Technology outsourcing-wasting a great opportunity

The annual value of global outsourcingto outsource: zlecać innej firmie, podwynajmować transactions goes into hundreds of billions of dollars.

Poland, after EU Accession, has a chance to get a fairspory, uczciwy, sprawiedliwy share in this market, viewed by many American and European firms as an attractive location for outsourcingto outsource: zlecać innej firmie, podwynajmować and an interesting alternative to Asian countries. Also, the local need for outsourcingto outsource: zlecać innej firmie, podwynajmować, especially in the financial sector, is rapidlygwałtownie growing. Instead of stimulating growth, or at least being neutral, the amendmentsamendment: poprawka to the Banking Law effective from May 1, 2004 and the recently issuedto issue: wydawać guidelines by the banking supervisingnadzorujący authorities have, unfortunately, a contraryprzeciwny effect.

Background
Before the amendmentsamendment: poprawka, the Banking Law was silent on the issue of outsourcingto outsource: zlecać innej firmie, podwynajmować. In the conservative opinion of the banking supervisingnadzorujący authorities, however, outsourcingto outsource: zlecać innej firmie, podwynajmować was not allowed, because of the banking secrecy provisionssecrecy provision: zabezpieczenie tajemnicy. Despite this negative position, many banks decided-even long before the new regulations came into forceto come into force: wchodzić w życie-to outsource some of their operations. In that case, possible economic benefits outweighedoutweigh: przeważać the risks of outsourcingto outsource: zlecać innej firmie, podwynajmować being questioned by the supervision authorities.

Changes in the law-are we really moving forwardto move forward: posuwać się do przodu?
Uncertainty is bad for business, and many expected that the new, long-awaited regulations will explicitlywyraźnie, w pełni allow outsourcingto outsource: zlecać innej firmie, podwynajmować transactions in the banking sector. It could open possibilities for a dynamic development, possibly placing Poland as a regional center for this type of services. Finally, after lengthy discussions, on May 1, 2004 a new comprehensivepełny regulation came into forceto come into force: wchodzić w życie. It is disappointing, though, to say the least. Although outsourcingto outsource: zlecać innej firmie, podwynajmować has been allowed, the new banking law contains restrictiverestrykcyjny provisions unheard ofniespotykany, nieznany in other European laws. Moreover, the banking supervisingnadzorujący authorities recently issuedto issue: wydawać a set of interpretations which, instead of helping to solve some issues, made things even more complicated.

So what actually is 'outsourcingto outsource: zlecać innej firmie, podwynajmować' ?
Outsourcing means the transferprzeniesienie of an in-housewewnętrzny (pracownik firmy) function to an externalzewnętrzny service providerdostawca, dyspozytor for the on-going provision of those services typically involving the transferprzeniesienie of physical, real and intangible assetsaktywa niematerialne and people. However, the definition of "outsourcingto outsource: zlecać innej firmie, podwynajmować services in the new Banking Law has a much broader scopezasięg, zakres than the generally accepted meaning of this term described above. They are vaguelyogólnikowo, wymijająco defined as 'any services connected with banking activities'. It was expected that the banking supervisingnadzorujący authority will explain more precisely what is exactly meant by that. In their recently issuedto issue: wydawać guidelines, however, they merelytylko, jedynie stated that 'outsourcingto outsource: zlecać innej firmie, podwynajmować services are any services functionally connected with banking activities' and gave three examples of services which would not fall withinpodlegać czemuś the scopezasięg, zakres of this definition: cleaning, cateringgastronomia and protection of buildings. This surprising statement shows the extentwymiar, zakres, rozmiar of confusionzamieszanie, zamęt and uncertainty the new regulations have caused. The guidelines offer little help, if at all, in clearing up fundamentalpodstawowy, zasadniczy interpretation problems connected with the definition of 'outsourcingto outsource: zlecać innej firmie, podwynajmować'. At the same time, the banking supervisingnadzorujący authorities consequently, although on an informal basis, present the opinion that all ITInformation Technology: technika informacyjna contracts concludedto conclude: zawierać with banks will be treated as outsourcingto outsource: zlecać innej firmie, podwynajmować.

