Do you know what’s in your IT outsourcing contract?
If you run a business, you understand the importance of contracts. Contractual agreements form the core components to today’s business dealings, which is why understanding the language and limitations are so important. Nowhere is this truer than in IT outsourcing. We’ve found that many small to mid-sized business owners not only don’t understand the technology behind their important business functions, but they also don’t realize what an IT outsourcing contract entails.
This post reviews what to look for in an IT outsourcing contract. What are the pitfalls and what should you look for in these important documents?
Before you sign on the dotted line, we have a few IT outsourcing contracting tips that should be red flags for any business owner:
First, really read the contract to determine if it is well written and concise. Does it match the features and benefits that the salesperson promised? If the sales rep said the cloud service had 99.9% uptime, does the contract reflect that? If they say security is so tight it’s foolproof, how does the contract address the possibility of a cyber data breach?
Second, on large contracts, you will sometimes be invited to sign a contract summary of the key points of the agreement. It could be called a Letter of Intent (LOI) or an MOU (Memorandum of Understanding). It’s not really legally binding, according to Infotech Law Advocates, but “it could create legal and moral obligations if you sign it.” While most small to mid-sized businesses won’t have to deal with an LOI, enterprise-level organizations do all the time. In these cases, legal counsel is usually standing by to lend a hand.
Be careful about entering into contracts by phone or email. Federal law says that a recorded voice affirmation or email chain could be enough to bind you to a contractual agreement. Many companies handle this by adding a non-disclosure and “not legally binding” language to a footer in most emails.
For enterprise organizations, if you have an on-premise technology team, and the IT outsourcing contract is for a service to supplement that team, be aware that you open the door to possible employee “poaching” by the technology provider. You already know how difficult it is to attract and retain the best tech talent, so to protect your tech infrastructure, you might want to consider asking the IT outsourcing vendor to sign a non-solicitation agreement to prevent them from hiring your employees.
Finally, for any business, make sure the contract has a non-disclosure clause related to the information that makes up your critical business functions.
Finding the right IT outsourcing firm is all about establishing a partnership with a company you can rely on. TOSS C3 has a track record of helping our clients manage the technology and the services that run a business.