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The role of contracts in outsourcing relationships

Written by Ioannis Malegiannakis

Paper category

Master Thesis


Business Administration>Accounting




Master Thesis: 5.3 Stage 3: The role of the contract during overflow This section discusses the consequences of how the contract works when there is a problem with service delivery. According to outsourcers, problems in service delivery (such as delays) are due to two factors. The first factor is related to the customer's failure to provide the necessary data/documents/reports in a timely manner, which hinders the delivery of the entire service. The second factor is related to the outsourcer’s miscalculation of the project, which leads to project delays. In any of these two factors, the most important thing is to communicate and cooperate again to solve the problem. If the problem occurs due to the customer, the outsourcing business will take action to remind the customer that cooperation requires the efforts of both parties. If the problem is due to the outsourcer, the outsourcer will invest more energy or resources to meet the deadline, otherwise the project will be delayed. In this case, in order to ensure that the outsourcer does not damage the relationship and customer satisfaction, he may take discounts or provide additional services for free. But the most important and meaningful action is to show effort and kindness to meet the customer's requirements, while also aiming to strengthen the relationship. "For example, a person in our company resigned. The project did not go well and we were late before the deadline. I went to the client. Because I was very formal, and I had a sense of responsibility and ownership. We worked for many hours and we The requirements of the project have been met, and the client is very grateful for my efforts and my willingness to help. This helps to renew the contract and continue to cooperate. For example, the client will find me in person next time.” In these situations, building a relationship is very important because It can help solve problems more effectively. In the case of a good relationship, the client expressed understanding and support for the outsourcer. The trust and relationship established through cooperation make the contract more "flexible" and ultimately provide services. It can be understood from this example that the contract loses its durability in cooperation, and the concept of trust and control takes over the management relationship. Overflow may not only occur when performance problems occur, but also when one party to the agreement does not necessarily abide by the agreement or has too many requirements beyond the contract terms. During a project, a customer requires more services than stated in the contract because the customer wants additional services to be included in the contract. This caused problems and controversy because the client had other understandings of the scope of the contract. This retreat from the outsourcer not only keeps the relationship in a good position, but also plays a good role in the next cooperation with the customer or the longer-term cooperation between the customer and the outsourcer. Therefore, the contract hires an outsourcer to let him do his best (as long as it is beneficial to the company) to fulfill the agreement to satisfy customers and retain customers. In addition, the final insight can have a wider scope. The outsourcing business will do its best, even if the customer considers it inappropriate due to other possible effects of good service. These effects are the reputation of the outsourcer in the market. Because of the concern for reputation, the outsourcer's goal of finding new customers, the outsourcer's "fear" of losing customers to other companies, and the contract has once again become a powerful control and commitment to the outsourcer. The outsourcer maintains a good reputation in the market by fulfilling the contract in any way, and provides guarantees for the quality of service and the safety of customers. In this way, outsourcers can attract more customers and increase their market expansion and value. It can be understood from the last two examples that the contract is a reason and a powerful motivation for mobilizing new allies, because the outsourcer will use any resources he can use to ensure that the contract is fulfilled, thereby creating a good reputation and market reputation, which will attract New potential customers. 6. Conclusion This section summarizes the results of the interview, experience and insights, and answers the research questions raised in the introduction. This paper studies the role of contracts in outsourcing relationships. Use ANT and its insights to have the opportunity to observe non-human actors like contracts and their behavior in organizational networks. The contract is considered a black box. When it was formulated, everyone accepted it and followed it "blindly". In this paper, the purpose is to observe and map the behavior of the participants surrounding the contract. In the translation process, we strive to decompose the contract into multiple stages, and observe and understand how the contract affects participants in each stage and how it affects their behavior in the outsourcing relationship. In order to better map the interaction, the impact of the contract is divided into three stages. Interaction before completion, interaction after implementation, interaction when there is a problem with the outsourcing relationship. In an outsourcing relationship where a customer depends on an outsourcer, it is important to define the exact service that will be provided. Read Less