Benchmarking

Innumerable factors contribute to misalignment of IT Outsourcing (ITO) and business process outsourcing (BPO) engagement pricing to global market standards. Everest Group’s portfolio of benchmarking offerings, based on rigorous, proprietary methodologies, address these issues to ensure its clients receive and maintain the outsourcing value for which they have contracted, without overpaying for services delivered.

Input/FTE-Based Benchmarking

Input-based benchmarking provides buyers with comparative pricing data by resource skill, and an understanding of the pricing drivers in their deal environment. Everest Group leverages two approaches to harness this intelligence for its clients: direct benchmarking, which is function and role-specific, and based on Everest Group’s comprehensive live-deal benchmarking database, and ground-up benchmarking, which is based on Everest Group’s proprietary location optimization database.

For more information on Everest Group’s Input/FTE-Based benchmarking services, please review this report, Infrastructure Outsourcing Input-based Price Benchmarking. Please click here to request our scope assessment template.

Output/Transaction-Based Benchmarking

Output-based benchmarking provides buy-side organizations with comparative pricing data by resource unit for each ITO tower or BPO process, and insights on the pricing drivers in comparable engagements. Output or transaction-based benchmarking provides insight into how differing levels and delivery models impact pricing.

For more information on Everest Group's Output/Transaction-Based benchmarking services, please download our whitepaper on Demand Variation in Output-Based Pricing Contracts.

Pricing Model Evaluation

As buyer’s requirements evolve throughout the lifecycle of their outsourcing engagements, the need for a different pricing model frequently arises. For example, certain pricing models lack the flexibility to scale to changing needs, and others do not incentivize the provider to invest in the relationship.

By assessing the cost, control, flexibility and risk management components of the engagement relative to the buyer’s primary motivations, Everest Group’s Pricing Model Evaluation can help them select the right pricing model or decide to transition to a different one. For example, if a buyer’s key driver is risk management, Everest Group may recommend a change from input-based pricing by headcount to outcome-based payment by achieved milestones.

For more information on Everest Group’s Pricing Model Evaluation offering, please download our report, Moving from Input-based to Output-based Pricing - Why, When, and How?

Operational Metrics Benchmarking

Outsourcing service providers utilize a variety of levers – including delivery pyramids and span of control, the onshore/offshore delivery mix, utilization rates and location leverage – to optimize delivery and pricing. But buyers need to understand the extent to which their service providers are employing these levers to ensure they achieve optimum sourcing spend.

By assessing the engagement on multiple dimensions such as cost competitiveness, pricing maturity, process maturity, quality insurance, infrastructure, project management and workforce management, Everest Group’s Operational Benchmarking offering measures their situation against best-in-class peers to determine the appropriateness of their spend from an operations perspective. Everest has also helped buyers benchmark their insourced operational environment to ensure they achieve maximum value.

Contract Benchmarking

The highly dynamic nature of outsourcing engagements mandates periodic contract review to ensure contract levers – including payment options, productivity gains, volume-based pricing, inflation adjustment clauses and service level agreements – remain aligned to market standards.

Everest Group’s Contract Benchmarking service helps buyers address all aspects of their outsourcing contracts at different stages of the program lifecycle. Everest Group benchmarks overall demand, governance, performance and payment metrics in the contracts gain a holistic view of the current business environment that may require contract changes without increasing the cost of outsourcing.

Sample Deliverables

To learn more about our Benchmarking services, please download these sample deliverables:

• FTE-based Price Benchmarking for IT-ADM Services
• FTE-based Finance and Accounting Price Benchmarking
• Analysis of Operating Cost and Pricing Trends in IT-ADM

Case Studies

To gain a view of how others have benefited from our Benchmarking services, please download these case studies:

• Everest Group's Pricing Benchmarking Case Study Compendium