Agreement & Contract

Master Service Agreement: How Is It Important in IT Outsourcing?

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Well, Master Service Agreement is very useful. It can also help a lot the companies which are into software development. Well, these companies when they use MSA, can accelerate their work by making easy the general contract rules for ongoing projects. At the same time, they do hold the power to make decisions.  

Say for instance that you’ve come across a good IT outsourcing firm or company. Besides, you own a complicated product that will have to through various phases of development. And your companies are required to work together for a long time. Perhaps, you have worked with this developer on a project which went quite well and you’re quite excited about working with them again.

Also, read Know All About The Service Agreement

With the help of MSA, the rules will become easier to understand for both parties and that too well in advance, so there is little confusion if any. It may also cut down the legal costs and the time & money that it takes to write new documentation.

Master Service Agreement: What It Is?

As per the definition, an MSA is a contract between an IT vendor and a customer that lays out the following: project expectations, responsibilities, roles, provided services, terms, and other important agreements.

The Uses Of MSA

MSA is put to use when a company and a software vendor decide to work together on a project for a considerably good period of time.

It also helps in cutting costs and prevents a lot of stress for all who are involved by lessening the need to renegotiate and re-read much of the already decided conditions again.

Writing the MSA in software development requires a lot of time and it involves a lot of work. However, once both sides agree on it, it can be utilized as a model for future projects.

You may like to read How to Draft a Service Agreement?

Master Service Agreement - Who Provides It?

MSA is mostly created by an outsourcing company. Thereafter, it is forwarded to the client for review. It’s quite likely for software companies to cover the small points in the arenas of how a project is done.

Additionally, an outsourcing company can create and put up a Master Service Agreement with various important documents as a part of the package.

What Are The Contents of MSA?

A good MSA should include all the important and minute details so that all the business expectations are communicated properly and financial guarantees are provided to both parties.

Here we are showing how it works: It should be simple and easy for project managers to understand so they can manage the project well. Thus, the MSA document is usually split into the certain sections, shown as below:

There are three major ways to get paid when you write software:

Method: Fixed price. This may be the best way to work on projects which have detailed plans that are required to be done by a certain date. In this, usually the payment is made when a project is completed, a task is completed, or a phase is completed. It can also be paid once the product is used

The two things that really do make things happen are: Time and materials are (T&M). Well, the products which are flexible that don’t have a specific use are good for this. In this model, the employer makes the payment for materials and for the number of hours which the Engineers work.

A model for a devoted team. This type of payment is for the people who can effectively manage the core development team. Herein,  customer pays in every month, based on the developer’s hourly work on the project.

MSA also tells about how to take the service, the reasons as to why people don’t like it, and how to change and revise it. Other things that go in this section are: the costs of unplanned expenses, how they can be paid and how to transfer money.

Providers of Service

After the parties’ names, their official contact person information, and their legal (official) addresses, comes the most important part of the document: general conditions, which are very important.

The MSA Document must include the following things in the Provision of Services:

There are four main goals and objectives for all of your projects

  • The client’s expectations
  • Services are provided for each SOW
  • Clauses, fees, and processes that go along with order changes or SOW changes.

Performance Management Should Be Tracked

Every project should have an independent SOW. It should lay out how the two sides will act in operating processes and in which way will the project will be monitored.

In fact, the MSA can tell about the complete structure of software development. Some companies even add a Management Guide attachment that explains about the function of every person in the office.

Term and Clauses for Ending

The Master Service Agreement spells out how long should the developer and client work together. The MSA Document also tells when a contract can be terminated pre-maturedly.

On the other hand, there can be an automatic renewal process if both sides concur on it.

Intellectual Property: Its Rights And Ownership

This tells us about the results of work on projects under individual SOWs that fall under intellectual property. We also come to know who owns the copyrights and various other rights that come along with the project deliverables.

Besides, the paper should also tell us which software, inventions, technology and data were made before or during collaboration belonging to the software company.

Also, read What Are The Conditions to Expect In A Master Service Agreement?

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