USA Law and Practice Contributed by: Jeffrey Harvey, Randall Parks, Andrew Geyer and Cecilia Oh, Hunton Andrews Kurth LLP
and data protection provisions, and legal terms of gen - eral application (such as compliance with laws, limita - tions of liability, indemnities, and dispute resolution). The statements of work include detailed statements of services, specific service-level commitments, pricing methodologies and any other terms that are unique to the services. Agreements Covering Multiple Jurisdictions Where multiple jurisdictions are involved, the master agreement typically provides a framework for local country agreements to be entered into between local affiliates. This may take into account payment using local currencies (including associated allocation of currency risk), unique IP or labour provisions, specific compliance issues involving local laws, and any coun - try-specific enforcement requirements. Also, because the markets tend to reward software revenues with higher share price multiples than services revenues, providers continue to shift revenue from services-only agreements to services agreements coupled with separately priced and separately negotiated software licences. 3.2 Alternative Contract Models Multi-Sourcing While highly consolidated “mega” deals (ie, a single contract with a single vendor who provides the full suite of IT services to the customer) are still frequently negotiated, multi-sourcing remains the primary con - tracting model for most customers. Under a multi- sourcing model, customers engage multiple vendors (through individual contracts) to collectively provide the full suite of IT services desired by the customer. The multi-sourcing model permits customers to mix and match “best of” technologies provided by unre - lated vendors in order to achieve a more optimal IT environment. This model is not without problems, however, as successfully integrating products offered by different vendors can be a challenge and more cooks in the kitchen can result in finger-pointing if there is an issue. Shared Service and Global Business Services Models Research also indicates that customers have gen - erally increased their investments in various shared services and global business services (GBS) models.
This trend reflects broader trends in the outsourcing and IT services market, including a collective desire for increased automation (including robotic process automation), standardisation of tools and processes, scalability, and the management of data as a strategic asset. By centralising services in a shared service cen - tre and increasing the variety of those services by cen - tralising into GBS models, customers may more easily adopt and implement these solutions at an enterprise level, rather than on a business-unit-by-business-unit basis. The adoption of hybrid shared services models (ie, those involving a third-party business processor) also continues to increase. This particular trend is down to customers realising that there are certain areas of expertise and technolo - gies that are still better performed by third-party ven - dors who specialise in those areas. Whether adopting a shared services model or a hybrid, contracts govern - ing the provision of services must focus on account - ability, quality of services and outputs. Of course, hybrid models involving third parties involve risks not necessarily present in a purely in-house shared services model, and those risks should be mitigated as they ordinarily would be in a transaction involv - ing a third-party provider. However, the impact of the COVID-19 pandemic on traditional delivery models knocked down many of the barriers associated with shared services and GBS models that previously caused customers to be hesitant in their adoption. Captive Deals While there has been a small handful of captive deals recently, adoption of captives appears to be on the decline. As with shared services models, the decline in the provision of services through captives appears to reflect broader trends in the outsourcing market, including a focus on value-over-cost savings, a reluc - tance to invest in owned IT assets, and policies of the current administration that favour retention and use of onshore resources. The inability to manage growth effectively and provide opportunities for employees within the captive model also continues to negatively impact the adoption of those models for customers. Contracts governing the creation and management of captives are far more complex than typical outsourc - ing arrangements and customers should be made
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