We, as an outsourcing company, understand how important and stressful contract formation can be. Mainly because we can be located in different countries, have different laws, rules. To avoid any risks before signing an outsourcing contract, we advise you to pay close attention to these points first:
It is easy to make a mistake at this point if the vendor and client do not discuss when, how, and where exactly payments will happen. To avoid any mishaps, it is important to define certain rules on invoices before signing the contract. If you are not sure what kind of payment to choose, read our article “Fixed price vs. Time and Materials: choose suitable variant” where we talk about possible models.
Another crucial point of payment terms is a possible retainer. Try not to miss payments as there always rules for missing them. For example, if you do not pay for a certain period, outsourcing company might suspend their services altogether.
A liability cap is a useful tool in your hands if you use it smartly. It can help you with risk management while putting a certain border to the liability of both parties. With the help of it, you can manage your company’s financial exposure.
Also, remember about warranty clauses. It means your vendor provides you services or develops products of a certain level and quality. However, keep in mind that warranty relates only to outsourcing projects with fixed prices. It is proof that the outsourcing team will provide all discussed results and do their job on time.
A notice period is a period given to an outsourcing company to organize the team. It helps with the control of project development and delivery process. There are two types of notice periods:
Ask the vendor for confirmation whether they:
An outsourcing contract should explicitly say that your company (as a client) is an owner of all intellectual property related to the outsourcing project. This way you will protect your software code from being reused somewhere else.
Nowadays, many outsourcing companies are fighting against poaching their IT professionals. Therefore, if you decide to hire their professionals without noticing them, you may have to pay fees. Because clients come and go, IT employees stay with vendor-company that has to pay taxes, educate and manage them.
If you want to work with an IT specialist without an intermediary, you should discuss it with the vendor. The situation can be resolved legally. However, remember to mention all conditions in your contract.
As outsourcing development becomes more popular globally, more companies are bold enough to choose vendors from other countries. And it is great. However, you still should remember about jurisdiction in your contract. Discus with vendor which governing law of which country is your contract. So, if there any case between both parties, you will know the laws of which country you will follow. Also, there are situations when you can use international arbitration to resolve the case.
We know it is difficult to find a right outsourcing company for your software project. However, the formation of a contract is a more complex matter so that both parties will be satisfied. Remember, if you will not pay attention to details in the agreement, you might face unexpected issues for your company. In any case, if you understand you have not enough knowledge on some subject, you can always contact us. Techexpert International will always provide you the best consultation and development of software you need.