In today’s IT services landscape, early signs of recovery are beginning to emerge. While North America shows encouraging momentum, Europe remains steady, making it an optimal time for organizations to prepare for the next phase of growth.

This webinar provided insights into the IT services market in EMEA, focusing on current outsourcing pricing trends and the forecast for 2025 in key European markets. We’ll also share our observations on what European organizations expect from their IT service providers and what makes a successful outsourcing deal in today’s dynamic environment.

Watch on-demand to hear from our commercial and solution experts as they discuss strategies to prepare for upcoming deal renewals in 2025 and how to navigate the shifting IT services landscape with confidence.

What questions did the webinar answer?

• How has the demand for IT services in EMEA evolved in 2024, and what’s the outlook for 2025?
• What are the latest outsourcing pricing trends, and what is the forecast for 2025 in European markets as we start to see early green shoots of recovery?
• What do European organizations expect from their IT service providers?
• What does a good outsourcing deal look like in this shifting market?

Who should attend?

• Service providers
• Sales leads
• Category managers
• Sourcing and vendor management stakeholders

In the current evolving technology landscape, generative AI (gen AI) has been leveraged as a transformative force, promising opportunities for innovation and efficiency, in most of the contemporary IT and BPO services deals.  

Proposing gen AI in the solution is no longer considered as a differentiator for service providers but has become a table stake in the past two to three quarters. In line with the evolving nature of gen AI, contractual language must also adapt swiftly to address the unique challenges and opportunities presented by these solutions in information technology (IT) and business process outsourcing (BPO).  

Here’s our take on which critical contractual considerations must be prioritized during the contracting stage, to improve the effectiveness of such solutions in services engagements.  

Reach out to us to discuss this topic further with our expert analysts. 

Critical contractual aspects for gen AI sourcing 

Ensuring robust contractual clauses in service agreements is paramount for the success of any partnership involving gen AI solutions. While numerous factors come into play, the following critical elements should be considered in the framing of any contract to establish a solid foundation for collaboration:  

• Input data treatment: The legal landscape surrounding gen AI is as complex as the technology itself. Enterprises must navigate a maze of industry-specific regulations and regional laws that directly impact data procurement and model training. Enterprises need to actively monitor the origins of input data to ensure it has been legally procured. Contracts must explicitly define the sources of data—whether they are server logs, IT service management (ITSM) ticket dumps, or other proprietary datasets. The nature of this data must be clearly understood whether it is proprietary, copyrighted, or sensitive. The risks associated with potential IP infringement cannot be overstated, and enterprises must protect themselves by incorporating robust clauses. Aligning and outlining data handling protocols with the vendor is essential to safeguarding data privacy and security. Contracts should define a clear RACI matrix for how data will be managed 

• Large language models (LLMs) and 3rd party original equipment manufacturers (OEMs) leveraged: The parties should have clarity on the LLM which will be used for the solution. Will it be an open-source model, a pre-trained model, or a custom-built one? Additionally, is there clarity on who will procure the LLM and any associated tools—the vendor or the client? 

• Acceptance criteria: Defining the Definition of Done (DoD) and acceptance criteria to agree upon the tasks that must be completed, to consider the unit of project delivery to be successful is of utmost importance, especially when the vendor is managing the project delivery. Tracking and monitoring progress towards these goals can be effectively managed by having robust service level agreements (SLAs) and key performance indicators (KPIs) in the contract 

• Commercial construct: a critical consideration for parties engaging in gen AI services is the commercial construct. Options include time and materials (T&M), fixed fee, or per-use case. Exploring outcome-based models, even in a hybrid approach, can also be a valuable avenue to align incentives and measure success based on the desired results  

Selecting the desirable considerations will make a significant difference in procurement 

When procuring gen AI solutions, the contracts governing these deals are not merely administrative formalities—they are strategic instruments that dictate the success or failure of the entire initiative. To truly capture this potential, enterprises and service providers must iteratively refine contractual clauses, ensuring they align with the unique demands and risks associated with implementation.  

