Overview of Legal Structures for Outsourcing
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1 1403992.1 OVERVIEW OF LEGAL STRUCTURES FOR OUTSOURCING January 20, 2004 Fred Greguras Fenwick & West LLP
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By Fred Greguras
Transcript of Overview of Legal Structures for Outsourcing
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1403992.1
OVERVIEW OF LEGAL STRUCTURES FOR
OUTSOURCING
January 20, 2004
Fred GregurasFenwick & West LLP
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MAJOR LEGAL STRUCTURES
Contract for services with an independent entityBuild, operate and transferContract for services with a controlled subsidiary
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DELIVERY MODELSMAY IMPACT LEGAL STRUCTURE
On-site
Off-site
Off-shore
Domestic
Global
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
ServiceProvider Customer
Agreement
Services
Payment
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
U.S. corporation/foreign parent
Master agreement/single engagement
Independent contractor relationship
Performance requirementsProject with fixed price (“spec”)Time and materialsSLA
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY (CONT’D)
Use of employees or contractors
ConfidentialitySubsidiary issue
Assignment of Intellectual PropertyMoral rights
Governing Law
Dispute Resolution
Tax Considerations
Registration requirements
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY (CONT’D)
Time to Implement
Cost
Risk
Intellectual PropertyBusinessCrimePrivacy
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
DEDICATED OPERATION STRUCTURE
ServiceProvider Customer
Agreement
Services
PaymentDedicatedOperation
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
DEDICATED OPERATION STRUCTURE (CONT’D)
Independent contractor
Separate/virtual facility
T&M pricing/cost plus pricing
Performance requirements
Use of employees or contractors
Confidentiality
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
DEDICATED OPERATION STRUCTURE (CONT’D)
Assignment of Intellectual PropertyMoral rights
Governing law
Dispute resolution
Tax considerations
Registration requirements
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CONTRACT FOR SERVICES WITH AN INDEPENDENT ENTITY
DEDICATED OPERATION STRUCTURE (CONT’D)
Time to implement
Cost
RiskIntellectual PropertyBusinessCrimePrivacy
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BUILD/OPERATE/TRANSFER STRUCTURE
ServiceProvider Customer
Services
PaymentDedicatedOperation
Option
Agreement
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BUILD/OPERATE/TRANSFER STRUCTURE (CONT’D)
Independent contractor
Virtual team with option to transfer team and possibly facility at a specified cost
T&M pricing/cost plus pricing
Option pricing
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BUILD/OPERATE/TRANSFER STRUCTURE(CONT’D)
Performance requirements
Use of employees or contractors
Confidentiality
Assignment of Intellectual PropertyMoral rights
Governing law
Dispute resolution
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BUILD/OPERATE/TRANSFER STRUCTURE (CONT’D)
Tax Considerations
Registration requirements
Time to implement
Cost
RiskIntellectual PropertyBusinessCrimePrivacy
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CONTRACT FOR SERVICES WITH A CONTROLLED SUBSIDIARY
ServiceProvider
(Subsidiary)
Customer(Parent)
Agreement
Services
PaymentControllingShareholder
(Parent)
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CONTRACT FOR SERVICES WITH A CONTROLLED SUBSIDIARY (CONT’D)
Control
Usually a general services agreement rather than project oriented
Arms length contractual terms
Cost plus pricing (transfer pricing)
Performance requirements
Use of employees or contractors
Confidentiality
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CONTRACT FOR SERVICES WITH A CONTROLLED SUBSIDIARY (CONT’D)
Assignment of Intellectual PropertyMoral Rights
Governing law
Dispute resolution
Other tax considerations
Registration requirements
Time to implement
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CONTRACT FOR SERVICES WITH A CONTROLLED SUBSIDIARY (CONT’D)
Cost
RiskIntellectual PropertyBusinessCrimePrivacy
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SUMMARY
Blocking and tackling usually with an international twist
Vendor’s track record
Intellectual property comes in many forms
