Benchmarking – Everest Group

Mapping the Next: Key Priorities for 2025 | Webinar

Alisha Mittal — Mon, 09 Dec 2024 19:29:46 +0000

Join us as we reveal findings from the annual “Mapping the Next: Key Priorities for 2025” study, offering an inside look into the top concerns, expectations, and goals of industry leaders for the coming year. This session will spotlight leaders’ core priorities, such as technology adoption, digital transformation, generative AI, customer experience, and sustainability.

Our experts will also discuss critical global services decisions, including build vs. buy strategies, in-house vs. outsourcing, onshore vs. offshore operations, and the balance between long-term and short-term contracts.

This is your chance to hear exclusive, high-impact insights and gain an edge so you can make more informed decisions that will improve organizational resilience, competitiveness, and chances of future success for 2025.

What questions will the webinar answer for the participants?

What are the trends that will shape the global services market in 2025?
What are the likely changes in sourcing spend, sourcing strategy (in-house vs. outsource), and locations?
What is the enterprise outlook on tech and AI adoption in 2025?
Which digital services and next-generation capabilities are expected to be in demand?
How are outsourcing deals, enterprises’ leverage of service providers, and bill rates expected to change?

Who should attend?

Enterprise/business leaders (CIOs, CDOs, CTOs, CFOs, CPOs)
Global sourcing leaders
GBS/shared services center heads
Leaders at IT and BP providers

Outsourcing Services Cost and Pricing: The Trends to Know to Focus on the Win | Webinar

Rahul Gehani — Tue, 03 Dec 2024 14:28:16 +0000

WATCH THE WEBINAR ON-DEMAND

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

Cybersecurity Services Price Benchmarking | Market Insights™

Ricky Sundrani — Wed, 06 Nov 2024 07:02:49 +0000

Cybersecurity Services

LEARN MORE ABOUT OUR PRICING SERVICES

Third-Party Contract Benchmarking in Outsourcing: Going Beyond Cost Optimization to Drive Transformation | Blog

Rahul Gehani — Thu, 24 Oct 2024 10:11:33 +0000

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:

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

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

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)

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

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. 

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.
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. 
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.  
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,

Five Key Steps Buyers Should Take to Optimize Services Contracts | Blog

Shatakshi Pandey — Thu, 12 Sep 2024 09:30:40 +0000

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)