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4 new IT outsourcing pricing models gain popularity

Stephanie Overby | April 16, 2012
Enterprises that have gone the outsourcing route now expect more value from their IT service providers and IT service vendors want potentially higher-margin work. The combination has resulted in several new pricing models. CIO.com looks at four emerging options.

Pros: This model encourages the provider to come up with ideas to improve the business and spreads the financial risk between both parties. It mitigates some of the risks of new technologies, processes, or models by assigning risk and responsibility to the vendor, according to Gartner.

Cons: Results can difficult to measure and rewards tricky to quantify, says Tisnovsky of the Everest Group. Clients must hand over much of the management to the provider.

Watch Out For: Arguments over resources, overhead, investments and rate of return.

 

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