Client stories

Helping a leading retailer benchmark an outsourcing proposal

When a leading retailer took its first steps into outsourcing, Everest Group empowered it to achieve US$4 million in savings through detailed benchmarking and negotiation expertise.

Client challenge

Navigating unchartered outsourcing waters

A top retailer with over 800 stores found itself navigating unfamiliar waters when outsourcing IT services for the first time. The initial proposal from the outsourcing vendor spanned application development and maintenance, infrastructure management, and end-user support services. With just one week to review the complex proposal, the stakes were high, and the clock was ticking.

The retailer knew that diving into outsourcing without proper guidance could lead to disappointment, hidden costs, and poor service levels. More concerning was the risk of getting trapped in an expensive, multi-year contract that failed to meet its needs. Seeking confidence during this crucial first step, the retailer chose Everest Group to provide independent benchmarking and equip its team with the insights needed to negotiate effectively.

Everest Group solution

Bringing clarity to complexity

Drawing from our extensive experience empowering clients to maximize value from outsourcing engagements, Everest Group moved swiftly. Our team conducted a custom pricing analysis, benchmarking the proposal against current market rates to identify areas of opportunity.

We provided detailed insight into how the vendor’s proposed resource ratios, productivity metrics, and pricing for infrastructure and applications compared to industry benchmarks. Our analysis revealed several areas where the vendor’s pricing was 15-20% higher than market rates.

Armed with data-backed recommendations, Everest Group outlined specific services and pricing metrics the retailer could negotiate for lower costs and better service levels. We also delivered proven negotiation tactics to help the retailer steer discussions with the vendor, including how to demonstrate the pricing gaps uncovered in our analysis and when to hold firm versus compromise.

Results and impact

HUGE savings unlocked

The retailer gained the confidence boost it needed to drive a hard bargain. Just one week after engaging Everest Group, the retailer had already achieved US$4 million in savings on the vendor’s initial proposal, reducing the total contract value by 6%.

“We were very pleased with the level of detail Everest Group provided to enable us to negotiate confidently. Their expertise proved instrumental in getting the best possible deal for our first major outsourcing contract.”
– IT sourcing manager

Why Everest Group?

The retailer selected Everest Group because of our reputation as the foremost authority on outsourcing advisory. Everest Group’s market insights and negotiation expertise empowered the retailer to make a major transformation with confidence and secure significant savings on its first major outsourcing engagement. This engagement exemplified Everest Group’s unique ability to empower clients to maximize value from complex IT services deals through data-driven insights and end-to-end negotiation support.