This interpretation causes a lot of confusionzamieszanie, zamęt and concernsprawa, troska, problem throughout the ITInformation Technology: technika informacyjna industry, bearing in mindto bear in mind: pamiętać, mieć na uwadze the consequences of falling into the definition of outsourcingto outsource: zlecać innej firmie, podwynajmować which are described further in this article. What does it mean in practice? 'Body shopping' (which is the industry buzzwordmodne, zwykle specjalistyczne określenie for hiring freelanceniezależny ITInformation Technology: technika informacyjna consultants) should then be consideredto consider: rozważać, rozpatrywać as outsourcingto outsource: zlecać innej firmie, podwynajmować. A contract for maintenanceobsługa, utrzymywanie of printers, an ITInformation Technology: technika informacyjna auditkontrola, rozliczenie, a software development agreement, any form of consulting-all this would also fall in this category. This is contraryprzeciwny to common sense and it is hard to believe that this is actually what was the purpose of the new Banking Law. It should be the banking supervision authorities' role to prevent such significant interpretative doubts from arisingto arise: pojawiać się, powstawać. It does not happen and it is disappointing.

The UK regulatory model
A comparison with similar regulations in other EU countries will serve as an interesting point of referencepunkt odniesienia for further discussion. First of all, in the United Kingdom the definition of 'outsourcingto outsource: zlecać innej firmie, podwynajmować' is-unsurprisingly-in linezgodnie z, proporcjonalnie with the generally accepted meaning of this word described above. As such, it covers a much smaller category of services, compared to the Polish legal definition. Yet not all of them are the subject of the Financial Services Authority's (FSA) special interest, but only 'material outsourcingto outsource: zlecać innej firmie, podwynajmować'.

The supervision model in the UK is based on a different philosophy-it is up toto be up to: zależeć od the firms to implementto implement: wprowadzać w życie effective risk management systems, and decide how to do it best in linezgodnie z, proporcjonalnie with their business strategy. The FSA has issuedto issue: wydawać, high-level and non-bindingniewiążący, guidelines for outsourcingto outsource: zlecać innej firmie, podwynajmować contracts, but the firms are free to negotiate and set up in the contract appropriate performance monitoring and remediesremedy: środek zaradczy with their counterpartiescounterpart: odpowiednik, kopia. Last but not least, there is no requirement to obtainto obtain: zyskiwać, zdobywać any permitspermit: zezwolenie, zgoda to enter into outsourcingto outsource: zlecać innej firmie, podwynajmować arrangements, and the obligationobowiązek to notify outsourcingto outsource: zlecać innej firmie, podwynajmować agreements (limited to 'material outsourcingto outsource: zlecać innej firmie, podwynajmować') will come into force in the last quarter of 2004, one year after it has been made publicly available.

Banking law vs. the principlezasada of freedom of contracts
On the other hand, in Poland, our proactivezapobiegawczy legislatorustawodawca decided to pass a lawwprowadzać prawo interferingto interfere: kolidować z directly with the content of the outsourcingto outsource: zlecać innej firmie, podwynajmować contracts: the new Banking Law prohibitsto prohibit: zakazywać the limitation of outsourcingto outsource: zlecać innej firmie, podwynajmować providers' liabilityodpowiedzialność karna, zobowiązanie vis-a-visw porównaniu z , względem banks for "damage caused to customers through the improperniewłaściwy, niestosowny performance of an outsourcingto outsource: zlecać innej firmie, podwynajmować contract". Let us take a closer look at this provision. It is wordedto word: formułować wrongly and is against the constitutional principlezasada of freedom of contract. Moreover, it is ignoring business principles commonly accepted in the ITInformation Technology: technika informacyjna industry (it affectsto affect: dotyczyć, wpływać all ITInformation Technology: technika informacyjna contracts under the current broad definition of 'outsourcingto outsource: zlecać innej firmie, podwynajmować'), and, finally, no similar provision, according towedług, zgodnie z my best knowledge, can be found in any other EU country, or the United States.

