Alphabiz - FTC Sanctions Doosan for “Work-First, Contract-Later” Practice in SI Outsourcing

Photo courtesy of Yonhap News

[Alpha Biz= Kim Jisun] The Korea Fair Trade Commission (FTC) has taken action against a long-standing industry practice in which large corporations initiate system integration (SI) projects without issuing formal contracts in advance.

On May 10, the FTC announced that it has decided to impose corrective measures and a fine of KRW 230 million on Doosan Corporation for failing to issue or delaying the issuance of written contracts while outsourcing SI services to 182 subcontractors.

According to the FTC, Doosan commissioned 516 service projects between January 2022 and October 2024 without providing written contracts—including legally required details such as subcontract payments—prior to the commencement of services. In some cases, contracts were issued as late as 291 days after work had already begun. Such practices violate South Korea’s subcontracting law, which aims to protect subcontractors from potential disadvantages arising from unclear contractual terms.

In addition, Doosan was found to have issued “incomplete contracts” lacking clarity on payment deadlines and inspection timelines. The company also failed to retain mandatory documentation, including work order instructions, for a period of three years. These violations resulted in additional warnings from the regulator.

Despite the domestic SI market reaching approximately KRW 56 trillion as of 2025, unfair practices have persisted within its relatively closed structure. SI affiliates of large conglomerates account for more than 60% of internal transactions, raising concerns over transparency and fair competition.

The FTC stated that this enforcement action is expected to serve as a warning to the broader SI industry and contribute to establishing a more transparent and fair subcontracting environment.

Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)