Achieving High Value Through a Total Cost of Operations (TCO) Pricing Model

Summary

Traditional gains from Contact Center Outsourcing (CCO) engagements are flatlining. At the same time, customer expectations are increasing, making enterprises look for sourcing engagements that contribute directly to business outcomes, such as reduced cost of operations and enhanced customer experience. Since all innovation involves risk, enterprises also now expect service providers to put some skin in the game and take a portion of the risk.

These changes are driving CCO engagements towards outcome-linked pricing models, where the service provider’s entire fee is linked to being able to deliver pre-defined, measurable business outcomes. The Total Cost of Operations (TCO)-linked pricing model is one such construct that has been gaining ground in the recent past. However, to successfully orchestrate the TCO-linked pricing contract, enterprises need to implement measures such as stakeholder buy-in, due diligence of delivery operations to calculate costs and anticipate risks, to name a few.

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