Legal Issues in Outsourcing

Legal
Legal Issues in Outsourcing
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11/14/2011
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I. Introduction
With the recent development of the service outsourcing industry, an increasing number of organizations (including banks, securities companies, insurance companies and fund management companies) use service outsourcing to reduce costs, enhance core competitiveness, and accomplish strategic goals. These organizations are able to benefit significantly from IT/BPO/KPO outsourcing, which are important part of financial service outsourcing. At the same time, they must also confront the managing risks that associate with outsourcing.
Any organization must be aware of the intellectual property protection, the data privacy and protection in the country where outsourcing is being done. Before outsourcing they should also make sure that they know about compliance with applicable country laws, enforcing contractual/legal rights and dispute resolution procedures.
II. Status of the problem/ International and national
While outsourcing many companies forgets that the rules of governance are different in different countries. In outsourcing, they forget to make sure to include two different legal systems. This heterogeneity in the legal system is an important legal issue with outsourcing that companies have to deal with. This problem exists, because there is no legal system which can be used globally. Different countries even have different intellectual property laws. Since there are no standard legal rules and regulations to follow, often the standard practice is to meet the outsourcing provider and make sure that everyone adheres to both the legal systems.
Outsourcing arrangements often involve the processing of large volumes of personal information about a company’s customers or employees. In many cases, this information includes sensitive information, such as financial data, medical data, payroll and benefits information, social security numbers and... [continues]

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