Executive Summary

Pricing IT outsourcing services has always been an area of great interest and can be scanned through the lenses of both buyers and suppliers.  From the supplier’s point of view, pricing is a combination of cost and margin.

Several factors such as location of resources, maturity of the supplier, and complexity of the job content govern costs.  Margin enjoyed by a supplier is a more complex topic, which less tangible factors often drive.

For the purpose of this analysis we separated suppliers depending on the location of majority of their service-delivery centers as follows:

• Multinational Suppliers.  We observe multinational suppliers (MNCs) to be fairly mature in both pricing and service delivery.  They frequently use complex pricing models and employ a mix of onshore and offshore resources.
• Indian Suppliers.  We observe Indian suppliers typically concentrate their operations in low cost offshore locations and tend to gravitate toward lower complexity in pricing, typically preferring an input-based model.

This whitepaper focuses on two areas of pricing:

• Comparison of similar rates between offshore and MNC players
• Comparison of margins on offshore rates across skills in ADM and IO

This paper discusses:

• IT outsourcing services pricing and its components
• Onshore and offshore rates and the difference in these rates and margins that offshore and MNC players charge