Fight or Flight

Many contracts include "change of control" provisions that release customers if an acquisition occurs. The question is whether to move away from the original provider. While some conditions are untenable -- like a defense contractor working with a U.S.-based outsourcer that gets acquired by an Indian firm -- it's often more beneficial to make the transition, says A.B. Maynard, president of Agilocity Consulting in Berwyn, Pa. "From a contract perspective, you want maximum flexibility," he says. "But you have to look at what you want to do from a practical standpoint."

For instance, there's often a fee involved for contract termination, even when change-of-control provisions exist, and switching suppliers can cause months of business disruption, says Paul Roehrig, an analyst at Forrester Research.

If you decide to walk away, it's likely that the vendor will help you with the handoff, says Dan Scheuble, president of the mortgage division at Fidelity National Information Services. "The market is small and getting smaller, so it's to the provider's benefit to make the conversion very smooth," he says. "Half a dozen times, we've seen customers circle back to us, and they remember we took care of them."

Copyright © 2006 IDG Communications, Inc.

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