Financial Terms

George Kimball and Mark W. Heaphy

Chapter 6 in Outsourcing Agreements, 2025, pp 139-178 from Edward Elgar Publishing

Abstract: Chapter 6 covers the full range of financial issues and provisions including: (1) customer interests and goals; (2) economic reasons for outsourcing (from economies of scale to labor arbitrage, to transformational opportunities); (3) deal economics, including tensions between the competing interest of customers and suppliers; and (4) common methods for pricing services, including consumption-based metrics, outcome-based charges, and gain-sharing. Chapter 6 then discusses adjustments on account of changes in consumption, rates of inflation, and exchange rates; price protection through customer rights to ‘benchmark’ charges against the market; and tax considerations (including taxes upon services and charges). The chapter concludes with a discussion of practical administrative arrangements including invoicing and payment terms; customers’ rights to withhold disputed amounts; and the parties’ audit rights and obligations.

Keywords: Outsourcing; Business Process Outsourcing; BPO; Information Technology Outsourcing; ITO; Pricing; Financial terms; Labor arbitrage; Transaction pricing; Outcome-based pricing; Gain-sharing; Benchmarking; Taxes; Invoicing; Audit rights (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035316984
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