COVID-19, Tight times always require a refreshing look at existing contracts to see how costs can be optimized or new capabilities can be obtained following the collaborative ‘win-win’ approach is the best way to proceed. Here we will explain what are the best strategies to achieve better Service Contracts #renegotiations with our partners.

The current situation COVID-19 crisis has compelled IT leaders to think about their costs even as they secure new capabilities to carry their organizations through uncertain times. For this, looking to existing service contracts can be beneficial for organizations or businesses.

This is a critical time to get in front of urgent requirements and potential long-term changes to IT services contracts. This is a situation where change is potentially more achievable, and work can commence on restructuring agreements to meet the requirements of the next normal.

There may be opportunities to not only save money on existing contracts but also shift resources and focus to meet changing business requirements.

It’s a wonderful time to be considering renegotiation. The current situation compels change in some, and it creates opportunity in others. The companies that consider the options now will secure the best deals with the shortest time to benefits realization for the organizations.

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However, renegotiating service contracts in a time of distress requires cleaver mindset. Doing so successfully in a way that works for both the service provider and customers requires good understanding of what’s no longer required and what new needs are emerging. It also requires a collaborative approach to maintain long-term relationships also.

In the current environment, aggressive renegotiations may come across as tone. Recommendation a more partnership-oriented approach focused on ‘re-solutioning’ to achieve the intended outcomes for the contract related services.

IT leaders can navigate these renegotiations most successfully by handling them with clarity, expedience, and care using the following below guidance.

1 Find out best targets for cost-saving possibilities for Service Contracts

Most IT services contracts have room for significant savings opportunities to proceed further to renegotiate.

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The key is how to prioritization. Ask which contracts will meet a critical business need through renegotiation. Those critical requirements could be cost or cash flow adjustments or scope adjustments. Clients need to focus on the ones where it matters most for the organization.

Those contacts or agreements that have not been comprehensively managed or evaluated over the past three to five years are most likely to offer great savings.

In addition, contracts that are labor-based are likely to offer low hanging fruits type savings opportunities that are more straightforward to identify and capture. While more complicated to capture savings, managed services agreements where the services are underutilized also present a potentially significant savings opportunity.

2 Agreement Identification in the current situation for Service Contracts Renegotiations

In some cases, the requirements or basic assumptions underlying the structure of finance of the deal may no longer be valid. “For example, the supplier may not be able to fully perform, or the needs of the customers may have reduced dramatically.

In those cases, you can drive for not merely a fix but a better contract, But you don’t want to renegotiate if contracts where had locked in rights to now-scarce resources or now-low prices.

3 Perform a comprehensive assessment of Service Contract Deals

Identify the areas where drive immediate benefits. This may include reviewing current invoices to identify errors, rationalizing spending or reducing consumption or volumes where there is flexibility to do so, leveraging contract terms that provide flexibility (such as business downturn rights), and re-architecting the solution to achieve mutually beneficial outcomes.

4 Right approach on the relationship and the performance of services

Don’t play too hard with a providers you are critically dependent upon and have risk or with whom you plan a longer-term relationship. Determine who will be your future strategic partners, who won’t and who could go either way, and negotiate accordingly. Now is not an appropriate time to shake things up unnecessarily with a critical and important service provider.

5 Don’t just renegotiate because of the opportunity​

These are challenging times and those organizations that are taking a collaborative approach with their service providers are having the greatest success after COVID-19. So don’t renegotiate just for the availability of opportunity.

6 Be straightforward positively for Service Contracts renegotiations

Renegotiation is unlikely to be at the top of your provider’s agenda in this situation so make it as easy as possible for the vendor to understand the situation what you’re exploring. Everyone’s distracted now due to COVID-19.

Put in the extra efforts to think your contract proposal through until it’s clear and simple to both. Also, we are pulling together in this crisis, so go with the extra effort and care to think win-win’ and create acceptable proposals from both interests and benefits.


This is a critical time for all, so everything needs to be taken care with empathy and long-term relationship for all service contracts or any other deals. Think positively with a Win-win situation for both parties. The right approach considering business impact is critical and to be taken care of while renegotiating Service Contracts with partners.

Thanks for reading and let us know your feedback and what you want to add more?

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