Introduction

This report is prepared by the Everest Research Institute to facilitate comprehensive price benchmarking analysis for IT infrastructure outsourcing (IO) deals. Everest Research Institute defines two models of the IO pricing:

• Output-based pricing model in which payment to a supplier is based on the consumption of the outsourced service by the buyer through units of output (e.g., price per server, per TByte of storage used)
• Input-based pricing model in which payment to a supplier is based on the supplier’s effort in delivering the outsourced service, measured in the units of input (e.g., labor hours).

This report includes data for both pricing models and provides you with the comparative pricing data and an adequate understanding of the pricing drivers in a typical deal environment. This report is aimed at helping suppliers align their company’s pricing strategy with global market standards and should be treated as a pricing intelligence tool that can help a supplier:

• Diagnose whether the pricing offered by a supplier in the recently won deals leaves any money on the table
• Diagnose whether the pricing offered by a supplier in the recently lost deals was the reason for the loss
• Identify acceptable pricing ranges for hypothetical client situations, that reflect likely future supplier’s deals  

Output-based benchmarking is conducted for 12 resource units spanning desktop support, network, mainframe, server, and storage and helpdesk towers. Eight drivers of pricing (e.g., asset ownership, support location) were included in the benchmarking analysis.  All the data is based on the actual outsourcing deals advised by Everest.

Input-based benchmarking is conducted for 16 resource skills on 4 dimensions (i.e., offshore, onshore, offshore resources onsite, onshore resources onsite). While most input-based benchmarking is based on rate cards, Everest added client deal data to provide more robust and insightful product.

In addition to the benchmarking data and pricing drivers overview this report also provides analysis of pricing trends in IO based on Everest proprietary data.   

Scope

The report consists of:

• Benchmarking process overview and analysis of pricing trends in IO
• Analysis of the pricing drivers in a typical deal
• Benchmarking report by resource unit (for output-based model) and by skill (for input-based model)