Outsourcing has become an increasingly important element of the way in which large businesses look to manage their activities. Many large companies now seek to outsource their back office functions, particularly in the fields of communications and data management, leaving them to concentrate on growing their front line activities.
We act for a number of companies who have extensive experience in providing such outsourcing services and in negotiating and completing outsourcing agreements.
Typically an outsourcing arrangement will start from the basis that the services are currently being provided in-house by the customer. Additional considerations will arise if the services are to be transitioned from an incumbent service provider as this may involve the deemed transfer of employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). In addition, it may be the case that other assets (including any properties and IT systems which are used by the customer in undertaking the function in question) will need to be transferred to the supplier or, at the very least licensed to the supplier for the duration of the outsourcing.
Alternatively, a situation may arise where a customer buys in a completely new service which has not already been provided in-house. In this scenario, there is little likelihood that any of the customers employees will transfer to the supplier at the outset but TUPE will still be relevant at the end of the outsourcing contract. In addition, to the extent that dedicated assets or staff are used to provide the services during the term (or there is an identifiable group of employees providing the services even if they are doing so on a part time basis), issues relating to the transfer of such assets and staff will need to be considered in the context of the expiry or termination of the agreement.
Such outsourcing agreements, as can be seen, often involve collaboration with our Property and Employment Teams and we regularly work closely with them to ensure our client’s interests and those of their employees are protected.