On Renegotiating a Contract


New research by UK-based Benchmark Research and sponsored by Orbys Consulting, which offers outsourcing advisory services, says that 84% of organizations made changes after the initial outsourcing contract had been signed.

That high number goes along with something a speaker said at one or another conference earlier this year: If you’re not renegotiating your contract on a regular basis, you put too much faith in it.

When an attendee asked why a service provider would be willing to renegotiate — especially around lowering costs — the speaker had a good answer (one that's obvious, once you stop to think about it): Providers rely on a steady stream of revenue coming in from its customers over a long period — and frequently they incur losses during the first years of a new agreement. They don’t want anything screwing up the longer term success of the contract. So it’s in the providers’ best interest to be willing to renegotiate to address changing business conditions.

I’d be interested to know — once the initial contract team has disbanded — who takes charge of those negotiations within the client organization. If you have any insights on this, please post 'em!