And a little more about offshore contracts.
Ensure that the contract you enter into is custom made for your enterprise. You can customize a basic contract made by your lawyer according to your needs and expectations.
Although each individual offshore contract differs with regard to the type of work to be done, its length and the budget, there are certain features that could be included in any contract.
First, of course, there are the fees. In the initial development phase decide whether the price fixed is based on the relevant specifications and proposal or whether it would be hourly payments for x amount of employees. Determine what time will be billed for services and see that you, as the client, will be able at any time to question the hours billed for services. Any reimbursements to be made by the outsourcer would be those originally decided upon in writing.
Also consider the response time. A set time, such as 48 business hours, should be fixed for responses by both, the client and the outsourcing party in the offshore contract. Responses include any development clarifications and status updates from the vendor’s side and feedbacks, clarifications, approvals or disapprovals from the client. An estimated date for the completion of the project must also be set by the provider.
The offshore contract must also have a detailed and accurate description of the services expected from the provider. This would include techniques, tools used, and timely and detailed progress updates.
The outsourcing client must in turn provide and maintain his own production system and make all up to date developed software modules and documentation related to the project available to the provider.
Also included in the offshore contract must be skill requirements, holiday schedules, the ability of the vendor’s employees to speak English, and details of any third party contracts.

Sometimes companies in a hurry to start their outsourcing go ahead without completing the tedious and time consuming task of drawing up a contract first. They very often sketch a memorandum of intent at face value.

Although such a document may help to generally establish what both of the concerned parties are expecting of each other an actual legal contract is what one really needs to have. No matter how much an outsourcer would like to regard the vendor as a partner rather than an employee and no matter how bright the prospects for a future relationship may be an original contract will help to establish the relationship with its parameters more firmly.

Besides this, you might ultimately wind up spending as much time and effort preparing your memorandum as you would have drawing up an actual agreement!

A contract will be more specific on the finer points, will be interpreted more accurately by various executives and will help to strengthen the client-vendor liaison.

It will allow both, the vendor as well as the client to have a clear picture of what the hazards, returns and the benefits may be for them and for each other, which will make the relationship more transparent and more workable.

A balanced and flexible contract will withstand any foreseeable changes that are bound to occur in technology and the marketplace during the tenure of an outsource and will form an excellent foundation upon which to develop a robust and prolonged outsource relationship.
Both parties must also be prepared for the eventuality of disengagement. An informal memorandum will in all possibility not include the terms for disengaging whereas a legal contract will, thus saving each party a lot of time in court and a lot of money should such a situation arise.