How to Create a Good and User-Friendly MSA for Outstaffing or a Dedicated Team

Admit it — you’ve had situations where you send a client a contract to sign, and they can’t make sense of what it says and send it back with a whole pile of corrections. Or this scenario: you need to make some minor changes and end up having to re-sign the entire contract.

On top of that, an MSA contract template is not just about convenience in communicating with the client — it is also an important reputational signal. But is it possible to make a contract convenient, clear, and legally sound at the same time? We believe it is entirely possible, and we will now try to demonstrate this to you as well.

A Convenient Structure — Why a Master Service Agreement?

In our view, the most optimal contract structure is the MSA (Master Service Agreement). An MSA is essentially a general (framework) agreement that governs the legal relationship between the parties as a whole. How exactly does this work?

Most of the provisions in your agreements with clients — such as those relating to confidentiality, conflict of interest, dispute resolution, force majeure, and so on — typically remain unchanged. These provisions are set out in the MSA and can remain in effect throughout the entire period of your relationship with the client, without creating any active obligations on your part in the meantime.

You can then conclude an Annex (addendum) that will contain more specific provisions — for example, regarding the subject matter of the services, the manner in which services are to be provided (such as under an outstaffing model), the cost of services, and so forth. An important advantage of this approach is that you can conclude several such Annexes with different terms, while your MSA remains unchanged.

Beyond that, you can go even further and agree on the most detailed terms in separate SoWs (Statements of Work). For example, in outstaffing, you can approve each individual developer in a separate SoW. This way, you and your client can easily navigate and adjust the terms of cooperation as needed.

Let us look at an example. Company A provides IT services to Company B. They have three joint projects: the first is divided into separate stages (Waterfall/Fixed Price), the second has no clearly defined stages or timeframes (Agile/T&M), and the third involves a dedicated team of several developers. What might the structure of their contractual relationship look like? For example, like this:

MSA → Annex No. 1 (Waterfall/Fixed Price) → Annex No. 2 (Agile/T&M) → Annex No. 3 (Outstaffing / Dedicated team) → SoW No. 1, SoW No. 2 …

Given that an Annex can be as short as 2–4 pages and a SoW just 1–2 pages, this approach is considerably more convenient than signing separate bulky contracts for each individual project — you would agree.

How to Properly Describe the Outstaffing / Dedicated Team Model

The outstaffing service generally involves assigning specific specialists of yours to the client, such that your client can communicate with them directly and without your involvement. This is a complex arrangement, since we are dealing with participants in the legal relationship (developers, for example) who are not themselves a party to the contract. It is therefore important to accurately describe all the rights and obligations of the parties, including matters on which your client may communicate only with you or only with your participation.

Particular Tasks to be completed shall be agreed by Parties via the System. Where agreed by Parties, Customer and Contractors may communicate directly without involvement of Company via the System.

In addition, your outstaffing services may differ substantially from those of competitors, which is why we strongly advise against using generic contract templates found online in this case. For example, a competitor may have an outstaffing contract in a dedicated team format that requires the client to engage the entire team as a whole (several specialists) with no right to replace individual specialists. Or another competitor may offer a specialist selection service for their clients with simultaneous engagement under the outstaffing model. Such services involve fundamentally different mechanics that should be properly reflected in the agreement (or in an Annex to the MSA).

Task Performance and Liability for Results

It is hardly possible for an IT specialist to perform work effectively without the necessary technical equipment. As a rule, the burden of provision falls on the company providing the outstaffing services. Nevertheless, your client may request certain services that require specific equipment. Such situations are worth anticipating in advance, with responsibilities allocated between the parties — specifying who will pay for such additional requirements.

Contractors shall provide the Services using their own or Company’s hardware, equipment and other network infrastructure. If the performance of the Tasks requires some special tools, equipment, hardware or network infrastructure components, Customer shall provide Contractors with such objects or cover the costs incurred by Company to acquire such tools.

It is also necessary to specify that, in the case of outstaffing services, your company bears no responsibility for the results of the work of the specialists engaged by the client. The more detailed allocation of liability depends on the specifics of your outstaffing service. For example, if the scope of your services includes the selection of candidate specialists, then once the client has approved the chosen specialist, your liability in respect of that specialist may be exhausted.

Customer is solely responsible for the Deliverables provided by Contractors. In no event, Company shall be liable for the Deliverables provided by Contractors.

Working Hours and Specialist Availability

It is also important to agree with the client and set out in the contract the hours during which specialists must be available and reachable by the client. These provisions can be established uniformly for all specialists in the Annex (for example, in the case of a dedicated team) or defined separately for each specialist in the respective SoW.

Each Contractor shall be available to Customer up to 40 hours per week according to the schedule that shall be agreed by Parties via the System. Any other use of Contractor’s time exceeding the specified weekly limit (the “Additional time”) shall be paid for by Customer in accordance with the terms and conditions additionally agreed by Parties.

If you work with specialists from different parts of the world, you and your client will also need to take into account the specifics of their national and religious calendars. One option is to specify the list of public holidays for each specialist separately in the respective SoW, or to indicate that you will send the client calendars electronically once a year.

Contractors may also enjoy holidays during which they may be inactive and unavailable for the Customer on certain days pursuant to the respective laws of the state of Contractor’s residence. The respective SoW hereto may specify the exact holiday calendar for Contractor.

Minimum and Probationary Periods

After successfully selecting a specialist or approving a dedicated team, the last thing you want is for the client to change their mind a few weeks later. To avoid this, you can include a minimum period during which the client must work with the specialist or team and during which the relevant SoW, Annex, and the entire MSA cannot be terminated.

Customer shall engage Contractors for a period no less than six (6) months. If a period of engagement is left undefined, Customer may not terminate the engagement of the respective Contractor within the first six (6) months of their engagement.

Additionally, at the client’s request, you can also provide for a probationary period, upon the expiry of which the client may, for good cause, decline to continue with a particular specialist or the entire dedicated team.

Nevertheless, Customer may terminate with due cause the engagement of the respective Contractor upon provision of a written notice five (5) calendar days prior to the end of the designated probationary period of such Contractor. Parties may additionally agree on the list of causes for such termination.

Non-Solicitation of Specialists and Their Buyout

Among the most important provisions for outstaffing service agreements are the prohibitions on poaching your specialists. Here it is important to describe in as much detail as possible the actions that the client may not take with respect to the specialists — especially given that the nature of the service involves their constant communication with each other and without your involvement.

During the course of this Agreement and for two (2) years thereafter Customer, its subsidiaries, successors, shareholders, assignees, related companies, affiliates and other associated companies shall not, without Company’s prior written consent, directly or indirectly:

(i) solicit or encourage any of Company’s employees/contractors to leave the employment or contract of Company or persuade Company’s customers, suppliers to end cooperation with Company…

At the same time, it may be in your interest to release a specialist for adequate compensation. In that case, you can specify in the agreement that such a buyout may occur only with your prior consent — or without it.

Customer is entitled to request Company to immediately terminate the respective SoW and engage the respective Contractor on its own terms and without involvement of Company…

Conclusions

So, first of all, the MSA structure gives you flexibility and convenience in your interactions with clients. Consistent and clear terms stay in the MSA; detailed and specific provisions go into separate Annexes and/or SoWs.

Second, an outstaffing or dedicated team service requires a detailed description of all the nuances of your activity. Do not turn to free templates found online — it is better to pay once for the development of a quality agreement than to lose money later because clients exploit loopholes.