BAGANG

Outsourcing is the mechanism that allows organizations to transfer the delivery of services to third
parties. Fundamental to outsourcing is accepting that, while service delivery is transferred,
accountability remains firmly with the remit of the client organization, which must ensure that the risks
are managed and there is continued delivery of value from the service provider. Transparency and
ownership of the decision-making process must reside within the purview of the client.

The decision to outsource is a strategic, not merely a procurement, decision. The organization that
outsources is effectively reconfiguring its value chain by identifying those activities that are core to its
business, retaining them and making noncore activities candidates for outsourcing. Understanding this in
the light of governance is key, not only because well-governed organizations have been shown to
increase shareholder value,3 but, more important, because every organization is competing in an
increasingly aggressive, global and dynamic market.

Governance of outsourcing is the set of responsibilities, roles, objectives, interfaces, and controls
required to anticipate change and manage the introduction, maintenance, performance, costs, and
control of third-party-provided services. It is an active process that the client and service provider must
adopt to provide a common, consistent, and effective approach that identifies the necessary
information, relationships, controls, and exchanges among many stakeholders across both parties.

Establish Clear Objectives and Scope Define Goals: Identify what you aim to achieve through
outsourcing, such as cost reduction, access to expertise, or increased focus on core activities. Scope of
Work: Clearly define the tasks, deliverables, and responsibilities to avoid misunderstandings.

PADAYHAG AND SENTASAS

Best Practices for Governance of Outsourcing

-Asset Management

All assets utilized by the client must be managed through a governance environment. This environment
consists of content against which to govern(contract schedules, SLAs, policies, etc.) and process
(automated workflows supporting all decision-making, benchmarking, and communication activities.

-Relationship Management

This discipline promotes effective communication among parties to the contract and all stakeholders.
Organizations should integrate relationship management with the outsourcing initiative and must
consider continuous communications, conflict identification and resolution, effective and creative
problem solving, and information sharing.

-Contract Management
This covers the definition of all contracts entered into, including the master services agreement (MSA)
and all schedules and companion agreements for subsidiary entities regarding maintenance, service
supply, demand, etc.

-Due Diligence

Due diligence refers to the discovery by both parties of the asset base, resources, processes, and, most
importantly, the capabilities of each other. It is essential to identify and understand the capabilities
required to support the future organization as this provides support for early decision-making
throughout all three major life cycle stages.

-Governance Processes

Governance processes are required to identify, manage, audit, and disseminate all information related to
the outsourcing contract whilst controlling the relationship between the client organization and service
provider. It is used to ensure that all contractual documents, SLAs, and OLAs are monitored on an
ongoing basis with clear auditability. The governance processes form part of the governance
environment.

-Roles and Responsibilities

Whilst the actual roles and responsibilities vary in magnitude and complexity according to the processes
to be outsourced, there are certain key interactive roles on both the client and supplier sides that are
crucial to the successful implementation and its subsequent governance.

Experience has shown that equivalent logical roles should be present at each level in both the client and
supplier. These are necessary to identify early indications of risk and ensure that proper management
can take place through to resolution.

LICAYAN, AMBUS AND GALO

What is vendor management?

In simple terms, vendor management is the process of managing relationships with

external vendors who supply goods and services to an organization. It involves
selecting the right vendors, negotiating contracts, monitoring performance, and
ensuring compliance with regulations.
 1. Vendor selection: The first step in the vendor management process
involes selecting a reliable vendor. This involves conducting market
research, evaluating vendor capabilities, and aligning their offerings
with the organization’s needs. It requires careful consideration of
factors such as reputation, expertise, pricing, and compatibility.
2. Onboarding and contract negotiation: Once the vendors are
shortlisted and selected, the next step is to proceed with defining
contractual terms, service level agreements, and key performance
indicators. This stage focuses on ensuring mutual understanding,
establishing clear expectations, and addressing any legal or
operational concerns before finalizing the contract.
3. Ongoing monitoring and performance evaluation: Once the
contracts are negotiated and an agreement is in place, it’s essential to
tracking vendor performance against agreed-upon metrics, conducting
regular reviews, and addressing any performance gaps or issues
promptly. It includes maintaining open communication channels,
conducting site visits, and leveraging technology to gather data for
objective evaluation.
4. Termination or contract renewal: A critical stage where the
organization assesses the vendor’s performance, compliance, and
overall value. It involves determining whether to renew the contract
based on satisfactory performance or initiate the termination process
if the vendor fails to meet expectations or no longer aligns with the
organization’s strategic objectives.

