Overview
A global dairy and nutrition cooperative found itself needing to renew two related IT services agreements, Infrastructure & Operations (I&O) and Applications Managed Services (AMS), with its long-standing provider, HCL. At the same time, it was preparing to divest a significant consumer-facing business unit.
That timing mattered. To minimize disruption during the divestiture, the cooperative needed to renew scope largely “as-is,” while still meaningfully improving pricing, commercial terms, and service levels across both contracts. UpperEdge supported baseline assessments of both agreements, proposal solicitation, negotiation preparation and benchmarking, and negotiation execution through to contracting.
Challenge
Renewing two interlocking managed services agreements simultaneously, in the middle of a corporate divestiture, created a narrow set of constraints:
- Scope needed to stay largely unchanged to avoid adding risk during the separation
- Both contracts were expiring the same quarter, requiring coordinated (not sequential) negotiation
- The cooperative needed real savings — not just a rollover at existing rates — despite limited appetite to re-scope services
- Existing service level frameworks across both towers had grown misaligned with the business’s actual priorities
Approach
UpperEdge structured the engagement around speed and coordination:
- Baseline Assessments of both the I&O and AMS contracts to understand true current-state costs and terms
- Proposal Solicitation Development to formally request improved terms from HCL across both agreements in parallel
- Negotiation Preparation, Analysis & Benchmarking to establish market-competitive targets for resource unit rates, productivity commitments, and volume discounting
- Negotiation Execution and Contracting to close both agreements on a co-termed basis ahead of the divestiture
A central thread was pulling savings forward: rather than accept discounts that only materialized in later option years, UpperEdge pushed for immediate reductions the cooperative could realize starting in year one.
Results
Deal Competitiveness: Highly Competitive
- ~13% savings over the 2-year base term versus HCL’s initial proposal (~15% including the optional third year)
- ~14% average reduction in IMS resource unit rates
- Immediate volume discount improvements — savings realized starting in the first contract year, with the new structure worth well over $1M across the term as spend grows
- ~12% reduction in AMS fees and ~15% reduction in I&O fees versus baseline, driven by rate reductions and productivity improvement commitments
- Return on investment of roughly 20x on the cooperative’s advisory spend with UpperEdge
Service level improvements landed across both towers:
- Allocation pool increased to 250% (I&O) and 200% (AMS), raising the provider’s financial accountability for missed service levels
- Quarterly (not semi-annual) rights to reallocate penalty percentages, letting the cooperative redirect the provider’s delivery focus as business priorities shifted
- Maximum SLA percentage raised to 35% across both agreements (up from 20–25%), giving the cooperative more leverage on the metrics that mattered most
- A defined earnback structure, incentivizing the provider to recover performance after any lapse rather than simply absorbing penalties
❝ “Renewing ‘as-is’ didn’t mean settling for ‘as-is’ pricing — the goal was flat scope with meaningfully better economics and accountability.”
Companies navigating a divestiture, carve-out, or other major corporate event alongside an IT services renewal should resist the instinct to simply extend existing terms for continuity’s sake. A structured renegotiation, even on unchanged scope, can still recover meaningful savings and modernized service level protections. Managing an IT outsourcing renewal alongside a major corporate transaction? Talk to UpperEdge about protecting your negotiation leverage.