In conclusion, sourcing gen AI solutions is a high-stakes endeavor, with contracts serving as the linchpin for success. Enterprises and service providers must adopt a strategic approach to these agreements, emphasizing and negotiating critical clauses to ensure optimal outcomes. By meticulously crafting contracts that address critical aspects, both players can navigate the complexities of gen AI sourcing and position themselves to maximize the benefits. 

Everest Group partners with both enterprises and leading IT service providers on mandates related to pricing strategies, productivity gains, and pricing impact related to gen AI. 

If you found this blog interesting, you can read our Meeting The ROI Bar: Client’s Expectations For Generative AI In IT Outsourcing Deals | Blog – Everest Group (everestgrp.com) blog, which delves deeper into the topic of gen AI. 

If you found this blog interesting and you want to discuss this topic in more detail or for a detailed analysis, contact us at benchmarking@everestgrp.com, or please contact Prateek Gupta and Swapnil Pamecha. 

In today’s competitive business landscape, maximizing value in outsourced services is crucial for buyers to achieve savings objectives and maintain a competitive edge.

This blog delves into strategies to ensure cost efficiency and foster high-value vendor partnerships, providing a comprehensive focus on these approaches to vendor engagement, which in return can drive significant outcomes and enhance a firm’s overall performance.

Reach out to us to discuss this topic further with our expert analysts.

• Role rationalization and skill-tier categorization: When sourcing teams lack a well-defined rate card structure, they struggle to compare vendor rates effectively, potentially leading to value leakage.

They should maintain a standard catalog of roles with clearly defined experience range and categorize key skills in tiers such as Standard, Premium and Niche skills, in which depend on existing technology landscape.

While comparing multiple vendor rate cards, this grouping will ensure clarity on pricing premiums and transparency in skill categorization. Notably, those who engage in role rationalization process with external benchmarking firms can potentially achieve overall cost savings up to 20-25%.

In one deal scenarios, Vendor A charges $100/hour for .Net developers and $125/hour for full stack developers, with a 25% price premium on premium skills. This leads to overall cost savings for the enterprise buyer. On the other hand, Vendor B charges $110/hour for .Net developers and $120/hour for full stack developers, with only a 9% price premium, but resulting in a higher total cost.

• Value leakage audits: Increasingly buyers are engaging third-party benchmark firms to conduct value leakage audits. These audits help determine if vendors are complying with contracts, invoices are billed correctly, service fees are competitive with respect to scope, and service credits are being applied properly by vendors.

• Including a price benchmarking clause: Buyers often include a benchmarking clause in their Statements of Work (SoWs) with vendors. This clause specifies the terms and conditions for benchmarking service fees to ensure they remain competitive with market rates. It may be a recurring annual exercise where the enterprise engages an external firm to seek benchmarks during the contract tenure.

• Tracking comprehensive metric scorecard: Traditional metrics include Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) related to savings, process improvements, and innovation. However, buyers are now including Experience Level Agreements (XLAs) and Objectives and Key Results (OKRs) in scorecards which offers a more holistic view of vendor performance by focusing on service quality, business alignment, and value realization.

• Standardized measurement practices: Alongside implementing scorecards, buyers are establishing robust measurement practices to ensure accurate and fair vendor evaluations. These practices include defining clear data collection methods, implementing customizable metrics, and conducting regular audits. This flexible, iterative approach helps buyers identify value-creation opportunities, address performance gaps, and cultivate high-value vendor partnerships.

If you found this blog interesting, you can now register for our The Evolution Of Next-gen Customer Engagement Platforms | LinkedIn Live – Everest Group (everestgrp.com) event on September 26. 

