Outsourcing agreements lack details

IT departments are major customers for outsourcing, but the contracts drawn up to govern such agreements are often inadequate, according to legal experts.

"Many of the contracts drawn up in IT are simply not up to the job of providing the basis for satisfactory agreements between the two parties," said Rosemary Mulley, head of consulting practice at legal firm Nabarro Nathanson.

"Historically, IT contracts have been based on software licence agreements, with some add-ons. IT [experts] are very good at detailing their requirements, but these requirements do not get incorporated into contracts," she added.

According to research commissioned by law firm Tarlo Lyons, IT support and services are the most common area for outsourcing: 28 per cent of firms said they outsourced some area of their IT department. But according to the research this was the area that firms were least likely to rate as good value, prompting many firms to change partners.

Tim Couldrick, head of outsourcing business unit at Tarlo Lyons, commented: "Quality of service drives contract renewal."

With firms looking at ways of reducing costs through outsourcing, more mission-critical systems are being handed over to third parties, said Shellye Archembeau, chief marketing officer at managed Internet service Loudcloud.

"Firms are betting their business on these decisions. It's vital that they can trust their partners to deliver," she added.

Loudcloud is planning to release regular reports on how its customers rate its performance. "We intend to set the bar for customer satisfaction," Archembeau said.