Sourcing, including outsourcing, offshoring and shared services arrangements, has become an important strategic tool for companies and institutions worldwide of all sizes in virtually every industry worldwide. Whether to reduce operating costs and free up capital, increase focus on core competencies or improve and transform service delivery, sourcing offers companies a range of options to structure their operations to achieve critical business objectives. However, while outsourced functions may not always be core to an organization's operations, they are critical to its success, and organizations involved in sourcing must take great care in structuring and negotiating these complex transactions.
In advising our sourcing clients, we do not follow a "one-size-fits-all" approach. Instead we work with them to develop an approach and a project plan that makes sense based on each client's unique circumstances and business objectives. As an integral member of the project team, we combine our unique technical sourcing experience with practical business orientation and industry knowledge to help clients identify opportunities and risks and structure appropriate and successful business solutions for each sourcing initiative.
Sourcing Experience and Capabilities
Gibson Dunn & Crutcher has a global practice group dedicated to working with clients on the full range of strategic sourcing transactions. In particular, our lawyers have substantial experience structuring and negotiating domestic and international information technology and business process sourcing arrangements, including offshoring, shared services, outsourcing renegotiations and restructurings and outsourcing-based strategic alliances and joint ventures, in transactions ranging in size from $5 million to $35 billion. We have assisted a wide range of clients in a broad array of industries, including:
- Aerospace
- Accounting
- Automotive
- Commercial & retail banking
- Biotechnology & pharmaceuticals
- Chemicals
- Communications
- Energy & utilities
- Financial services
- Healthcare
- Insurance and risk management
- Life Sciences
- Logistics & distribution
- Manufacturing
- Media and entertainment
- Real Estate
- Retail
- Technology, including information technology and consulting
- Telecommunications
- Transportation
- Travel and hospitality
Our deep familiarity with the technology and commercial aspects of sourcing transactions – as well as the legal issues involved – enables us to better understand the critical issues underlying each transaction, whether based on a competitive or sole source procurement, and to structure the sourcing relationship and the legal agreements to address those issues. We are well equipped to provide counsel on the entire spectrum of issues that arise during such transactions and we regularly advise our clients on all aspects of such projects, including issues involving:
- Developing and implementing sourcing strategies and procurement processes
- Developing and drafting requests for proposal (RFPs)
- Evaluating proposals and proposed service providers
- Developing service level and service level credit methodologies
- Developing licensing schemes and protecting intellectual property rights
- Developing and evaluating pricing models and methodologies
- Structuring employee and asset transfer strategies
- Evaluating and assisting with compliance with regulatory requirements
- Structuring the overall strategic and contractual arrangements
- Structuring domestic and international transactions to minimize tax exposure
- Developing and drafting sourcing agreements and supporting exhibits
- Negotiating contract documents and strategic relationship issues
- Developing and structuring service provider management organizations
- Developing and documenting comprehensive exit strategies
- Renegotiating, restructuring, and terminating existing relationships
Unanticipated issues – requiring counsel in other specialties or different geographic locations – often arise from complex sourcing transactions. As an international, full-service law firm, our strategic sourcing and technology transactions lawyers are able to draw upon the skill and experience of hundreds of lawyers and other legal professionals worldwide to quickly respond to the challenges raised by each transaction. Our strategic sourcing and technology transactions lawyers are able to draw upon our labor and employment, tax, intellectual property, corporate, bankruptcy, regulatory, real estate, and environmental lawyers and resources during the course of a transaction to produce the right blend of capabilities and skills to respond to such challenges in a comprehensive, cost-efficient manner.
Early involvement can be crucial to the success of any sourcing transaction and our extensive experience can serve as a useful resource for helping clients understand the pitfalls and challenges of every phase of the sourcing process. Whether assisting in the development of a sourcing strategy, defining the scope of services to be outsourced, or selecting the right service providers to include in the RFP process, our clients have found that we have proved to be invaluable resources in helping them make these early decisions. Additionally, our early involvement in a transaction also helps to ensure that our clients’ initial negotiation positions, as well as the final legal documents, dovetail with their overall business objectives.
