There can be little doubt that outsourcing is becoming more and more popular as a solution to cutting costs and allowing enterprises to focus on their core business. But the sector is also subject to a minefield of financial regulation and other legal parameters, as well as complex contract negotiations. It is, the panellists agreed, not a commitment that should be entered into lightly. “You cannot outsource just because it is fashionable,” warned Emmanuel Vaerman, manager with Tata Consultancy Services. “You have to outsource for the right reasons, and make sure it has its place in the context of the company,” added Pascal Lanser, director of IBM Luxembourg.

Hosted in the exhibition space of advertising agency Mikado, the round table was chaired by Guy Kerger, managing partner at Mindforest. The panel, which also included Eduoard Delosch, counsel at Linklaters LLP, addressed a wide range of subjects including the delicate matter of the sharing of knowledge and strategy. “If a project is to be successful the service provider must be allowed to take charge; there has to be a sharing of knowledge,” said Vaerman. “Outsourcing contracts are not short term. They are for periods of between five and ten years. We can’t predict the future, so it is important that strategy is discussed regularly so that appropriate models can be adapted,” said Lanser.

Contract flexibility

The sector has opened up through recent regulation, according to Eduoard Delosch. “Control has to be in place and new standards have been set. Outsourcers have to be in full compliance with all aspects, even if they are sometime contradictory.” He cited banking secrecy and data protection laws as well as the European MiFID directive as all playing an important role in outsourcing for the financial sector. Of course, now outsourcing service providers have PSF certification which aids with many aspects of compliance.   “But local labour law must also be taken into account if there is a transfer of people,” he added. “And then there are also questions of domiciliation.”

Contract negotiation, especially in the current economic climate, is also an important factor. Delosch argued that flexibility is key, but also said that clear objectives must be fixed – including a pricing structure agreement. But Lanser countered that the mitigation of risk cannot be sacrificed for flexibility. “We have to measure the risk when changing a model, and that takes time. There has to be some demystifying of flexibility in this context.”

See the video interview with Eduoard Delosch HERE

See the video interview with Emmanuel Vaerman HERE

See the video interview with Pascal Lanser HERE