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Foreword
6
Table of contents
10
1. Background and snapshot of key issues
17
1.1 Context
17
1.2 Background
17
2. Outsourcing fundamentals
30
2.1 Purported benefits
30
2.2 Costs and risks of outsourcing
31
2.3 Outsourcing models
32
2.4 Typical outsourcing arrangements
33
2.5 Separation of assets and operations
34
3. Attitudes to outsourcing worldwide
38
4. Selecting an outsourcing service provider
40
4.1 Minimising risks through the choice of an appropriate service provider
40
4.2 Service provider challenges from a customer perspective
43
4.3 The RFP process
44
5. The Indian judicial system
48
5.1 Primary source of law
48
5.2 Secondary source of law
49
5.3 Tribunals
50
6. Critical contract considerations ā jurisdiction issues
52
6.1 Two systems of law
52
6.2 European legal landscape (common law vās civil law)
52
6.3 Indian contract law
54
6.4 Jurisdiction to prescribe
57
6.5 Jurisdiction to adjudicate
57
6.6 Jurisdiction to enforce
58
6.7 Arbitration
61
6.8 Public policy and refusal to enforce foreign judgments / awards
65
7. Allocation of risk into the contract
69
7.1 Types of risks and terms within a contract
69
7.2 Terms of a contract
72
7.3 Disclaimers
76
7.4 Subcontracting provisions
77
7.5 Privity of contract
77
7.6 Insurance requirements
78
7.7 Force Majeure provisions
78
7.8 Disaster recovery
80
8. Project management
82
8.1 Elements of good project management
82
9. Contract discharge and methods to reduce liability
85
9.1 Contract performance
85
9.2 Representations and warranties
87
9.3 Indemnities
88
9.4 Limiting liability
90
9.5 European Unfair Contract Terms
90
10. Pricing
93
10.1 Types of pricing schema
93
11. Transition-in and change control
97
11.1 Transition-in
97
11.2 Change control
98
11.3 Mergers
98
12. Scope of services to be outsourced
100
12.1 Scope of the services contracted
100
13. Service Level Agreements
104
13.1 Type of Service Level Agreements
104
13.2 Performance standards
105
13.3 Process and Quality standards
106
13.4 Rules for effective SLAs
107
13.5 Selecting appropriate metrics
108
13.6 Measurement and management
109
13.7 Benchmarking
111
13.8 Remedies as part of the SLA
112
14. Contract enforcement
115
14.1 Typical remedies for failures to perform obligations
115
14.2 Damages available in India
117
15. Contract termination procedures
120
15.1 The outsourcing lifecycle
120
15.2 Triggers for termination
120
15.3 Effects of termination or expiration / reversion clauses
121
15.4 Dispute resolution mechanisms
123
15.5 Escalation procedures
123
16. Unenforceable contract terms under Indian legal system
125
16.1 Sovereignty
125
16.2 Indian statutes cannot be overwritten by any other law
125
16.3 Non-predation clauses
126
17. The EU Data Protection Directive 97/66/EC and related issues
128
17.1 The requirement for data protection
128
17.2 Non disclosure agreements / confidentiality
128
17.3 Personal data protection ā the eighth principle
129
17.4 Data transfer in the interests of the data subject
137
17.5 The Seventh Principle
138
17.6 The situation in India with respect to data protection
140
18. Intellectual property rights (IPR)
144
18.1 Intellectual property rights is an integral part of the outsourcing agreement
144
18.2 Copyright
148
18.3 The Indian Copyright Act
148
18.4 Trade Marks
150
19. Transferring employees as part of the outsourcing agreement
153
19.1 Concept of Acquired Rights
153
19.2 When does the Acquired Rights Directive and TUPE apply to outsourcing?
154
19.3 Asset based activities
155
19.4 Employment transfers
155
19.5 What obligations and rights pass to the transferor?
156
19.6 Negotiating the contract in respect of transfer of employees
156
20. Legal and regulatory risks
158
20.1 Categorising legal and regulatory risks
158
20.2 Planning for change
158
20.3 Markets in Financial Instruments Directive (MiFID)
159
21. Specific Indian legal issues of importance
161
21.1 Taxation issues
161
21.2 Employment laws
163
22. Summary
167
Afterword - the future of outsourcing to India
171
Annex
173
1. Sample contract template - Checklist
174
2. Sample contract template - Section 1: Framework contract for outsourcing
175
2.1 Background
175
2.2 Definitions
175
2.3 Contract management
175
2.4 Law and place of jurisdiction
180
2.5 Transition- in
180
2.7 Conflict resolution
183
2.8 Rights and obligations
184
2.9 Confidentiality
186
2.10 Data and protection
186
2.11 Auditing and security requirements
188
2.12 Pricing / payment procedure
191
2.13 Indemnities
193
2.14 Damage limitations
194
2.15 Third party access
195
2.16 Subcontracting
195
2.17 Insurance
196
2.18 Taxes
197
2.19 Force Majeure
197
3. Sample contract template - Section 2: Description of services to be outsourced
199
3.1 Definitions
199
3.2 Description of the service
199
3.3 Service level agreement
200
4. Sample contract template ā schedules
201
References and resources
203
Statutes and international conventions
203
Case law
204
Textbooks
206
Articles
207
Documents
208
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