Here’s our AMS Expert Srikanth Karunam, throwing some light on volume-based pricing in IT Outsourcing, a topic which is getting quite popular among some of our newly acquired customers.

Here’s our AMS Expert Srikanth Karunam, throwing some light on volume-based pricing in IT Outsourcing, a topic which is getting quite popular among some of our newly acquired customers.

Businesses today are undergoing waves of transformation more rapidly than ever before. Change in the ways of operating a business, diversify revenues, control cost, gain a competitive edge through technology, are forcing IT leaders to look for agility. While agility is a broad term in the context of IT outsourcing, here’s his take on volume centric pricing models. In this model, the customer would be in a ‘pay as you use’ mode of services, meaning they would pay only for the number of tickets delivered in a month with the scope of services being constant like number of modules to support, support coverage, type of tickets to service, geographies to support etc, they would also get to choose minimum number of support tickets to service per month.

Now the all-important question, how is it going to help our customers when they move towards a pricing model that is driving by volumes. One factor is that pricing determined by quantity gives customers the flexibility in addressing fluctuating work volumes. They can be flexible by paying only for the work delivered, focus on strategy rather than operational issues, or focus on efficiencies rather than discussions on the hours taken to deliver the work. Regardless, we need to remember that customers and vendors often spend lot of their time discussing and monitoring the duration of the work delivered. Such discussions only result in frictions and trust issues until strong guidelines are established on how work should be estimated

We must also know that every model has its pros and cons, the three most important questions to ask are ‘which model should I choose, when, and why?’

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