Dynamics of Emerging Pricing Models in Business Process Management

-- WNS and ISG Point of View

Related To: Procurement Cost Savings Pricing Models outsourcing outcome-based pricing alternative pricing models BPM incremental revenues transaction- based pricing

Key Points

After two decades of outsourcing and offshoring, the benefits from traditional sourcing models are plateauing in terms of cost savings and talent access
Enterprises need new sources of value beyond cost savings, and service providers need new sources of competitive differentiation and margin levers
Emerging pricing models — transaction and outcome-based pricing — provide an opportunity for both parties to shift the sourcing conversation to value-based models
Pricing models in BPM have been evolving. Finance and accounting outsourcing is likely to experience a higher prevalence of transaction-based pricing rather than FTEs

Key Points

A Perspective on Current Prevalence and Future Adoption by Dinesh Goel, Partner at ISG, and Somak Roy, Director at ISG

Today, enterprises need to look beyond cost savings, while service providers need new sources of competitive differentiation and margin levers. In Business Process Management (BPM), Finance and Accounting Outsourcing (FAO) has historically followed FTE-based pricing. However, in recent times, some areas have seen a very gradual shift towards new, value-based models such as transaction-based and — in a more limited way — outcome-based pricing.

This whitepaper answers questions about why and how the new models are likely to evolve in the long term, how an enterprise should evaluate which pricing model would work for a specific engagement, and what an enterprise can do to ensure realization of the benefits through these new pricing models.

The opinions in the whitepaper are backed by three WNS case studies on alternative pricing models in BPM that detail the advantages of a non-FTE model, transition phases, and benefits.

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