What You Need to Do When an Offshoring Contract Ends
There will be a time when the offshoring contract comes to an end, leaving you with one big question: what should I do next? Normally, you have 3 options: renew, reallocate or terminate the contract; and your decision should result from thorough review of the agreement as well as weighing all the alternatives available. It is advisable to regularly think about your offshoring contract, and not just when they are coming to the end of term.
RENEW THE CONTRACT
Renewing the current offshoring contract is the best option because the long-term partnership allows the service provider to understand, customise and adapt to your specific business demand. It can also save you the hassle from drastic transition to a new provider. If you have a positive relationship with your current service provider and you are satisfied with the level of service quality and efficiency, then you should renew the existing agreement with confidence. It is also possible to shake things up and make some amendments in the new arrangement to ensure that the service provider can continue to accommodate the transforming business and facilitate your business strategy.
REALLOCATE THE CONTRACT
Another viable option is to reallocate, or transfer, part of your offshored functions to another partner while retaining certain responsibilities with the current service provider. There are two reasons for this practice. One is the existing service provider fell short of your expectation or they have decided to withdraw some tasks from the portfolio. Two is you would like to specialise or expand certain functions beyond the provider’s capabilities. However, you are advised to proceed with this option with caution as collaborating with 2 different providers simultaneously can be really challenging. After reviewing your option, you will want to spare 9-12 months prior to the end date for initial setup and transfer.
TERMINATE THE CONTRACT
Last but not least, the least desirable option is to terminate the offshoring contract. You might plan to bring work back in house or look for a new service provider. However, anyone considering terminating the contract must be extra careful with this complex and time-consuming process. Thus, it is best to regularly assess your company’s ability to reintegrate the service so that it is in a sound financial position to bear additional costs involved in bringing back the operations and also a robust exit that ensures the smooth transfer of tangible and intangible assets from the service provider. You can even hire external advisors as some transitions may take up to 9 months to complete.
In conclusion, the end of an offshoring contract provides the opportunity to re-evaluate your company’s goals and strengthen the relationship with your current provider. To prevent unnecessary complications, choosing a trustworthy service provider and planning a long-term offshoring strategy from day one are important. At ASW Global, we take pride in helping Australian companies build their talented offshore teams, some of which have drastically expanded in the past five years. If you would like to find out more about our professional offshore services, feel free to contact us at ASW Global for further assistance.