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Gold/Mining/Energy : CGI Group (GIB.A) -
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To: waitwatchwander who wrote (773)10/14/1998 9:42:00 AM
From: Sili Investor  Read Replies (1) of 1673
 
Usually, the flab is identified BEFORE the contract is signed. From my understanding, the flab is where the outsourcer can make its margin, it identifies the flab, cuts all of it out and returns only a portion of the flab savings to the client.

However, I would agree that if there are surprises after the contract is signed, then the outsourcer could be at risk. Even then, however, the outsourcer should have clauses for such surprise occurences. Rarely would you have a contract where its an "all or nothing" approach.

Remember, the outsourcing contract represents a long term partnership between the outsourcer and the client. It is not in the client's best interest to have the outsourcer losing money since the first reaction to that is a lowering of service levels.

That's all in my opinion ofcourse!

Sili
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