As the global services landscape continues to evolve, 2024 has brought unique challenges. While the cost of delivering global services continued to increase, pricing came to a standstill for many services and even declined for some. The growing adoption of the Global Capability Center (GCC) model has further transformed the economics of outsourcing, prompting both buyers and service providers to reevaluate key elements of their agreements.

Watch this on-demand webinar as our panel of pricing experts analyzed the significant trends of 2024 and offer a forward-looking view on IT and BPO services pricing for 2025. This session will provide valuable insights into the pricing strategies and key levers that can help both parties achieve win-win outcomes in an increasingly complex environment.

What questions did the webinar answer?

• How has the cost of delivering IT and BPO services and pricing changed in 2024?
• What levers are buyers and providers pulling, and is a win-win arrangement possible
• What is the outlook for pricing and costs?

Who should attend?

• CIOs, CTOs, CDOs
• IT executives, IT strategy leaders
• BPO department leaders
• GBS leaders managing IT and BPO outsourcing contracts
• Pricing leaders
• Solutioning leaders
• Pre-sales leaders
• Large pursuits leaders
• Finance Leaders

Related Content:

• The Evolution and Growth of Global Capability Centers (GCCs) and the Critical Role of Providers | Blog
• Five Key Steps Buyers Should Take to Optimize Services Contracts | | Blog
• Unlocking Revenue Potential: Service Provider Strategies for Tools/Accelerator Monetization  | Blog

Given the cost pressures in most organizations, there are always questions about whether a particular outsourcing deal and vendor are generating the right value… 

This is where third-party contract benchmarking plays a crucial role in ensuring that outsourcing agreements are not only cost-effective, but also aligned with broader organizational goals, including transformation and innovation. 

Reach out to discuss this topic in depth. 

What is contract benchmarking?  

Contract benchmarking involves comparing the terms of an outsourcing agreement—such as pricing, service levels, and performance metrics—with industry standards or best practices.  

By engaging a third party for this process, companies ensure an objective and independent assessment, avoiding potential biases or limitations in internal evaluations. Benchmarking allows businesses to assess whether their contracts are competitive and aligned with market realities.  

Traditionally, contract benchmarking focused largely on costs and pricing , which remains an essential element. However, with the growing demand for more value-driven outcomes, modern benchmarking practices have expanded beyond mere cost comparisons to evaluate elements of transformation, innovation, and strategic alignment.  

Why third-party contract benchmarking is essential: 

1. Unbiased assessment: Third-party benchmarks provide an objective perspective, devoid of internal biases or conflicts of interest. This ensures that the organization is getting the best value for money, without compromising on quality or strategic alignment 

1. Informed decision-making: Outsourcing contracts often involve complex and multi-faceted arrangements. Third-party benchmarks give businesses access to a broad array of data points from multiple contracts, industries, and regions, allowing for informed decision-making. For instance, in a recent benchmarking engagement, the client realized that while its year 1 prices were in line with the market, by year 3 the pricing was 6% higher than the benchmarks. The reason was a provider-biased cost of living (COLA) clause. The client used these findings to not only re-align the current contract, but also its other outsourcing contracts 

1. Protection against overcharging: By analyzing market trends and comparing pricing models, third-party benchmarking helps organizations avoid paying too much for services. This becomes especially important in long-term legacy contracts where pricing can become quickly outdated given the rapid advancements in technology and rise of artificial intelligence (AI) 

1. Negotiation leverage: Armed with data from independent benchmarks, organizations have better leverage during negotiations. Whether it’s renegotiating a current deal or initiating a new one, benchmark data ensures that companies can negotiate from a position of strength  

1. Performance monitoring: Beyond pricing, third-party benchmarking evaluates performance levels against industry standards. This ensures that service providers are delivering at par or above market expectations 

Important to note here, that benchmarking should not be treated as a silver bullet to make an outsourcing relationship difficult for service providers. There can be (and have been) situations where the benchmarks revealed that the provider was truly delivering good quality services at competitive prices. 

Moving beyond costs

In today’s digital era, organizations are now expecting their outsourcing partners not just to deliver services efficiently but to actively contribute to innovation, process improvements, and digital transformation. Consequently, contract benchmarking is evolving to measure these broader outcomes.  

