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BPO Future Forward: 8 Best Practices for a Win Win Outcome-Based Pricing Model

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In the current finance and accounting outsourcing (FAO) scenario, service providers offer flexible pricing options to clients – fixed term, full time employee (FTE), transaction, and outcome-based pricing models. Among these, the traditional FTE model is fairly simple to execute and evaluate. However, it falls short of providing maximum value to both clients and service providers.

Therefore, next-generation buyers or clients expect outsourcing partnerships to provide more than just a fixed number of employees. They expect that service partners join forces and help them achieve business outcomes and share risks. As a result, innovative outsourcing partners are increasingly offering the best-fit pricing model for long-standing partnerships – outcome-based. Also known as gain sharing, the outcome-based structure dictates that service partners are paid only when pre-agreed business outcomes are achieved.

This drives the fundamental advantage of outcome-based pricing model - mutual benefits. Clients are encouraged by higher cost savings, value maximization, and focus on business outcomes. Service partners, on the other hand, look forward to higher risk appetite, better understanding of client businesses, and adding more value.

A word of caution – outcome-based pricing has certain inherent uncertainties based on factors that are not completely under the control of service partners. The following provides eight best-practices for a win-win outcome-based pricing model.

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BPO Future Forward: 8 Best Practices for a Win Win Outcome-Based Pricing Model

  1. 1. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based @Infosys_bpo #FAO pricing model
  2. 2. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model Outcome-based pricing models are relatively new, but deliver tangible value to clients and outsourcing partners. However, the challenge lies in getting the pricing structure right and putting in place the right operational controls. Here are 8 best practices to create an outcome-based pricing model that delivers long-term @Infosys_bpo #FAO mutual gains to an outsourcing partnership.
  3. 3. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model 1 @Infosys_bpo #FAO Outsourcing partners need adequate time to meticulously understand client businesses and define sound baselines 2 Innovation boards, strong reporting and governance structures, and regular meetings identify the right business outcomes OFFER A WARM UP PERIOD DRAFT A BLUEPRINT
  4. 4. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model 3 @Infosys_bpo #FAO Joint reviews of data and processes ensure confidentiality of financial information, identify errors, and mitigate fraud 4 Calculation of quantifiable results and benefits upfront mitigates misconceptions INTRODUCE CHECKS AND CONTROLS SET MEASURABLE OUTCOMES ONLY
  5. 5. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model 5 @Infosys_bpo #FAO Identification of client dependencies creates accountability for process delays and inaccurate information 6 Exhaustive documentation of business components that will be impacted by the pricing model, right at the start, provides clarity DEFINE REVERSE SLA AGREE ON THE SCOPE
  6. 6. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model 7 @Infosys_bpo #FAO Create payout caps, which help avoid extreme volatility and hedge some risk 8 Compulsory inputs from pricing, domain and process teams creates the best-fit pricing model ADD RISK PREMIUMS INVOLVE KEY STAKEHOLDERS
  7. 7. THE FINANCE & ACCOUNTING (F&A) SERIES 8 best practices for a win-win outcome-based pricing model @Infosys_bpo #FAO FIND OUT MORE Blog post READ White Paper READ Infographic VIEW Network with industry leaders at InfosysBPO.com/community InfosysBPO.com/BPOFutureForward

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