Anyone who wants to switch IT service providers while a project is already underway first needs clarity regarding their own contractual situation and then a plan for the technical handover. The trigger usually follows the same pattern: A service provider has failed to deliver for months, deadlines are being missed, and communication breaks down. Often, an „ERP project in crisis“ is the trigger for this decision, but sometimes even a single service provider that has lost control of its own code is enough. Both aspects of the problem—the legal and the technical—can be addressed in advance without bringing day-to-day operations to a standstill during the handover.
Anyone who wishes to change IT service providers may generally do so at any time during an ongoing project. Section 648 of the German Civil Code (BGB) allows the client to terminate the contract at will, while Section 648a of the BGB governs termination for good cause. Access rights, code, and documentation must be clarified before termination; otherwise, the technical handover silent.
On what legal basis can companies switch IT service providers?
§ 648 of the German Civil Code (BGB) gives the customer the right to terminate a contract for work and services at any time without cause. The contractor retains the right to compensation but must allow for any expenses saved to be offset against the amount owed. This termination without cause does not require a reason, but in practice it usually costs more than a termination for cause.
Section 648a of the German Civil Code (BGB) provides a second option. If there is good cause—such as a repeated breach of duty—the contractual relationship may be terminated without notice. Before termination, it is generally necessary to set a deadline; the service provider must be given the opportunity to remedy the situation before the contract ends.
Anyone who wishes to terminate the contract solely due to dissatisfaction with the working relationship typically invokes Section 648 of the German Civil Code (BGB) and pays the difference between the agreed compensation and the expenses saved. Anyone who can demonstrate documented breaches of duty may be able to avoid paying the full compensation under § 648a of the German Civil Code (BGB), but must provide verifiable documentation that a prior notice period was set.
Which option is more cost-effective depends on the specific circumstances. Under Section 648 of the German Civil Code (BGB), the customer often ends up paying for services that are no longer provided, minus the savings the service provider realizes as a result of the early termination. Under Section 648a of the German Civil Code (BGB), this remaining amount is waived provided that the good cause is upheld in the dispute. Ultimately, both approaches lead to the same outcome: a new service provider takes over.
Source code, data, and what you can actually request
There is no automatic right to the disclosure of the source code. The Federal Court of Justice has ruled that disclosure depends on the purpose of the contract and the amount of compensation paid (Federal Court of Justice (BGH), Judgment of December 16, 2003, X ZR 129/01). If only a license fee was paid, the source code often remains with the service provider. If the full cost of development was paid, this supports a claim for the return of the source code.
Since this Federal Court of Justice ruling, the disclosure of source code has depended on the purpose of the contract and the compensation paid; there is no automatic right to such disclosure.
Federal Court of Justice (BGH), X ZR 129/01, December 2003
The legal situation is clearer when it comes to personal data. Under Article 28(3)(g) of the GDPR, a processor must return all personal data to the controller or delete it upon termination of the contract, depending on the contractual choice. This obligation applies regardless of any dispute regarding the source code.
Anyone who wants to rule out this uncertainty from the outset should include an escrow clause. Under this arrangement, the service provider deposits the source code with a third party, who will release it only when specific conditions are met, such as insolvency or the termination of the contract. Without such a clause, the only recourse is often to interpret the original contract to determine its purpose. The release conditions of an escrow agreement are contractually specified in advance; common examples include insolvency, cessation of business, or a serious, proven breach of contract by the service provider.
This guidance is not a substitute for legal advice in specific cases. An attorney specializing in IT law should review the specific contract before termination.
The Technical Handover in Practice
The legal framework clarifies when an employee may be terminated. What happens afterward determines whether the transition goes smoothly or comes to a standstill for weeks.
| Area | What to Hand Over |
|---|---|
| Additions | Server access, admin accounts, domain and DNS management, password managers |
| Repositories | Complete version history instead of just the latest version |
| Build Pipelines | Configuration, Secrets, Deployment Scripts |
| Operational Documentation | Architecture, Interfaces, Known Issues |
| Open Tickets | A prioritized list that includes context rather than just ticket numbers |
| Knowledge Transfer | Regular meetings with the current team, as long as they are still available |
An interim CTO can oversee this transition without the internal team having to take on vendor management in addition to their day-to-day work. This is particularly challenging if the previous service provider shows little willingness to cooperate after the contract is terminated. What a Interim CTO The article explains how much such a mandate costs and how long it typically lasts Interim CTO: Costs, Duration, Expectations.
Knowledge transfer sessions are not optional. Without them, knowledge about workarounds and past decisions remains with the old team and is lost when the last point of contact leaves. An overlap period, during which the old and new service providers work in parallel for a short time, significantly reduces this risk and is almost always worthwhile, even if it incurs additional costs.
Without a previously agreed-upon escrow clause or escalation rights, no subsequent claim to this arises. Anyone who has not included these points in the original contract will negotiate the handover from a weaker position and remain dependent on the willingness of the previous service provider to cooperate.
Plan a Handover Without Downtime
If a company contacts us while the transition is underway, we usually respond within one business day.
Frequently Asked Questions
When should you switch IT service providers?
It makes sense to switch providers as soon as deadlines are repeatedly missed, technical commitments are not honored, or communication breaks down for weeks at a time. A single missed milestone rarely justifies termination, but a pattern of multiple incidents certainly does. These incidents should be documented in writing from the very beginning; this makes it easier later on to choose between § 648 and § 648a of the German Civil Code (BGB). If you wait too long, you lose your bargaining position because, with each passing month, the previous service provider accumulates more undocumented knowledge, and your own time pressure increases.
What can you ask for?
Access rights, operational documentation, and all personal data may be requested without restriction under Article 28(3)(g) of the GDPR. With regard to source code, the matter depends on the contract; the Federal Court of Justice makes the right to access contingent on the purpose of the contract and the compensation paid. Without an escrow agreement, this issue often remains a matter of negotiation rather than a clear legal matter. In practice, it is advisable to negotiate the disclosure of access credentials and data separately from the dispute over the source code, because the former is legally established and can be implemented immediately.
How can you avoid a standstill?
A disruption can be avoided by ensuring that the technical handover takes place in parallel with the legal termination, rather than beginning only afterward. Access credentials, repositories, and build pipelines must be secured before the current service provider’s last day of work, and knowledge transfer sessions should be scheduled in advance while both parties are still cooperating. An overlap period of a few weeks, during which the old and new service providers work in parallel, costs extra money but prevents the significantly more expensive disruptions that would occur after the last day of work.
What should the contract with the new provider cover?
The switch is the best moment to prepare the next exit contractually. This includes an exit clause with a duty to cooperate during handover, the release of access credentials, repositories with full version history and documentation in an agreed format, a source code arrangement via usage rights or escrow, and the return or deletion of personal data under Art. 28(3)(g) GDPR. Settling these points at the start means you do not negotiate them later from the weaker position.
Switching service providers in the middle of a project requires someone who takes the technical lead during the handover rather than just standing by. In such situations, torck takes on the technical leadership and implementation as a one-stop solution—with its own development teams in Maxhütte-Haidhof, Vienna, and Rabat—rather than merely providing consulting services. The contractual partner is the German company torck GmbH, which ensures a dedicated point of contact during the handover. Anyone currently in the midst of a changeover or looking to prepare for one can do so in a Initial Consultation discuss.
This article refers to laws and regulations to put technical decisions in context. It is not legal advice. Whether and how a rule applies to your company is a question for your legal department or a law firm.
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