Outward bound

Prior to embarking on a cost saving outsourcing arrangement, consider these key steps and issues:

Undertake a feasibility study and due diligence
To identify the operational needs and requirements of the outsourcing party, it will be necessary to undertake an in-depth review of the existing services. It is also important to ensure your contractor is financially sound, and has sufficient experience.

Question the appropriate structure or vehicle
Significant savings can be achieved by collaborating in services such as back-office and those involving routine transactions. There are also a number of corporate vehicles, contractual arrangements, formal or informal partnerships that can be entered into.

Procurement
Local authorities and housing associations will be restricted by public procurement rules. The competitive tender process should be selected on its cost and time effectiveness and also its ability to clearly identify the most economically advantageous tender.

Employee consultation
Key to relieving the concerns of any employees is consultation and keeping staff informed of the change. It is important to ensure that all staff have a clear sense of what the change is about and why it’s happening and have an opportunity to influence its direction.

Allow flexibility
An outsourcing contract is a live document and will need to be flexible enough to provide for consequences of change to the services during the term of the contract. Where possible it is good practice to agree a framework for managing any changes.

Avril Smith is a senior lawyer at Lawrence Graham

avril.smith@lg-legal.com

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