Outsourcing highlights 2017
2 Outsourcing highlights 2017 Choosing Allen & Overy A global market leader Our international outsourcing practice has established itself as a market leader, advising on the full range of outsourcing projects ranging from negotiating major new outsourcing contracts through to renegotiations as agreements start to expire, as well as finessing existing deals to drive down costs. We also advise clients on how to structure a tender process to most effectively utilise the various procurement models, as well as on how to prepare a winning tender response. The team marshals the firm s impressive resources in regulatory and financial services law together with market-leading expertise in complex outsourcing arrangements. Recently advised on the outsourcing of HR, funds management, IT and telecommunications infrastructure services. Chambers UK 2017, Outsourcing Our experience to meet your needs OUR OUTSOURCING EXPERTISE Cloud Procurement Termination of agreements & exits IT & communications Funds administration Facilty Management & logistics Allen & Overy LLP 2017
3 We act for both leading suppliers and corporate customers and have a good understanding of the commercial requirements and priorities of both parties, as well as knowledge of the latest outsourcing trends. With an integrated global team combining expertise in commercial contracts, IP/IT, employment and benefits, tax, antitrust, corporate finance and regulation, we are at the forefront of current practice, and drawing on this expertise, can help create innovative outsourcing solutions. We also have a first class team of litigators with extensive experience in outsourcing disputes across all the major industry sectors. We work closely with clients and industry experts to develop market-leading strategies that address key concerns in the outsourcing process, including in relation to service levels, benchmarking, human resources, relationship management, liability, business continuity planning and exit management. We also regularly provide training workshops for clients on many of the hot topics in the industry. Finance & accounting Clinical trial services Asset & cash management Human resources WHAT WE CAN ASSIST YOU WITH shortlisting and selecting suppliers negotiating contracts risk assessment exits multi-jurisdictional projects projects including cloud services We have in-depths experience acting for both leading suppliers and corporate customers alike.
4 Outsourcing highlights 2017 Industry expertise Sector areas Financial institutions Retail & consumer Telecoms, media & technology Practice areas Litigation Corporate finance Antitrust This international firm has a strong client base in the financial and banking sectors, regularly advising multinational corporations in significant and cross-jurisdictional outsourcing projects. The firm displays a prominent presence in the UK, with additional experience in Europe and Asia. I m pleased to give an endorsement for Allen & Overy as our counsel on major strategic contracts. They are flexible, have good working relations, and are decent people to deal with. Chambers UK, Outsourcing (quotes from clients) Chambers Global 2017, Outsourcing Allen & Overy LLP 2017
5 Life sciences Infrastructure & transport Industrials & manufacturing Hotels & leisure Commercial Employment Tax Pensions
6 Outsourcing highlights 2017 Case study 1: IT Services functions outsourcing Brief We advised a leading technology services company, as supplier, on a large scale outsourcing of IT services functions undertaken by a FTSE-100 company. The value of the transaction was significant, with anticipated charges over the seven year life of the deal of approximately GBP500m. ISSUES ARISING AND ADVICE GIVEN We advised principally on commercial aspects relating to the outsourcing and supported both the senior in-house lawyer and the business team on negotiations with the customer. The customer had already outsourced the provision of certain other services to the supplier. However, the supplier was keen to improve the terms negotiated under its earlier deal with the customer, which was justified based on the increased scope of services and the commercial deal struck. We supported the client in seeking to improve its position during the negotiation process, which was strongly resisted by the customer. The transaction involved a significant amount of due diligence. A substantial number of existing vendor contracts were transferred to the supplier. We provided support on the review of these contracts, ensuring that liabilities assumed for managing contracts, or novation of contracts, were known and appropriately limited. There were unique financing aspects to the deal. The supplier had agreed to make a substantial sales incentive payment to the customer, which was of sufficient size to justify it taking security to ensure that amount was repaid in certain circumstances (e.g. termination or an insolvency of the customer). Our banking department assisted with advice on the provision of a letter of credit by the customer s bank. HOW WE ADDED VALUE The deal was negotiated and signed in an extremely tight timeframe given the deal s size and complexity; less than two months. There was a hard deadline which was driven by financial issues. We were able to provide scaleable resources to enable the client to meet that timeframe. We supported the negotiation of improvements to the supplier s starting position in negotiation, both by careful presentation of proposed changes and also particularly by contributing our experience of market practice to those negotiations. We were well placed to advise on this transaction, particularly given the importance of the financing aspects of the transaction, which were supported by our market leading finance practice. Allen & Overy LLP 2017
