ABSTRACT
Source: Reproduced with kind permission of Pinsent Masons This is the ‘classic’ outsourcing arrangement to a single Service Provider. The customer enters into a Services Agreement with the Service Provider under which Service Provider provides services for a fee. Any of the customer’s employees who are assigned to provide the services outsourced will transfer under TUPE. The fee structure may include an element of risk/reward, for example a share of any cost savings realized or penalties for failure to meet agreed service levels. The advantage of an arrangement with a single Service Provider is straightforward, arm's length and well understood. There is a single managerial interface and a single point of responsibility. Disadvantages include dependence on a single source which may expose the customer to loss, for example, if the Service Provider becomes insolvent. Further, while this structure was most used for the earliest outsourcing contracts for simple services such as cleaning and security, in the case of more complex HRO, the Service Provider may not have the internal competence or resources to manage the complexities and cover all the customer's requirements.
