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An Outsourcing Agreement sets out the terms when one company hires another to handle specific business functions or services. In Malaysia, these contracts typically cover IT services, customer support, manufacturing, or back-office operations, following Bank Negara Malaysia's guidelines for regulated industries.

The agreement spells out key details like service standards, data protection requirements under PDPA 2010, payment terms, and confidentiality obligations. It also includes important safeguards for both parties, such as performance metrics, dispute resolution methods, and clear procedures for ending the relationship - essential protections in Malaysia's business landscape.

Consider an Outsourcing Agreement when your company needs to delegate specialized tasks like IT support, manufacturing, or customer service to external providers in Malaysia. This becomes especially important when handling sensitive data or critical business functions that require clear accountability and protection under Malaysian law.

The agreement proves essential before starting any significant outsourcing relationship, particularly in regulated sectors where Bank Negara Malaysia's guidelines apply. It helps prevent disputes by establishing clear performance standards, protecting confidential information, and ensuring compliance with local regulations like the PDPA 2010 and employment laws.

• Outsourcing Contract Agreement: Master agreement covering broad business functions like IT or manufacturing, with comprehensive service levels and compliance requirements
• Outsourced Employee Contract: Focuses on individual staff placement terms, including workplace rights and supervision structure
• Employee Outsourcing Agreement: Deals with workforce management services, addressing liability and employment obligations
• Recruitment Process Outsourcing Contract: Specialized agreement for delegating talent acquisition functions, including hiring metrics and recruitment standards

• Service Providers: Companies offering specialized services who sign Outsourcing Agreements to deliver IT, manufacturing, or business process solutions under Malaysian law
• Client Organizations: Businesses seeking to outsource operations while maintaining quality control and regulatory compliance, especially in sectors overseen by Bank Negara Malaysia
• Legal Teams: In-house counsel or external law firms drafting and reviewing agreements to ensure PDPA compliance and risk management
• Project Managers: Oversee implementation and monitor service levels outlined in the agreement
• Compliance Officers: Ensure adherence to data protection, employment laws, and industry-specific regulations

• Scope Definition: List all services, deliverables, and performance metrics that will be outsourced
• Provider Assessment: Gather detailed information about the service provider's capabilities, track record, and compliance with Malaysian regulations
• Data Protection: Document how sensitive information will be handled in compliance with PDPA 2010
• Service Levels: Define specific performance standards, reporting requirements, and quality metrics
• Risk Management: Outline contingency plans, liability limits, and dispute resolution procedures
• Cost Structure: Detail payment terms, pricing models, and any performance-linked incentives
• Exit Strategy: Plan transition arrangements and termination conditions

• Service Definition: Detailed scope of outsourced activities, deliverables, and performance standards
• Data Protection Clauses: PDPA 2010 compliance requirements, confidentiality obligations, and data handling procedures
• Service Levels: Specific KPIs, quality metrics, and reporting requirements
• Payment Terms: Fee structure, payment schedule, and currency specifications
• Liability Provisions: Risk allocation, indemnification, and insurance requirements
• Termination Rights: Exit conditions, notice periods, and transition arrangements
• Governing Law: Malaysian law application and dispute resolution mechanisms
• Force Majeure: Provisions for unforeseen circumstances affecting service delivery

An Outsourcing Agreement differs significantly from an Agency Agreement in several key aspects, though both involve external parties performing services. Understanding these differences is crucial for Malaysian businesses to choose the right legal framework.

• Scope of Control: Outsourcing Agreements delegate specific functions while retaining oversight, whereas Agency Agreements grant authority to represent and act on behalf of the principal
• Legal Relationship: Outsourcing creates a vendor-client relationship with clear service deliverables, while agency establishes a fiduciary relationship with broader powers
• Liability Structure: Outsourcing partners bear direct responsibility for their service delivery, but agents can legally bind their principals to third parties
• Regulatory Framework: Outsourcing falls under BNM guidelines and PDPA requirements, while agency relationships are primarily governed by Malaysian Contract Act provisions