To discuss this topic in more detail or for a detailed analysis, contact us at benchmarking@everestgrp.com, or via Shatakshi Pandey (shatakshi.pandey@everestgrp.com), Geetesh Makkar (geetesh.makkar@everestgrp.com), Amy Fong (amy.fong@everestgrp.com) and Prateek Gupta (prateek.gupta@everestgrp.com)

Generative artificial intelligence (AI) has disrupted the global market since its scaled capabilities were unveiled to the world by OpenAI at the end of 2022.

Today, most enterprises either want to adopt this game-changing technology or are looking to build their own gen AI capabilities, but at what cost? Reach out to us to discuss this topic further with our expert analysts.

Billions of dollars have now been invested into building and leveraging gen AI, with the hope that it will improve business operations with unprecedented productivity improvements.

Similarly, on the information technology (IT) services side, many service providers have begun investing in proprietary gen AI solutions to pass on the associated efficiencies to their clients, all while identifying new use cases during delivery. While the offering of gen AI-driven productivity was considered a differentiator for providers in 2023, this has become a table stake in the past two to three quarters. Despite all of this, a big question remains: “Is the providers’ proposition aligning with client expectations regarding ROI?”

In this blog, we delve deeper into the current expectations in IT outsourcing deals.

Demanding more from gen AI: enterprises raise the bar

With a varying degree of success from the proof of concepts (POCs), enterprises now expect service providers to clearly demonstrate a visible return on investment before approving fresh investments. Enterprises are now expecting clear call outs on both capabilities, as well as true efficiencies from their gen AI solutions.

In this regard, some of the leading providers have started to highlight specific details as a part of their gen AI solution value proposition, such as:

1. Quantifying productivity: What are the incremental productivity gains over the deal term?
2. Cost benefits: How would the improvement in productivity translate into noticeable cost benefits? This should take into consideration the reduction in the overall Total Contract Value (TCV) of IT outsourcing deals, both with and without the gen AI proposition
3. Intangible benefits: How will the gen AI solution lead to an enhanced user experience? For example, highlighting potential reduction in the meantime to resolve (MTTR) or improvement in customer satisfaction (CSAT) scores

Please note that with the advent of new technologies like Agentic AI, the cost implications and the productivity benefits are also expected to increase in the future.

The gen AI return on investment (ROI) dilemma: Is it worth the hype?

Despite the allure of gen AI, executives are under increasing pressure to justify its seemingly hefty price tag. Demanding an ROI of at least 2-2.5x, they’re wary of projects that fizzle out after initial proofs of concept due to the soaring costs and its unclear benefits.

To address these concerns, enterprises are demanding greater transparency and more accountability from providers, scrutinizing costs associated with resources, infrastructure, data, and large language models (LLMs).

There are also concerns around the associated capital expenditure. In response to these demands, providers are strategically positioning gen AI as a long-term value proposition by amortizing the upfront costs over the contract period. In most cases, especially in competitive IT services opportunities, we are also observing a few leading providers proposing gen AI solutions as an investment from their side.

To safeguard the interests of both parties, contracts are now evolving to include detailed discussions on risk, regulatory compliance, commercial impact, and implementation costs. Periodic benchmarking clauses are also being negotiated to ensure ongoing accountability and prevent unforeseen expenses.

Everest Group partners with both enterprises and leading IT service providers on mandates related to pricing strategies, productivity gains, and pricing impact related to gen AI.

If you found this blog interesting, check out our virtual event, Gen AI Unhyped: How It Is Evolving and How to Plan for Success.

To discuss this topic in more detail or for a detailed analysis, contact us at benchmarking@everestgrp.com, or please contact Prateek Gupta and Anubhav Jain.

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The economic environment is currently uncertain due to concerns around inflation and geopolitical instability in parts of the world. As a result, enterprises are pushing service providers to deliver more while keeping costs static or even lowering them.

Providers can differentiate themselves through a mix of efficient solution sizing, which involves the best use of granular market insights, continuous service improvement levers (including generative AI impact), balanced risk-taking to do more with less, and competitive underlying rates.

