Articles Posted in Cost Optimization

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Global In-House Centers (GICs) were first seen in India in the 1990s as an alternative to IT outsourcing arrangements with third-party vendors. The principal driver was labor-cost arbitrage between the United States or Europe and India. The banking, financial services and insurance industries were early adopters. In their original iteration, GICs were known as “offshore […]

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Happy new year, outsourcing industry! In our last post, we posited that the new year brings an opportunity for a fresh start in structuring fundamental aspects of an outsourcing transaction. We pointed to the following mechanisms used to restrict a customer from an early exit from an IT outsourcing deal as being outdated, having originally […]

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The advent of the new year provides an opportunity to contemplate a fresh start — and that’s just what is needed when it comes to structuring the fundamentals of an IT outsourcing transaction. Early IT outsourcing transactions typically involved significant capital investments by suppliers, who would often purchase the customer’s existing assets and promise to […]

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This is the second of two postings that discuss SaaS pricing. In the earlier posting, we discussed the underlying economics of SaaS solutions and their implications for how SaaS services are priced. This posting identifies some key considerations in negotiating pricing for SaaS services that can help lower total subscription costs. Committed Growth vs. Incremental […]

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Software as a Service (SaaS) is growing rapidly as an alternative to licensing on-premises software for corporate customers. As reported by Forbes earlier this year, analysts are forecasting that global SaaS revenues will reach $10.6B in 2016, representing a 21% increase over projected 2015 spending levels. By 2018, 27.8% of the worldwide enterprise applications market […]

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As the range of technology employed by the UK’s leading banks widens, the balance between cost-effectiveness and manageability of solutions becomes increasingly difficult to strike. Mike Pierides (Partner) from law firm Pillsbury examines some of the challenges banks face in sourcing the technology they need to stay competitive. Background The banking sector in the UK […]

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In the early days of outsourcing IT as a managed service, it was not at all unusual for a managed services price to be all inclusive of assets, services and facilities. That bundle of services and assets usually came with a “black box” style pricing that was devoid of transparency and created a myriad of […]

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As noted in our previous blog postings on the subject (Applications Outsourcing Pricing – Part 1 and Applications Outsourcing Pricing – Part 2), the most prevalent model for pricing applications outsourcing services involves the following components: a fixed monthly charge for applications maintenance and support; a fixed monthly charge for a baseline number of application […]

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As noted in our previous blog posting on the subject, the most prevalent model for pricing applications outsourcing services involves the following components: (1) a fixed monthly charge for applications maintenance; (2) a fixed monthly charge for a baseline number of application enhancements hours (typically included as part of the fixed fee for applications support) […]

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The pricing structure of outsourcing transactions often reflects a balancing of competing objectives. In the case of applications outsourcing services, most customers want the pricing structure to provide predictability and proper financial incentives for the supplier to continually increase productivity and efficiency in service delivery. At the same time, both the customer and supplier usually […]