4. Avoid agreeing to cost-of-living adjustments.These increases, common in offshoring contracts, are often 8-10 percent. "Even though inflation is tied to wages, providers are paying resources in a devalued currency so they're getting ahead of the game with significant margins," says Rutchik, adding that vendors are increasingly agreeing to leave out the COLA clause.
5. Be reasonable. There's no formula for renegotiating price based on currency valuation. "A good approach would be to talk to the vendor about it since a depreciating rupee also means increasing inflation," says Iyengar. "Compromise at a point where the vendor also has a little wiggle room. At the end of the day, the vendor also has a business to run.
6. Consider foreign exchange fluctuations at the start of a deal. "By strategically using currency-driven deal structures, we've seen clients repeatedly save millions of dollars on their outsourcing contracts," says Rutchik. "Some of this is in the form of providers giving clients seven-figure credits based upon the valuation of contracts that factor in currency implications."
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