In an earlier post about the hype around outcome-based outsourcing engagements, I talked about how it’s a great conversation starter, but doesn’t necessarily end up being the way that contracts eventually get written. Not that it’s about bait-and-switch (although sometimes it is). But it begs a question: how pervasive is outcome-based outsourcing?
Today I had an excellent, wide-ranging discussion with Forrester analyst Bill Martorelli about outcome-based outsourcing. Bill is currently working on an upcoming research report about outcomes which he will be presenting at the Forrester Services and Sourcing Forum 2009 and we were comparing notes and I was looking for some feedback on the messaging I’ve developed for my company, Symphony Services. We had a pretty big disparity in our estimates. We were talking pretty broadly about the ITO and outsourced product development (OPD) markets, but I said that it’s probably less than 5% of total contracts, definitely less than 10 percent. Bill thought that it was larger, perhaps twice that, but as we talked about what really counts as true outcome orientation versus simple output-based, fixed-time/fixed-price or SLA-supported contracts, he felt that my number probably wasn’t too bad.
But what this really highlights is that even some of the brightest minds in the business don’t have a good handle on how much of the outsourcing contracts are outcome-based. What do you think is the right number, or do you think it’s just so much hype?