Skill Portfolio Rationalization

Without even realizing it, buyers of outsourced Application Development and Maintenance (ADM) frequently spend far more – even up to 20 percent more – than is appropriate for what they receive from their service providers.

This overspend results from a variety of factors:

• Due to large work volumes and the diversity of skills sourced, buyers may inadvertently give service providers an opportunity to build around existing rate cards, leading to hidden non-compliance and role misalignment
• As resource requirements evolve, buyer’s often find it impossible to locate the necessary skills on the existing rate cards, leading to a request for specialized skills which are often significantly more expensive
• Buyers build direct relationships with specific members of the service providers’ teams, and continue to use them even when they are promoted to more senior roles; this frequently leads to hiring more expensive resources for lower skill work
• To accelerate the contracting phase, buyers allow the service providers to define the skills, which can result in terminology and appropriate pricing inconsistencies and disconnects
  

Everest Group’s Skill Portfolio Rationalization offering extends beyond price benchmarking to identify and address the root causes of such skill definition and pricing misalignments.

To help clients stop chronically overpaying for services delivered, Everest Group analysts develop a comprehensive view of skill demand based on actual client demand data, assess and update job descriptions, define cost savings opportunities, develop a structure of job groups and appropriate rates, and benchmark the new skill portfolio. The end-deliverable to the client is a holistic, rationalized skill portfolio, standardized role descriptions and benchmarked prices for all sourced roles.

As the first step to Skill Portfolio Rationalization, Everest Group performs a diagnostic assessment of the outsourced portfolio. This assessment focuses on high-impact areas of optimization and estimates ball-park savings potential. To learn more please download a sample diagnostic assessment.