What Price Is Fair: Best Practices in Price Benchmarking

This IDC study provides an overview of the benchmarking process and how outsourcing clients can leverage price benchmarking to periodically ensure that they are receiving fair market pricing. Each year, hundreds of price benchmarks are performed, resulting in the restructuring and reduction of millions of dollars in outsourcing revenue. Benchmarking is arguably the most valuable tool a client has to realign the outsourcing contract to the current business requirements and recalibrate pricing to the market range. The influence of price benchmarking, which can benefit as well as challenge both sides of the outsourcing equation, makes it one of the most contentious issues in the industry today.

"Regardless of the controversy and difficulties," says Mark Schrutt, director of Outsourcing Services, "as long as contracts with benchmarking clauses exist and vendors and consultants suggest to clients that they can do it for less, the future of price benchmarking is all but guaranteed."

• IDC Opinion
• In This Study
• Figure: Types of Benchmarking
• Situation Overview
  • How Benchmarking Works
  • The Clause
    • Frequency
    • Scope
    • Figure: Benchmark Schedule
  • Interpretation of the Results
  • Accuracy and Limitations
• Future Outlook
• Essential Guidance
  • Advice for Clients
  • Advice for Outsourcing Vendors
• Learn More
  • Related Research
  • Appendix
    • The Benchmarking Process
    • Figure: The Benchmarking Process
  • Synopsis