An outsourcing arrangement, whether for application development, application support, or data center operations, is a significant and long-term commitment for any enterprise. A contract is a necessary mechanism for reaching agreement on mutual expectations for the deal. As the arrangement proceeds and organizational memories fade, the contract is the only enforceable record of what the parties agreed to at the beginning.

Outsourcers have standard contract terms that they propose to potential clients. While outsourcers naturally look out for their best interests, standard terms generally reflect good practice. However, it is essential that the enterprise understands the contract terms proposed, confirms that they address specific needs and expectations, and negotiates to enhance them where appropriate.