The purpose of this unfortunate provision was most probably to protect bank customers (not the banks themselves, as the prohibition applies only to damage suffered by customers, and not banks). Let us assumeto assume: zakładać that due to improperniewłaściwy, niestosowny performance of an outsourcingto outsource: zlecać innej firmie, podwynajmować providerdostawca, dyspozytor, a customer suffers damage and files a claimto file a claim: wysuwać roszczenie against the bank. The probability of an individual client filing such a claim against a bank is quite remoteodległy, though. Thus, rather surprisingly, this provision protects mostly the institutionalinstytucyjny, zorganizowany customers of banks. Let us assumeto assume: zakładać that a customer wins a lengthy lawsuit. Only then, the bank could file a recourse claimżądanie regresu, wystąpienie o regres against the outsourcingto outsource: zlecać innej firmie, podwynajmować providerdostawca, dyspozytor whose liabilityodpowiedzialność karna, zobowiązanie in that respectin this respect: pod tym względem would be unlimited. One can easily get lost in these legal complexities and a real black scenario may fall off one's radar screens: in the case where the outsourcingto outsource: zlecać innej firmie, podwynajmować providerdostawca, dyspozytor significantly fails to performwykonywać its obligations, which may seriously disruptzakłócać, the bank's activity, the bank has to take appropriate steps including terminationwygaśnięcie, zakończenie of the contract and claim for damages. In such case, though, the prohibition of limitation of liabilityodpowiedzialność karna, zobowiązanie would not apply, and liabilityodpowiedzialność karna, zobowiązanie issues would be governedto govern: kierować, regulować by the provisions of the contract, concludedto conclude: zawierać between the partiesparty:grupa, strona. It is not clear then why the prohibition of limiting liabilityodpowiedzialność karna, zobowiązanie would be so badly neededbardzo potrzebny, if it does not bring much value. Especially if it is contraryprzeciwny to the fundamentalpodstawowy, zasadniczy freedom of contracts rule and there is no obvious public interest, which would justify it. At least no such public interest has been found by the legislators in other EU jurisdictionsjurisdiction: jurysdykcja, or the US, where there are no similar restrictions.

The Constitutional Tribunal confirmedto confirm: potwierdzać many times in its verdicts that the freedom to agree on the content of contracts is the basis of the principlezasada of economic freedom and it can be limited only by an act of law, if it is necessary to protect an important public interest. In such a case the balance between the degree of violation of individual rights and the importance of the public interest that such a limitation is intended to protect should be consideredto consider: rozważać, rozpatrywać. There are serious doubts if the new Banking Law provisions are compliantuległy, podległy with the Constitution in lightw świetle of the above judgments.

And finally, the prohibition to limit liabilityodpowiedzialność karna, zobowiązanie is contraryprzeciwny to the business practice on the ITInformation Technology: technika informacyjna market. An unlimited liabilityodpowiedzialność karna, zobowiązanie clauseklauzula, is a deal breakerłamacz układów (umów, porozumień) for all reputable global players, which, on the other hand, are open to discuss reasonable capscap: limit on liabilityodpowiedzialność karna, zobowiązanie giving comfort to their clients. This stems fromto stem from: mieć swoje źródło, brać się z the revenuedochody recognition rules under the GAAP standards, the majoritywiększość of major outsourcingto outsource: zlecać innej firmie, podwynajmować providers are subject to. They imposeto impose: nakładać, narzucać the obligationobowiązek to discloseto disclose: ujawniać potential liabilities arisingto arise: pojawiać się, powstawać from contracts. A company which would sign even one contract under the principlezasada of unlimited liabilityodpowiedzialność karna, zobowiązanie as required by the new Banking Law, would be unable to quantifyto quantify: oznaczać ilość its liabilityodpowiedzialność karna, zobowiązanie. Is it just the outsourcingto outsource: zlecać innej firmie, podwynajmować providers' problem...? I do not think so-it is probably not in the banks' best interest to conclude agreements with one-man-and-a-dog type of firms gladly accepting unlimited liabilityodpowiedzialność karna, zobowiązanie, rather than reputable outsourcingto outsource: zlecać innej firmie, podwynajmować providers able to pay damages within an agreed capustalony limit.