7 Case study 2: Managed network services outsourcing Brief We are advising a global bank in relation to a long-term (10yr) outsourcing of global technology, telecom and network products and services (including voice services, video services, data services, security services and service desk), across 47 jurisdictions. The purpose of the outsourcing is to establish a consistent, standardised, and integrated global technology service model across the Bank s global technology services network and to create increased operating efficiencies across the Bank s technology services. ISSUES ARISING AND ADVICE GIVEN We advised on amendments to an existing agreement between the Bank and the supplier, relating to the provision of services in the US, to make the agreement work as a global master agreement for the provision of services in other countries. This involved creating a framework for the execution of short form country-specific agreements. We used our experience of the laws and regulations applicable to financial institutions across the globe to build into the master agreement, to the extent not already addressed, provisions commonly required by local laws and local regulators, such as provisions relating to compliance with laws, record keeping, audits, data protection, security, confidentiality, business continuity, and many other key provisions. We provided (through our local offices) or obtained (from external law firms) advice on local regulatory requirements in each jurisdiction, including regulations relating to outsourcing of services, bank secrecy and data protection. HOW WE ADDED VALUE The transaction involved obtaining advice from 19 Allen & Overy offices and over 25 third party law firms, all coordinated by Allen & Overy. Allen & Overy lawyers in London, Hong Kong and New York coordinated the advice in their respective regions. Overall project management responsibility at Allen & Overy was centralised in London. We have strong relationships with regulators and have been closely involved in dealing with the impact of local regulatory requirements on the global agreement between the parties, as well as requirements in relation to notification to, consultation with, and obtaining approvals from, regulators (both financial and data protection specific). We have extensive experience of acting for financial institutions on outsourcing transactions. This enabled us to anticipate many of the banking regulatory and data protection issues likely to arise across different jurisdictions, enabling us to address them at an earlier stage, improving efficiency. Clients appreciate the team s ability to quickly understand complex commercial situations and come up with solutions that are practical. Chambers UK 2017, Outsourcing
8 Outsourcing highlights 2017 Case study 3: Multi services and Facilities Management outsourcing Brief We advised a major financial institution on a multi services and facilities management outsourcing. The primary purpose of the transaction was to optimise the management of the client s premises, which were until this transaction managed by a substantial number of suppliers. The other purposes were to harmonise and centralise the management of the Group facilities and enhance cost efficiency. ISSUES ARISING AND ADVICE GIVEN The main challenge was moving from multiple providers to one provider whilst ensuring that there was no negative impact on the provision of their services, primarily ensuring that its regulatory obligations as a financial institution were not affected. The transaction raised important employment law issues, in particular with regard to TUPE regulation, which we provided specialist advice for and guided the client through. The project will be extended into multiple jurisdictions and therefore the documents and deal structure needed to sufficiently flexible to allow for this country by country expansion. Allen & Overy was closely involved in advising on the most appropriate structure for this deal model. The impact of the regulatory requirements had to be considered and reflected during each stage of negotiations in the global agreement. The Customer wanted clear responses from the Supplier in respect of the customer s personnel. Allen & Overy negotiated a right for the Customer to conduct internal surveys regarding whether its personnel were satisfied with the standards of the service e.g. catering or cleaning with a corresponding obligation on the Supplier to respond by improving the service where needed. Security was a key issue in the Services. Attention was focussed on ensuring that the supplier was very aware of its obligations relating to access to premises for their personnel along with ensuring there was no unauthorised third party access, particularly to sensitive areas such as trading floors. Due to the type of services being provided, a high turn over of supplier personnel is often experienced. Extensive provisions were included in the document in order to reduce this risk as far as possible and put the cost/impact of this turn over onto the supplier. HOW WE ADDED VALUE Our strong point in this outsourcing was that there were significant issues arising from the transaction in other fields notably employment, regulation and tax. We liaised closely with our specialist colleagues on these issues to ensure that all these issues were addressed in a consistent manner. Highly respected team with a long history of assisting financial institutions, multinational corporations and governmental bodies in sophisticated international outsourcing transactions. Chambers UK 2015, outsourcing Allen & Overy LLP 2017
9 Case study 4: Business Process Outsourcing (BPO) Brief We advised TNT Express, one of the world s largest delivery companies and active in more than 200 countries, on the outsourcing of its global activities related to finance & accounting, procurement and data entry to Accenture. ISSUES ARISING AND ADVICE GIVEN The BPO was set up as a competitive auction, with simultaneous negotiations and competition between multiple suppliers right until signing. The contract between reflects a central model, with local-to-local service agreements only when required by mandatory law or for tax or accounting reasons. Multi-jurisdictional works council processes were addressed by a signing protocol. HOW WE ADDED VALUE The transaction was led centrally from Amsterdam by a joint TNT Express and Allen & Overy core team who worked together with colleagues in the other jurisdictions. Not only did we draft all the documentation but we also negotiated all aspects of the project and were insrumental in crafting the team. This approach allowed us to establish a strong partnership with TNT Express. In the end we succeeded in delivering the deal within budget and a very small window (6 months). Market-leading practice advising on impressive mandates across TMT. Noted strength in cross-border transactions and contentious issues. (Chambers Europe 2015, TMT Netherlands)