In this webinar, Everest Group’s pricing experts discussed some of the true differentiators observed on recent deals and the outlook for these approaches.

What questions did the webinar answer for the participants?

• What selection criteria have enterprise clients prioritized in recent IT outsourcing deals?
• What are the price and solution sizing themes that land well in terms of win rates?
• What are the pitfalls that enterprises and service providers should be mindful of?

Who should attend?

• CIOs, CTOs, CDOs
• IT executives and strategy leaders
• GBS leaders managing IT outsourcing contracts
• Pricing leaders
• Solutioning leaders
• Large pursuits or large deal leaders
• Sales leaders

Learn more about current trends in pricing.

Chief Procurement Officers

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Persisting economic uncertainty and increasing geopolitical pressures continue defining the macroeconomic environment this year. Because outsourcing service providers are unable to pivot to meet changing demands, buyer satisfaction with providers is hitting a record low, and the Asia Pacific (APAC) region is no exception.

In this webinar, our analysts will discuss shifting buyer expectations and the defining characteristics of the outsourcing climate in 2023 from an APAC-focused lens.

We will also explore what sourcing leaders are doing to navigate uncertainties across a range of levers, including service provider portfolio shifts, location and talent strategies, pricing and contracting tactics, and engagement models.

Our speakers will discuss:

• What are the macroeconomic trends shaping the APAC outsourcing market?
• What are the top focus areas in APAC for buyers of outsourced services?
• What location and talent strategies are sourcing leaders adopting to overcome increasing uncertainties?
• What are the pricing trends and forecasts in APAC? Which skillsets are facing more demand?
• How should APAC-focused procurement leaders shape their contracting and negotiation strategies?

Who should attend?

• CPOs, CIOs, and CTOs
• Category managers
• Indirect sourcing leaders
• Buyers of outsourced services
• Strategic sourcing leaders
• IT and BPO department leaders
• Supplier management leaders
• GBS leaders managing IT and BPO outsourcing contracts
• Price-to-win teams from service providers
• Service providers’ sales leaders
• Service providers’ country heads

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Enterprises have leveraged SAP for more than a decade to manage and streamline their core business operations. In recent years, SAP expanded its predominantly on-premise enterprise products to the cloud. In response, providers have invested in tools and accelerators to align with this shift, helping enterprises migrate to the cloud seamlessly – creating a rapidly growing market.

Join this webinar to learn insights into the latest pricing and investment themes, enterprise challenges, and solutioning approaches in the SAP services market.

What questions will the webinar answer for the participants?    

• What are the key enterprise investment themes and opportunity areas for service providers in the SAP services market?
• What are the enterprise challenges arising with the SAP and service partner community?
• What are the approaches and key solution tenets that drive SAP pricing?
• What are the pricing trends observed in SAP-managed and transformation services?
• What are the differentiators and value adds proposed by leaders in SAP services?

Who should attend?

• CIOs, CTOs
• IT strategy heads
• Heads of outsourcing
• Procurement managers
• IT department heads
• Global sourcing mangers
• Vendor managers
• Heads of SAP services / application services
• Senior sales leaders
• Senior members of deal pricing teams

2022 has proven to be a constantly shifting and unpredictable year for outsourcing services. The first half witnessed an unprecedented demand surge accompanied by cost and price inflation, and the second half saw a slowdown in client decision-making with fears of a recession.

In this webinar, Everest Group’s pricing experts will analyze the trends observed this year and deliver the pricing outlook for IT and BPO services in 2023.

Our speakers will discuss:

• How the outsourcing services demand has evolved in 2022
• What the most successfully negotiated clauses have been in recent deals
• How the pricing of IT and BPO services has changed
• What the future outlook for pricing will be

Who should attend?

• CIOs, CTOs, and CDOs
• IT and BPO department leaders
• SVMOs
• CPOs
• Strategic sourcing leaders
• Category managers
• Supplier management leaders
• Vendor managers