Rate Card Rationalization in Outsourced IT Portfolios

14 Aug 2019
by Abhishek Sharma, Achint Arora

This report is available only to Strategic Outsourcing & Vendor Management members. For information on membership, please contact us

Most outsourced IT portfolios at large enterprises today have grown as a result of decentralized procurement, often by individual business units or geographical silos. As Mergers and Acquisitions (M&A) and divestitures become a known reality across different industry verticals, rate card management has become very challenging due to a complex supplier mix and inherent structural flaws.

In this research, we attempt to address some of the issues in the current rate card regimes and how can they have a compound effect to become a nightmare for sourcing executives.

We also look at solutions to mitigate these problems using our three-step framework for role rationalization. The framework has been designed based on best practices observed across a sizeable number of engagements and cover the following aspects:

  • Technology consolidation, which aims at segregation of rate cards based on the skill premium
  • Hierarchy-based segregation that seeks to provide segregation of roles based on responsibilities and job expectations
  • Role consolidation to remove any duplicate roles or add missing roles

We have also included a case study to highlight an example of how Everest Group was able to rationalize the IT outsourcing portfolio for one of its clients. The case study focuses on the incumbent state of the IT ADM portfolio and how we structured the rate cards to provide maximum coverage and depth.

We conclude this report with some key recommendations for the sourcing executives which should be kept in mind when optimizing their outsourcing portfolios.

Scope and methodology

The report has been prepared based on our advisory role across multiple engagements, where we worked closely with sourcing executives and internal IT managers to identify the most suitable approach, while designing rate cards.




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