10 Outsourcing highlights 2017 Credentials An international payment processing company on its engagement of Endava to establish and operate a software development centre in Romania dedicated to providing software development services in return. Our role included advising in the negotiation of the build and operate agreement for the services to be provided by the newly established entity, and the option and transfer agreement under which the company has the option to buy 100% of the shares in the newly established entity. A Middle Eastern oil company on a supply chain IT transaction involving IBM, SAP and/or BravoSolution. A global management consulting, technology services and outsourcing company on the implementation of a softwareas-a-service (SaaS) platform for a multinational company in the manufacturing sector for its mobility services offer. One of the world s largest delivery companies active in more than 200 countries, on the outsourcing of activities related to finance & accounting, procurement and data entry to Accenture. A leading payment services provider on the development of two new services the processing of Cash ISA Transfers and Account Switching, including the agreement between the client and participants in those services/schemes and the agreement between client and VocaLink to develop and run the infrastructure. A leading consultancy, technology and outsourcing company on the negotiation of an outsourced service agreement with a global communications and information technology company. The communications company is seeking to outsource the application development and application maintenance of five key business units, along with the transfer of a substantial number of employees. Advice spans from pre-rfp stage through to final contract negotiation. One of the world s largest players in the healthcare industry on drafting and negotiating a major cross-border facility management outsourcing project with Sodexho, through which it centralises its European facility management service providers. A global information services company with operations in more than 40 countries (Europe, North America, Asia Pacific and Latin America), on the negotiation of a global IT infrastructure outsourcing transaction with SAP. Under the agreement, our client procured software and related services on a worldwide basis from SAP. A major US-based global bank on the North Carolina-law governed global outsourcing to Hewlett-Packard of certain technology, telecom and network services. This transaction covers more than 45 jurisdictions and is a major, high value transaction for the bank. A financial institution on the termination of an outsourcing agreement, as well as the appointment of a new servicer, in relation to a multi-billion pound portfolio of equity release mortgages acquired. A global bank on a landmark funds administration agreement. A global bank on restructuring its captive data centre and call centre facilities in China and putting in place new service agreements with the group companies. A global IT services and consulting company on a contract to provide global data centre and SAP infrastructure services and on their winning bid for the outsourcing by a German energy supplier of telecommunications activities worldwide. A global management consulting, technology services and outsourcing company on several national and crossborder outsourcings, business process outsourcings (BPO) and IT outsourcings. A government run financial institution on the provision of loan administration services following the transfer of certain loan portfolios to the client and, in particular, advising in relation to the amendment and restatement of the existing terms and conditions of the services. A large U.S.-based financial institution in connection with their largest ever long-term outsourcing of global technology, telecom and network products and services. The transaction spanned 47 jurisdictions. A leading distributor of consumer goods on its RFP processes and contracts with SAP, KPMG Consulting and CSC for the supply and integration of ERP and CRM systems for its international distribution network. A leading research-based pharmaceutical company on the outsourcing of analytical development services with a global leader in the testing, inspection and certification of products and on an agreement with a Dutch-based carrier-neutral co-location space, hosting and managed services provider. A global leader in the energy sector on the outsourcing of its global IT functions. A leading financial services firm on the provision of outsourced international cash management services from Asia to other banks in the UK, Germany, the Netherlands and South Africa. A leading motor oil brand on the outsourcing of its technology and engineering functions, involving more than 50 jurisdictions. A leading pharmaceutical company on the gradual exit of a EUR700m global outsourcing agreement and on the parallel tender for a replacement agreement. Allen & Overy LLP 2017
11 OUR TEAM Asia Belgium France Germany Luxembourg Will McAuliffe Filip Van Elsen Laurie-Anne Ancenys Jens Matthes Gary Cywie Tel +852 2974 7119 Tel +32 3 287 7327 Counsel Tel +33 1 40 06 53 42 Tel +49 211 2806 7121 laurie-anne.ancenys@ jens.matthes@ gary.cywie@ Jim Ford Tom Levine Nigel Parker tom.levine@ nigel.parker@ will.mcauliffe@ filip.vanelsen@ Netherlands UK Herald Jongen Jane Finlayson-Brown herald.jongen@ Tel +44 20 3088 4797 jane.finlayson-brown@ jim.ford@ Tel +31 20 674 1614 Tel +44 20 3088 3384 Tel +44 20 3088 3114 Counsel Tel +352 44 44 5 5203 Tel +44 20 3088 3136 U.S. Peter Harwich Tel +1 212 610 6471 peter.harwich@
GLOBAL PRESENCE Allen & Overy is an international legal practice with approximately 5,400 people, including some 554 partners, working in 44 offices worldwide. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi Amsterdam Bucharest (associated office) Budapest Ho Chi Minh City Hong Kong Moscow Munich Seoul Shanghai Antwerp Casablanca Istanbul New York Singapore Bangkok Barcelona Doha Dubai Jakarta (associated office) Johannesburg Paris Perth Sydney Tokyo Beijing Düsseldorf London Prague Warsaw Belfast Bratislava Frankfurt Hamburg Luxembourg Madrid Riyadh (cooperation office) Rome Washington, D.C. Yangon Brussels Hanoi Milan São Paulo Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP s affiliated undertakings. Allen & Overy LLP 2017 CS1510_CDD-43392_ADD-69343