Morrison & Foerster’s Global Sourcing Group has outsourcing experience in sectors such as banking, finance and insurance; information and financial services; manufacturing; pharmaceuticals; health care; media, communications and technology; energy; real estate; transportation and logistics; consumer products; and retail. Our lawyers have been involved in some of the most complex and high-profile outsourcing transactions, covering information technology outsourcing (ITO), business process outsourcing (BPO), human resources outsourcing (HRO), business transformation outsourcing (BTO), facilities management outsourcing (FMO), transportation and logistics outsourcing, communication and network outsourcing services and offshoring.
ITO transactions include the outsourcing of mainframe, midrange server and desktop infrastructure services; local area network (LAN) and wide area network (WAN) operations; help desk functions; and application development and maintenance support services. Such transactions involve issues such as offshore delivery models, transferring staff and assets, standardizing applications and hardware, hardware and software refresh and balancing increased demands for processing power against the declining costs of hardware. In recent years, ITO deals have often involved utility computing models, as well as “cloud” or “as-a-Service” components. Methodologies for addressing pricing issues, service level agreements, cybersecurity and other risks, deal governance structures and the allocation of intellectual property rights continue to evolve with the advent of emerging technologies. We offer innovative and sound principles and practices to help clients structure and negotiate cost-effective and manageable ITO deals.
BPO transactions include the outsourcing of horizontal business functions such as finance and accounting, HR administration, payroll and procurement, as well as vertical business processes, including customer help desk and back-office administration. BPO transactions may also provide for the outsourcing and transformation of industry-specific processes—from credit card processing to the offshore development of animated feature films. This fast growth area has been driven by a number of factors, including the business drive to concentrate on core competencies, the desire to use technology to reduce costs and headcount and the continued rise of offshore locations that offer outsourcing services. Most importantly, however, the success of BPO draws upon business-focused activities not only to drive efficiencies, but also to gain competitive advantage through the use of processes that are closely aligned to the core business competencies. In these transactions, our attorneys assist clients in structuring contracts that maximize the relationship among business objectives, business processes and technological advancements.
Cloud and “as-a-Service” Transactions
Increasingly, companies are moving business process functions to the cloud. Managing cloud and “as‑a‑Service” transactions successfully requires expertise in global technology and outsourcing transactions, privacy and data security, intellectual property and regulatory frameworks. With a team of leading practitioners, we are at the vanguard of cloud and “as-a-Service” solutions. New service offerings, technologies, contracting practices and regulatory guidance continue to develop as available business models mature and providers compete to offer enterprise solutions to increasingly diversified sectors. We are unmatched in our understanding of private, public and hybrid clouds and their underlying technologies: Infrastructure as a Service (IaaS); Platform as a Service (PaaS); Software as a Service (SaaS); and data security, business continuity and regulatory compliance.
Robotic Process Automation (RPA)
RPA is the use of software with machine-learning capabilities and artificial intelligence to manipulate data and perform repetitive, rules-based tasks. Outsourcing service providers are increasingly seeking to incorporate RPA in their service offerings to perform tasks previously performed by their employees in order to reduce costs, increase accuracy and speed of service delivery and improve regulatory compliance. RPA may be deployed to streamline the delivery of industry-specific processes—such as insurance claims processing—or, in some instances, to transform back-office operations to improve overall industry competitiveness and efficiencies. We have been quick to identify and develop creative solutions for meeting client needs where conventional methodologies have been challenged by the introduction of RPA. For example, greater attention is required for defining and allocating responsibilities for mapping systems and processes to be replaced by RPA and otherwise for parsing and allocating liabilities associated with any failures arising out of such exercise. Similarly, inevitable tensions arise between clients and service providers in defining and allocating intellectual property ownership rights in the RPA processes that may be developed collaboratively, particularly in light of the potential competitive advantage offered to clients in securing such rights and the possible increased market share service providers may secure through the control of such rights. With our expertise in emerging technologies and sensitivity to client business objectives, we are able to expertly assist our clients in navigating through what may appear to be uncharted legal and commercial channels introduced by RPA-related issues.
Systems Integration Projects
Our clients frequently engage third-party vendors for systems integration projects, including those involving the implementation of enterprise resource planning (ERP) applications for, for example, customer relationship management, financial management, human resource management and supply chain management. The inherent risks associated with such integration projects—whether arising from time delays, runaway costs or ultimate failures in implementation—require expert contract structuring and negotiation to protect against such potential pitfalls. We work closely with our clients’ business and technical team members to put into place appropriate contractual levers to drive project success.
Facilities Management Outsourcing
Facilities management costs often account for a substantial portion of a company’s overhead expenses, and a growing number of companies are seeking to manage these costs more efficiently by outsourcing their facilities management operations to specialized vendors. These transactions cover the outsourcing of building maintenance, repair and space usage planning; cleaning, waste disposal and pest control; event support; food and beverage operations; grounds management and landscaping; laboratory and manufacturing support; mailroom and copy center services; reception services; site security operations; utilities management; and a wide variety of other services relating to the operation and maintenance of facilities. In recent years, these services have expanded to encompass energy management and health, safety and environmental compliance. Our attorneys have worked on numerous facilities management outsourcing transactions, ranging from the outsourcing of a single service at a single office building to complex cross-border projects involving the transfer of most facilities management services at all of a company’s facilities.
Transportation and Logistics Outsourcing
Transportation, warehousing and other logistics operations are critical to the success of any business that manufactures and distributes physical products. Our attorneys have extensive experience representing clients in the planning and negotiation of logistics outsourcing arrangements with ground, air and ocean carriers; warehouse and distribution center operators; freight forwarders; and other vendors. These arrangements range in complexity from a carrier services agreement with a single trucking company to the outsourcing of the entire North American logistics operations of a multinational enterprise. Many of these transactions have cross-border elements, and with attorneys in key business centers in Asia, Europe and the United States, we are able to advise on the international dimensions of many of these transactions. We understand the importance of making sure that the business aspects, as well as the legal terms, of a logistics outsourcing agreement are thoroughly addressed to ensure a successful long-term relationship between customer and vendor.
Transition Services in Carve-Out M+A Deals
With our world-class mergers and acquisitions (M+A) practice spanning North America, Europe and Asia, our outsourcing and technology transactions attorneys play a key role in carve-out and other similar transactions where transition services may be required to support the ongoing operations of acquired or divested entities. While transition services agreements are akin to services agreements for outsourced services in many respects, our extensive experience with transition services transactions—including in the technology, logistics, real estate, pharmaceutical and biotechnology industries—has given us a keen understanding of those terms that differentiate transition services from outsourced services and those terms that are critical to success. Our lawyers work closely on these transactions with other subject matter experts in our firm to address industry-specific issues, as well as with M+A deal teams to address gaps in rights and services required to be filled.
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