Cybersecurity Services
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.
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.
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.
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.
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.
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,
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.
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.
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 [email protected], or via Shatakshi Pandey ([email protected]), Geetesh Makkar ([email protected]), Amy Fong ([email protected]) and Prateek Gupta ([email protected])
Price Benchmarking
In an era of ceaseless change, ever-evolving market dynamics, and an unrelenting demand for progress, the traditional pace of value creation is no longer enough. Creating accelerated value has become paramount for business leaders.
How do you achieve accelerated value? Enterprises must embrace innovation while effectively managing change. This approach will help businesses navigate rapid transformation while ensuring stability and sustainability.
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We discussed the major concerns, expectations, and trends for 2024 and provided recommendations on how to drive accelerated value from global services – helping position organizations to plan and align goals and succeed in 2024.
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