1. Reclassification of the pricing model: Benchmarking plays a pivotal role in evolving pricing models and resource unit structures by providing a data-driven comparison against market standards . For example: As an outcome of a recent benchmarking exercise, a client evolved its network services resource units based on the size/configuration of the device, compared to one based on the underlying functionality i.e. core/distribution/access switch, as that was the key factor that really determined the provider’s efforts and consequently the price for the service provider.
2. Optimize the pricing model: Benchmarking can uncover inefficiencies where low-cost services were bundled with higher-cost ones. By decoupling these services, the clients can transition to a more granular and flexible pricing model. This allows for better cost control and a model more reflective of the actual service delivered. 
3. Rate card rationalization: On multiple occasions, benchmarking projects have also helped clients to re-look and rationalize their rate card structure removing inefficiencies such as role redundancies, unnecessary clubbing or the blending of diverse roles, varied experience bands associated with the same role, mix-up of role and skills hierarchy, etc.  
4. Innovation and digital enablement: Modern contract assessments, look at how service providers are contributing to digital transformation initiatives—whether it’s adopting new technologies like AI, automation, or cloud computing to improve efficiency and productivity.  

Strategic alignment through benchmarking: 

Third-party benchmarking helps ensure that outsourcing contracts are strategically aligned with an organization’s long-term goals. While cost will always be an important factor, businesses must consider how outsourcing arrangements contribute to their overall growth and transformation objectives. A benchmark that evaluates a vendor’s ability to innovate, improve service quality, or enhance customer experience provides a more holistic view of the contract’s value.  

The future of contract benchmarking: a focus on value creation: 

As outsourcing continues to evolve, especially with the advent of generative AI (gen AI), contract benchmarking will further emphasize value creation rather than just cost savings. 

Service providers will be evaluated on their ability to drive business outcomes—whether it’s through enhanced efficiency, improved customer satisfaction, or supporting a company’s digital transformation journey.  

In conclusion, third-party contract benchmarking is no longer just about ensuring you’re paying a competitive price. It’s about ensuring that your outsourcing relationships are aligned with your business objectives, driving innovation, improving performance, and creating long-term value. 

By adopting a broader approach to benchmarking, organizations can ensure they are not just getting the best deal but also the best partner for their strategic transformation. 

If you found this blog interesting, check out our blog focusing on Nine Tactics That Can Improve Salesforce Contract Negotiation | Blog – Everest Group (everestgrp.com), which delves deeper into another topic of Benchmarking. 

If you have any questions, would like to delve deeper into the Commercial and Solutions Analytics service line, or would like to reach out to discuss these topics in more depth, please contact Ricky Sundrani and Rahul Gehani,

Our expert team specializes in commercial and solutions analytics, such as pricing assurance, to guide organizations around the world to build highly productive deals in the market. Analyst relations (AR) teams can help their sales and go-to-market stakeholders harness these powerful capabilities to enhance competitive positions.

Watch this LinkedIn Live session to gain new insights into how Everest Group’s pricing expertise can advance go-to-market teams. Don’t miss the chance to ask questions live during the event!

During this collaborative LinkedIn Live session, we discussed:

How Everest Group can increase the competitiveness of deal pursuit activities of technology and service providers
The emerging segments within this ecosystem
Ways AR teams can enable key sales and go-to-market stakeholders to build productive engagements

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Navigating Collaborative Models

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Innovation Fund

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In the IT and BPO outsourcing industry, growth rates have declined over the past eight quarters, testing business resilience, challenging providers, and evolving buyer expectations. However, the market is poised to see a reversal.

Watch this webinar to hear our pricing experts reveal key commercial trends they have witnessed throughout outsourcing deals made in H1 2024. Specifically, they discussed the pricing of software and cloud platforms and outlined the potential implications of this year’s trends for buyers.

Attendees came away with an understanding of where buyers can optimize their spend, where portfolios may be losing value, and potential solutions providers can offer in light of current shifts.

What questions did the webinar answer?

• How has the demand for outsourcing services in APAC evolved in 2024?
• What are the top learnings and open questions around pricing model changes, generative AI, SaaS pricing, and their impact on commercials in IT and BPO deals?
• What is the outlook for pricing in APAC?

Who should attend?

• CIOs, CTOs, and CDOs
• IT strategy leaders and executives
• BPO department leaders
• GBS leaders managing IT and BPO outsourcing contracts
• Pricing leaders
• Solutioning leaders