In the midst of a financial downturn, information technology departments still find themselves entering new business process and information technology outsourcing arrangements and struggling with how to make these arrangements smarter and more cost-effective.

Despite limited budgets and new projects on hold, major outsourcing contracts still come up for renewal, while divestitures and reorganizations require institutions to enter into new contracts or modify existing ones. In addition, even as financial institutions put pressure on their information technology departments to keep their costs down, they also insist that their legal departments find ways to negotiate outsourcing arrangements in a more cost-sensitive manner.

Business process and information technology outsourcings are complicated transactions that often require customers to engage in extensive diligence and documentation to avoid costlier problems with vendors down the road. No customer, however, wants to see a large share of the cost savings they hope to reap from the outsourcing swallowed by the diligence and transaction costs required to enter — or eventually exit — the outsourcing agreement.

Customers who correctly take aggressive positions with vendors to protect themselves can often find that the process of reaching agreement with vendors takes on a life of its own and consumes time, energy, and money. Consequently, a key question facing customers is how to make sure the outsourcing is done correctly while keeping the due diligence involved in vendor down-selecting and transaction costs under control.

via Law.com – Outsource the Work, Keep the Cash: 6 Tips.