Banking Law vs. the principlezasada of acquiredto acquire: nabywać rights
So what do we have here? A prohibition of limiting liabilityodpowiedzialność karna, zobowiązanie in outsourcingto outsource: zlecać innej firmie, podwynajmować contracts and an unreasonably broad definition of 'outsourcingto outsource: zlecać innej firmie, podwynajmować contracts' covering all ITInformation Technology: technika informacyjna contracts. But there is even more... The new Banking Law contains transitionalprzejściowy provisions requiringto require: wymagać that all the existing 'outsourcingto outsource: zlecać innej firmie, podwynajmować contracts' have to comply with the new regulations by the end of 2004. This means that the principlezasada of unlimited liabilityodpowiedzialność karna, zobowiązanie will have to be included in all ITInformation Technology: technika informacyjna contracts concludedto conclude: zawierać by banks. This requirement puts both ITInformation Technology: technika informacyjna companies and banks in a very difficult position.

Imagine a large Polish which had bank concludedto conclude: zawierać a contract for the implementation of a central ITInformation Technology: technika informacyjna system with a long termdługoterminowy maintenanceobsługa, utrzymywanie containing a limitation of liabilityodpowiedzialność karna, zobowiązanie clauseklauzula,. This high-value project, crucial for the bank's operations is half finished. Then the new banking regulations imposeto impose: nakładać, narzucać the obligationobowiązek to remove the limitation of liabilityodpowiedzialność karna, zobowiązanie clauseklauzula,. The partiesparty:grupa, strona enter into negotiations... It is hard to imagine a more conflictingsprzeczny situation. Surely, it will not help in the efficientwydajny, sprawny completionukończenie, sfinalizowanie of the project. How to value the increase in the providerdostawca, dyspozytor's risk arisingto arise: pojawiać się, powstawać from the removal of the limitation of liabilityodpowiedzialność karna, zobowiązanie from the contract...? Will the providerdostawca, dyspozytor accept it at all...? How to amicablypolubownie, przyjaźnie terminate the contract if the partiesparty:grupa, strona fail to reach an agreement...? What consequences may it have to banks...? These are only some of the questions that come to mind. It is hard to understand how the benefits offered by the new regulations could outweigh potential losses they may cause.

More importantly, the transitionalprzejściowy provisions are clearly violatingto violate: naruszać the constitutional principlezasada of security of the state and the law. New laws cannot have a retroactivewsteczny, działający wstecz, adverseniekorzystny, niesprzyjający effect on the rights acquiredto acquire: nabywać in good faith under earlier laws. It is a fundamentalpodstawowy, zasadniczy constitutional principlezasada commonly accepted in all democracies and has been confirmedto confirm: potwierdzać many times in the Constitutional Tribunal's verdicts.

Some eggs have been broken. We should now work together and try to cook possibly the biggest omelette out of them. Certain modifications to the new Banking Law will be necessary, which will be a lengthy process. However, a lot can be done in parallelrównolegle with the help of the banking supervisory authorities. A clear definition of 'outsourcingto outsource: zlecać innej firmie, podwynajmować' would reduce the scale of the problem. An open discussion with the banking and ITInformation Technology: technika informacyjna industries and drawing from the experience of other EU countries could lead toprowadzić do the creation of a set of guidelines for outsourcingto outsource: zlecać innej firmie, podwynajmować transactions. The supervisingnadzorujący authorities could reconsiderto reconsider:rozważać ponownie certain of their controversial interpretations such as the prohibition for outsourcingto outsource: zlecać innej firmie, podwynajmować providers to sub-contractpodwykonawczy, podkontraktowy works. Let us hope that it will all happen as soon as possible.

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