Gartner Research

Save Time and Money With 50 Contracting and Pricing Applications Outsourcing Guidelines

Published: 21 March 2013

ID: G00248643

Analyst(s): Grant Bayne, Gilbert van der Heiden , Frank Hersbach

Summary

Sourcing managers acquiring application services should apply 50 guidelines to improve their applications outsourcing contract, particularly for changes in rates, pricing indexes, currency fluctuation, incentives, discounts and improvement over time.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Transparent Pricing: Audit Rates and Embed Benchmarking Clauses in Your Contract
  • Actively Measure and Manage Offshore Versus Onshore Ratio Evolution Over Time
  • Aim for Prices per Unit That Buyers Can Measure and Control Themselves, and When Using Vendor-Defined Units, Ensure Buyers Understand the Cost Model Behind it
  • Limit the Use of Indexing to a Single CPI Only, and Select a CPI That Preferably Is the Country's CPI of the Legal Entity That Signs the Contract
  • Determine Incentive Ranges From a Historic Data Baseline; Ranges Need to Be a Realistic Representation of Targets That Can Be Realized, not Targets That Might Be Realized

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