How to Protect Your Business: Legal Tips for Contracting a BPO Service


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Outsourcing has evolved into a crucial business initiative as the globalization of the economy continues. Delegating commercial operations to a service provider, frequently one based overseas, is known as outsourcing. Due to its competent labor and economic benefits, the Philippines has become a well-liked outsourcing location. Many business owners worldwide are concerned about the legal implications of outsourcing to the Philippines, especially regarding employment and data privacy regulations.


For businesses desiring to simplify processes, cut expenses, and concentrate on core strengths, business process outsourcing (BPO) services have grown to be a common choice. BPO has several advantages, but it’s important to take into account any potential legal repercussions and difficulties.

Essential Legal Considerations when Contracting a BPO Service

Data Protection and Privacy

A business owner can manage data safety and privacy issues by defining the steps the service provider must take to secure confidential data and adhere to applicable laws and regulations. Consider BPO companies that address data handling practices, data backup and recovery, data breach confirmation, and the restitution or deletion of records upon the end of the contract.


With data breaches becoming increasingly common, ensure your BPO provider complies with data protection regulations relevant to your region. The contract should stipulate who is responsible for data breaches and the associated liabilities.


Service Levels and Performance Metrics

Any effective corporate cooperation must first define the performance criteria, measurements, and benchmarking that will be employed to assess the services provider’s productivity. Standards for responses and settlement times, quality standards, access, and other pertinent factors may be included in SLAs. Make sure that the fines or service credits that will be applied if SLAs are not met are clearly specified.


Moreover, clearly define the service level agreements (SLAs) and key performance indicators (KPIs). These metrics will govern the expected performance and quality of service.

Consider penalties or rewards for meeting or failing to meet these metrics.


Intellectual Property

If the BPO involves processes or technologies that your company has developed, ensure the contract protects your intellectual property rights. Address concerns about copyright, trademarks, and patents. Even though it is frequently ignored in business process outsourcing agreements, intellectual property might result in legal problems if it is not handled. Your agreement should expressly state who will own and be responsible for protecting any intellectual property (IP) rights associated with the outsourced services. 


Define who will own the new IP generated over the term of the contract, who will own the current IP, and how any shared or collaboratively developed IP will be managed. It’s also advised to add clauses limiting how the service provider may utilize client data and safeguard sensitive information.


Termination Clauses

It’s crucial to establish clear criteria and procedures for contract termination. This includes breach of contract, underperformance, or other unforeseen circumstances. Determine notice periods and potential penalties or costs associated with early termination.


Beginning and finish dates are another significant component of any outsourcing contract. Include terms that address contract renewal, termination, and the circumstances under which either party may end the agreement. The procedure for returning services to the firm or shifting them to a different provider should also be covered in this section, along with any notice periods that are necessary for termination.



The BPO provider will likely have access to sensitive company information. Ensure there is a robust confidentiality clause in the contract, along with non-disclosure agreements (NDAs).

The Confidential corporate company data and intellectual property are safeguarded by confidentiality clauses in BPO agreements. Make careful to specify what material falls under the category of “confidential,” as well as any exceptions or restrictions to the confidentiality rules.


Regulatory and Compliance Issues

If your industry has specific regulations, ensure the BPO provider can comply. It’s also crucial that the provider is aware of and complies with local labor laws and standards. Guarantee that the agreement specifies how to adhere to every rule, rule, and law in effect. Data security, labor regulations, security credentials, and any other pertinent legal or regulatory requirements may fall under this category.


Dispute Resolution

It’s a good practice to outline a process for handling disputes. This could include negotiations, mediation, or arbitration, before resorting to litigation.


Using objective standards that both sides can agree on is one technique to settle conflicts and disagreements in a BPO project. Objective criteria, such as industry best practices, contractual provisions, or market pricing, are standards or benchmarks that are not influenced by your beliefs or preferences. You may avoid emotional arguments and subjective considerations by using objective standards, which will strengthen and more fairly present your case. For instance, you might cite the contract or the going rate to support your demand for a lower price if your vendor is billing you more than what was agreed upon.


Employee and Talent Concerns

If employees from your company are transitioning to the BPO provider, understand the legal and ethical obligations, including any severance packages, continuity in terms of employment, and pensions.


Clarify the process for training and upskilling the BPO provider’s employees as well. Keep in mind that happy employees are good for business. Job satisfaction is increased and employee turnover is decreased through sound HR practices and perks. In addition, check the action plan of the HR department on upskilling employees to become ready for company changes. HR must address additional workplace issues if it wants to keep workers happy. Problems with the workplace infrastructure or dispute resolution are examples of this.


Governing Law and Jurisdiction

Specify which country’s or state’s laws will govern the contract. This becomes especially relevant when dealing with international BPO providers. A  choice of law and venue rules specify which jurisdiction’s laws will apply to any problems that could develop under the agreement and where such disputes would be resolved.


When deciding on a jurisdiction for governing law, keep in mind that the chosen laws will handle disagreements over the execution of the contract as well as the interpretation of its terms. The location picked determines where any required legal action will take place.


The disclosing party, generally the company requesting the NDA, will normally specify the applicable state or jurisdiction legislation as the controlling law and the venue for the agreement as its local court system. Usually, the same jurisdiction is used for both venue and choice of law. 

Why Outsourcing to the Philippines Is Legal and Why You Don't Need to Be Concerned About the Legal Aspects

The Philippine government together with its governing departments and agencies, play a key role in promoting and enabling the outsourcing business in the country. They provide pros including tax credits, the ability to import machinery free of charge, and streamlined import-export processes. Moreover, the government is committed to sustaining the Philippines’ distinctive advantage in outsourcing as seen by its ongoing investments in infrastructure and education, as well as by its strong emphasis on developing technical skills and digital literacy.


By using a recognized supplier like Splace to outsource to the Philippines, all legal issues are taken care of. To guarantee that they are in compliance with all legal requirements and lessen the possibility of legal disputes or fines, Splace has legal professionals who are knowledgeable about Philippine labor laws and data protection rules. With these, your business and its goals are in the right places. 


Splace Contracts for outsourcing present entrepreneurs and employees with more security. These contracts outline each party’s obligations, including observing labor laws and data protection rules. They also offer legal remedies in the event of disagreements or contract violations.


We call you to engage in a significant move for your company. Your dreams for success are protected at Splace!


SPLACE is a dynamic and innovative business process outsourcing company that offers a wide range of outsourcing services to businesses worldwide. With a focus on delivering high-quality solutions, virtual assistance, IT solutions, and exceptional customer service, SPLACE has established the company as a trusted outsourcing and call center service provider to companies across various industries. 


SPLACE comprises experienced professionals who deliver customized and cost-effective solutions to meet every client’s business needs. The company believes in the power of technology and innovation to drive growth and success, and its main focus is helping clients succeed in an ever-changing business landscape. 


Clients looking for support in data management, customer service, virtual assistance, technical support, or any other outsourcing need can seek help from the SPLACE BPO firm.

If you are interested in Splace’s Business Process Outsourcing Solutions,

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