Information Technology Outsourcing
Information technology outsourcing (ITO) has become a standard tool in the strategic arsenals of most large and mid-size companies. Whether pursued on a one-off, single function basis or as part of a broader, cross-functional sourcing initiative, IT outsourcing gives companies the ability to leverage resources and take advantage of opportunities across their own businesses and throughout the world. Many companies and institutions and their advisors - view IT functions as relatively commoditized, but outsourcing IT functions in conjunction with critical business processes poses challenges not generally seen in more “standard” ITO transactions. Our lawyers have advised clients, in the context of both ITO projects and related BPO initiatives, on the outsourcing of the entire spectrum of IT functions, including:
- Application development
- Application maintenance
- Application and web hosting
- Data center operations
- Deskside and distributed systems support
- Equipment procurement & disposal
- Help desk operations
- IT security
- Mainframe & midrange infrastructure
- Network provisioning & support
- Telecommunications / VoIP
Business Process Outsourcing
The business process outsourcing (BPO) market is one that continues to evolve, driven by changes in relevant regulatory environments and the global economy. As a result, our lawyers have participated in many cutting-edge and innovative transactions. These transactions include the outsourcing of:
- Back-office support operations
- Call center operations
- Check / payment processing
- Claims / transaction processing
- Credit card operations
- Customer relationship management
- Finance & accounting
- Human resources
- Logistics & distribution
- Manufacturing & product support
- On-line retail sales
- Payroll processing
- Print & distribution
- Procurement / supply chain
- Records management & archiving
Crucial to our success in advising our clients is our ability to remain flexible and creative in our approach to each new client engagement. Gibson Dunn's depth of experience with BPO transactions provides us with an excellent foundation upon which to draw as new sourcing trends, solutions, and issues emerge in this ever-changing industry.
Human Resources Outsourcing
Representing customers in a wide range of industries, we have helped to structure, document and negotiate a wide range of human resources outsourcing transactions, from complex, global initiatives involving the entire spectrum of HR functions and related business processes to more focused, single-function transactions. Our lawyers have advised clients in outsourcing HR functions that include:
- Benefits administration
- Compensation administration
- Employee development
- Employee records management
- Employee relations & communications
- Organization development
- Payroll processing
- Performance management
- Recruiting
- Relocation administration
- Staffing & recruiting services
- Succession planning
- Training management
- Workforce deployment
Finance & Accounting Outsourcing
In the current regulatory environment, the outsourcing of finance and accounting (F&A) functions can be particularly challenging. Our experience representing companies in F&A outsourcing transactions - including in highly regulated industries such as insurance and financial services - has helped us to gain an appreciation and understanding of the unique regulatory issues involved in outsourcing these functions. We are also used to working closely with our clients’ in-house and outside corporate counsel to ensure that regulatory issues are addressed in a manner consistent with our clients’ overall business strategy and approach. Our lawyers have worked with clients to outsource F&A functions, as well as related IT processes, that include:
- Accounts payable
- Accounts receivable
- Fixed asset accounting
- General ledger accounting
- Payroll processing
- Planning & forecasting
- Procurement & supply chain
- Tax accounting
- T&E expense management
- Treasury
Other Business Process Outsourcing Experience
In addition to our experience in handling the outsourcing of human resources and finance and accounting functions, our outsourcing lawyers have represented leading companies and institutions around the world in the outsourcing of critical business functions ranging from customer relationship management to procurement, logistics and warehousing operations.
Service Provider Experience
A key factor in the success of any outsourcing initiative is the ability to leverage past experience with, and institutional knowledge of, service providers in the outsourcing industry. Our clients benefit not only from our ability to handle a broad spectrum of issues, but also from our experience with service providers. Our lawyers have negotiated with every top-tier, global BPO and ITO service provider, as well as all of the major offshore providers and many of the specialized or niche service providers.
Working with Consultants
Because of the complexity and scope of sourcing transactions, our clients often work with outside consultants, whether throughout the entire outsourcing process or on a more targeted basis. Issues and deliverables positioned or created by consultants often form the foundation of critical legal documents and negotiating positions, and we believe that a cooperative relationship between outsourcing legal counsel and consultants is a critical success factor in the sourcing process. Our lawyers have extensive experience working with many consulting firms in the outsourcing industry. We have significant experience with the outsourcing methodologies and processes used by consulting firms and are accustomed to drafting and negotiating contract documents to dovetail with the technical and business documents created by consultants. This experience and collaborative approach helps to ensure our clients that their transactions are being handled in the most efficient manner possible.