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How to achieve outsourcing at market level cost

Henrik Ringgaard Pedersen 


11 June 2014


To read the Danish article in full, click here.


In his regular Computerworld blog, PA sourcing expert Henrik Ringgaard Pedersen explains how benchmarking is a way to ensure a cost level of outsourcing suppliers – but that customers cannot rely on benchmarking alone to ensure this cost remains the same throughout the contract.

He refers to PA and Whitelane Research’s recent study about sourcing in the Nordics and states that low cost is no longer the most important factor. With strong, new partnerships between customers and vendors, the focus is not just about ensuring the lowest prices, but that the price is fair compared to the market.

Henrik says: “Benchmarking is not easy when it has to be based on seven comparable companies with the same level of complexity and within the same industry and size. Customers can consider benchmarking based on unit prices of specific components or think about incorporating regulated price falls during the contract."

“They could also incorporate a benchmarking clause on new services, which, combined with a non-exclusive deal, gives the client freedom of choice and enables them to choose from more suppliers. Some companies are establishing joint bonus models which attempt to lower the price and create shared savings. However, there is no miracle cure, which is why companies should consider tools other than just benchmarking to ensure a competitive price in the contract period," says Henrik.


Henrik Ringgaard Pedersen is an outsourcing expert at PA Consulting Group 


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