Legal and Accounting Outsourcing to India

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VI. Offshore Outsourcing Contracts

The greatest risks for global outsourcing come from some emerging countries that are early entrants into outsourcing, or those that have limited governmental support, ineffective legal enforcement, immature infrastructure, limited or nonexistent intellectual property protection or lack an understanding of foreign laws.

- Madaan & Company

Here’s the good news - most of the issues with offshore outsourcing can be minimized or eliminated by having sound outsourcing contracts. Outsourcing contracts among companies within the same country and offshore outsourcing contracts vary significantly. Many organizations use the same template for onshore and offshore outsourcing contracts without realizing the dangers of doing so. According to one website, out of a possible 18 areas to be addressed in a standard outsourcing contract, as many as 15 have to be modified for offshore contracts.

Companies entering into offshore outsourcing contracts must make sure the contracts cover the areas of security and confidentiality, compliance, payment terms, proprietary rights, auditing rights and a well-defined dispute resolution process. Companies should also ensure that the country in which the BPO resides has legal systems that recognize and respect intellectual property rights and also the jurisdictions specified in the contract. It is advisable to involve lawyers from all applicable jurisdictions while finalizing any outsourcing agreement.

Typical areas covered in an outsourcing contract are:

• Duties and obligations of Outsourcer
• Duties and obligations of service provider
• Security and confidentiality
• Legal compliance
• Fees and payment terms
• Proprietary rights
• Auditing rights
• Applicable law to outsourcing agreement
• Term of the Agreement
• Events of Defaults and Addressing
• Dispute Resolution Mechanism
• Time limits
• Location of Arbitration
• Number of Arbitrators
• Interim measures/Provisional Remedies
• Privacy Agreement
• Non-compete Agreement
• Confidentiality Agreement
• Rules Applicable
• Appeal & Enforcement
• Survival terms after the termination of the outsourcing agreement.

(Source: Madaan & Company)

VII. Conclusion

Our study indicates the vast potential for outsourcing legal and accounting work to India. The technology available today makes it possible for BPO service providers in India to deliver value to companies in the USA and other countries. This eventually translates into value for the shareholders of those companies. While there are issues, which need to be addressed to make offshore outsourcing an easier choice, these can be addressed by drawing up good outsourcing contracts that protect the interests of the companies. While drawing up outsourcing contracts, it is advisable to use legal experts from the country of the outsourcer and the country of the BPO. Whether companies are looking at setting up operations or just enter into BPO agreements with third party providers in India, there are several Indian legal and accounting firms providing their services at competitive rates.

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