Performance management: This pillar focuses on monitoring and evaluating the

performance of vendors against predefined criteria and service level agreements
(SLAs). It involves setting clear performance expectations, tracking vendor
performance, and conducting regular performance reviews. Performance
management enables organizations to assess if vendors are delivering as promised,
meet quality standards, and fulfill contractual obligations. It allows organizations to
identify any performance gaps or areas for improvement and take appropriate
actions to ensure vendors consistently meet expectations.
Risk management: This pillar revolves around identifying, assessing, and
mitigating risks associated with vendor relationships. It involves conducting due
diligence on potential vendors, evaluating their financial stability, security practices,
and compliance with relevant regulations. Risk management in vendor
management includes implementing measures to minimize risks such as
contractual safeguards, data protection protocols, and contingency plans. By
effectively managing vendor-related risks, organizations can safeguard their
operations, reputation, and customer data.

Relationship management: This pillar emphasizes fostering positive and

collaborative relationships with vendors. Relationship management involves clear
and open communication channels, building trust, and establishing mutual
understanding and shared goals. It includes regular communication, periodic
meetings, and proactive issue resolution. Effective relationship management
enables organizations to cultivate strong partnerships with vendors, foster
innovation, and drive mutual success.

SUCOBOS AND AYUBAN

Outsourcing has transformed the way businesses operate, providing a
pathway to scalability, cost-efficiency, and enhanced productivity.
However, amidst the myriad benefits, understanding the legal
intricacies is vital for a successful outsourcing venture. In this article, I'll
delve into the critical legal aspects that business owners should
consider when embarking on an outsourcing journey.
1. Comprehensive Contracts: Building Trust through Clear Terms
Crafting a robust contract is akin to laying a sturdy foundation for a
building. It's the bedrock upon which successful outsourcing
partnerships are built. A well-drafted contract clearly outlines the
scope of work, quality standards, payment terms, and confidentiality
clauses. Ambiguities and assumptions have no place in this document.
The more detailed and specific the contract, the fewer chances there
are for misunderstandings and disputes down the road.
2. Tailored Agreements: Your Business, Your Rules
Every business is unique, and its outsourcing agreements should
reflect this individuality. Generic, one-size-fits-all agreements rarely
encapsulate the nuances of specific industries or business models.
Tailoring agreements to your specific needs is crucial. This
customization can include specific service level agreements,
intellectual property rights, non-compete clauses, and data protection
provisions. These tailored agreements ensure that your outsourcing
partnership aligns perfectly with your business objectives.
3. Navigating Compliance Challenges: Staying Ahead of the
Regulatory Curve
In the labyrinth of regulations and compliance standards, businesses
must stay informed and compliant. Depending on the nature of the
outsourced services, businesses may need to adhere to industry-
specific regulations, international data protection laws like GDPR, or
local labor laws. Failure to comply can result in significant penalties
and reputational damage. Hence, partnering with outsourcing firms
well-versed in compliance matters is crucial. It ensures your operations
remain legally sound and ethically responsible.
4. Transparency and Communication: Keys to a Lasting
Partnership
Transparent communication is the glue that holds outsourcing
relationships together. Regular updates on project progress,
challenges faced, and changes in requirements build trust between
parties. Additionally, transparency about legal obligations, compliance
measures, and potential risks establishes a strong foundation for
collaboration. Clear channels of communication ensure that any legal
concerns or compliance issues are swiftly addressed, preventing them
from escalating into major problems.
5. Ongoing Legal Due Diligence: Adapting to Changing
Landscapes
Outsourcing relationships are dynamic, mirroring the ever-changing
business environment. Regular legal due diligence on your
outsourcing partners is essential. Periodic reviews of contracts,
agreements, and compliance measures help businesses adapt to
evolving legal requirements. This proactive approach not only
safeguards your interests but also ensures that your outsourcing
partners are meeting the agreed-upon standards.
In essence, successful outsourcing goes beyond finding the right
partner; it's about laying a firm legal groundwork. Comprehensive
contracts, tailored agreements, adherence to compliance standards,
transparent communication, and ongoing legal due diligence are the
keystones of a fruitful outsourcing partnership. We work closely with
businesses, ensuring not just efficiency but legal security in every
outsourcing endeavor.