Right Resource Volumes- The Key Aspect of Successful Outsourcing Contract, Reveals Latest Report by Alsbridge

Coming up with the accurate contract volumes and structure is extremely important for a successful outsourcing contract, according to Alsbridge Inc., a benchmarking, sourcing and transformation advisory firm. The firm today released a report, “Keys to Driving a Successful Outsourcing Contract,” which discusses the key aspects of any contract that can drive the initial projections of savings and return on investment.

Chip Wagner, CEO, Alsbridge Inc., says, “If some or all of these aspects are not carefully thought out and strategized, you can expect mixed degrees of impacts on the financial benefits of your outsourcing contract.”  The main aspects are:

• Resource's types and baselines
• Fixed and variable portions
• Unit rates
• ARCs/RRCs
• Dead bands
• Re-Negotiation points

According to the report, making sure that the base volumes are correct for the life of the outsourcing contract will ensure accurate pricing and minimize adjustments in the contract due to “change." While fixed and variable components are a must for getting the “best price,” unit prices, that make up the ARC’s (additional resource charges) and RRC’s (reduced resource charges) in a contract, are the vehicle that enables both the client and service provider to adjust the overall charges of the contract.

Further, the report suggests incorporating dead bands and renegotiation bands in the outsourcing contract. Dead Bands minimize the billing complexities of minor changes to the resources consumed. The rationale is that service provider costs do not change significantly in order to respond to different call volumes, as the service desk has some flexibility, and capacity built on the model. The Renegotiation band is a point in the contract when the resource volumes and charges from a service provider have changed significantly and may begin to have an impact on the way the outsourcing contract was setup initially.

“Get the resource volumes right, both initially and over the life of the contract, and this will be the major driver in achieving success,” says Dieter Thompson, president Alsbridge. “Also, getting the variable portion right will help to ensure that changes in volume are aligned with changes in your price.”

 For further details, download the complete whitepaper Keys to Driving a Successful Outsourcing Contract.

About Alsbridge Inc.

Alsbridge is a global consulting firm that helps companies transform and optimize the way they purchase, manage and leverage technology and business processes.   We have over 200 team members on 3 continents serving over 200 clients a year including more than 40% of the Fortune 500.  Alsbridge has helped hundreds of companies reduce costs and get more value from their vendors.  Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your service providers.  Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, network carrier services, hardware and software, application support and development, business processes and cloud services.

EDITORS/WRITERS: Journalists interested in covering the above topic or interviewing one of our SMEs please contact:

Scott Tims
Office: 214-378-7970 ext. 278
stims@thepointgroup.com
www.alsbridge.com