If there’s anything harder than deciding what to outsource, it’s negotiating a fair price.
In the past, fixed-price or cost-plus pricing models were an adequate, if imprecise, way to compensate outsourcers. But today’s competitive marketplace offers CIOs new alternatives that add flexibility and agility to these relationships. Indexed pricing, gain sharing, and capacity or utility pricing promise a stronger correlation between business results and IT-resource consumption. They also add risk, though, in the form of complexity and costly overhead. CIOs need to balance flexible prices with ease of administration and make sure pricing mechanisms allow the requirements of the business to drive technology decisions, rather than the other way around.
Authors: Edward Hansen, Sol Irvine
Source: Optimize Magazine
Subjects: IT / Technology / E-Business, Outsourcing / BPO
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