploiting successful outsourcing relationships

Avoiding ‘contract squeeze’

A further characteristic of a procurement play is that it tends to lead to a much more restrictive contract. We are in a fast-changing world, with globalization challenges and pressures intensifying by the day. In such an environment, the authors certainly do not believe that a rigid, contract-driven transaction is the type of deal that businesses – or indeed outsourcing providers – should be looking to do.

The behaviour generated by the resulting construct is that whenever an event or problem occurs, both parties’ first reaction is to focus on what the contract says, rather than on establishing what the right course of action is on each side.

Over time this leads to destructive behaviour, with both parties looking ...