Outsourcing Agreement Template for England and Wales

An Outsourcing Agreement sets out the terms when a business hands over specific tasks or services to another company. It's the key contract that governs everything from IT support and payroll processing to manufacturing and customer service operations, laying out exactly what each party must deliver.

Under English law, these agreements need clear performance standards, data protection commitments, and service levels. They typically include provisions for staff transfers under TUPE regulations, confidentiality safeguards, and detailed exit arrangements to ensure smooth transitions when the contract ends. Good agreements also build in flexibility for changing business needs while protecting both parties' interests.

Use an Outsourcing Agreement when your business needs to delegate core functions to external providers while maintaining control and quality. This applies when outsourcing IT services, customer support operations, manufacturing processes, or back-office functions to specialized vendors in the UK market.

The agreement becomes essential before any service handover begins, particularly when dealing with sensitive data, critical business processes, or situations covered by UK data protection laws. It's crucial for protecting intellectual property, ensuring service levels, and establishing clear accountability. Many businesses implement these agreements when scaling operations or focusing on core competencies while managing costs effectively.

• Software Development Outsourcing Contract: Focuses on technical deliverables, IP rights, and code ownership
• Outsourcing Service Level Agreement: Details performance metrics, response times, and quality standards
• Agreement For Outsourcing Call Center Support: Covers customer service standards, call handling, and data protection
• Hr Outsourcing Contract Agreement: Addresses payroll, recruitment, and HR compliance services
• Outsourcing Contract Agreement: General framework for any business function outsourcing

• Client Organizations: Companies outsourcing their business functions, typically mid to large enterprises seeking specialized services or cost efficiencies
• Service Providers: Specialist companies or contractors delivering outsourced services, from IT firms to call centers
• Legal Teams: In-house counsel and external solicitors who draft and review agreements to ensure compliance with UK regulations
• Project Managers: Oversee implementation and monitor service delivery against agreed standards
• Data Protection Officers: Ensure compliance with UK GDPR when personal data processing is involved
• HR Directors: Handle staff transfers under TUPE regulations and manage workforce implications

• Scope Definition: List all services to be outsourced, including specific deliverables, timelines, and quality standards
• Provider Details: Gather full company information, certifications, and track record of the service provider
• Cost Structure: Document pricing, payment terms, and any performance-linked incentives or penalties
• Service Levels: Define measurable performance metrics, reporting requirements, and review periods
• Data Protection: Map out data flows, security requirements, and GDPR compliance measures
• Exit Strategy: Plan transition arrangements, notice periods, and handover procedures
• TUPE Impact: Assess if staff transfers apply and gather relevant employment details

• Parties and Services: Clear identification of contracting parties and detailed scope of outsourced services
• Service Levels: Specific performance metrics, quality standards, and measurement methods
• Payment Terms: Pricing structure, payment schedules, and any performance-related adjustments
• Data Protection: GDPR compliance measures, data handling procedures, and security requirements
• TUPE Provisions: Staff transfer arrangements and employment protection measures
• Intellectual Property: Ownership rights, licenses, and usage permissions
• Termination Rights: Exit conditions, notice periods, and transition arrangements
• Liability Limits: Risk allocation, indemnities, and insurance requirements

An Outsourcing Agreement differs significantly from an Agency Agreement, though both involve external parties performing services. The key distinctions lie in control, liability, and relationship structure.

• Legal Relationship: Agency Agreements create authority for one party to act on behalf of another, while Outsourcing Agreements establish a vendor-client relationship without representation powers
• Control Level: Agents must follow principal's direct instructions; outsourced providers maintain operational independence within agreed service levels
• Liability Structure: Agents can legally bind their principals to third parties, while outsourcing providers cannot create legal obligations for their clients
• Performance Metrics: Outsourcing focuses on specific deliverables and SLAs, while agency relationships emphasize duty of loyalty and fiduciary obligations
• Risk Management: Outsourcing requires detailed service specifications and data protection provisions; agency focuses on authority limits and third-party dealings