Is incumbency an adverse factor in Outsourcing Contract Renegotiations?Posted by: Vineet Nayyar On February 07, 2013 02:02 PM Not long time ago most of the outsourcing contracts were viewed as a long term steady business with adequate stickiness - But not anymore. The general perception was - once service provider permeates into customer's organization and becomes its integral part as an extended organization coupled with inherent cost arbitrage, any chances of service discontinuity was unthinkable. This dependency in fact gets increased exponentially over the period of contract duration in the form of additional outsourcing work and collaboration. However the current slow recovery has taken its toll on this illusion also especially for the customers who have for long reaped the cost arbitrage benefits and are looking towards next avenues of cost savings. ...

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An IT failure disrupted travel for 50,000 customers of airlines in Australia due to disruption of reservation and distribution software platform. The IT service provider in this case hosts the platform on its own server infrastructure at a data centre in Sydney on a cloud based model.

While there was a service agreement between Airlines and the IT provider, which requires the mission critical system outages to be remedied within shorter period of time, it didn't happen in this instance. This clearly demonstrates that merely having a contract and SLA's agreement in place don't protect any business against downtime in a cloud environment, and it's important to evaluate & construct a robust failover and disaster recovery mechanism in the NEW cloud environment. You need to clearly know that in such case of such eventuality what you need to do for resuming operations through another data centers? How much data you will you lose by the time you resume your operation? How lon...