Slaughter and May launches new approach to safeguarding innovation in outsourcing

Slaughter and May this week defined its unique way of tackling innovation in outsourcing contracts at the National Outsourcing Association's Innovation Forum. Using the firm's detailed knowledge of outsourcings across numerous sectors as a frame of reference, Strategic Sourcing associate Hardip Shokar identified four clear and distinct types of outsourcing innovation. Each of the four has evolved as the outsourcing market has matured over the past decade.

According to Slaughter and May, the four 'flavours' of outsourcing innovation are:

  • transformation innovation
  • change innovation
  • incentivised innovation
  • partnership innovation

Hardip revealed how each of the four models represents a different type of relationship between service provider and customer. They all involve a separate and individual balance of commitment, risk-share, certainty of outcome and, crucially, individual contractual approach. Many outsourcings fail to deliver against the desired expectations and hopes for innovation. According to Slaughter and May, all too often contracts do not facilitate innovation - and sometimes they actively hinder or prevent it. Recognising this as a major problem, the firm has now developed a new approach to enable innovation across all outsourcing contracts.

Hardip Shokar said:

"In our experience good contracts don't stifle innovation, they facilitate it. But the issue is that there are just too few of them, which means that poorly conceived or ill-thought through commercial structuring has sadly become the norm. This new contract approach has been designed to enable the outsourcing industry - both service providers and customers - to consider, understand and agree their true appetite for innovation, together with the associated costs and risks. Our hope is that this new thinking will enable contract lawyers to produce contracts that facilitate the necessary level of innovation across all major outsourcings."

The National Outsourcing Association's Innovation Forum was held at Slaughter and May's London office on 18 March 2015. In addition to Hardip's presentation, delegates enjoyed talks from a diverse range of speakers from the BBC, Zurich and Criminal Justice.

In November last year, Slaughter and May won the prestigious Outsourcing Advisory of the Year prize at the National Outsourcing Association Awards. This is the second time that the firm has won this award, following an initial win in 2007 and it is the only recipient to receive it twice.