Outcome Bases Pricing Approach in FAO ? A True Win-Win?

Fortune 500 companies are moving up the value chain in terms of services outsourced in the Finance and Accounting Outsourcing (FAO) spectrum. As buyers are increasing the level of outsourcing of judgement intensive activities like Management reporting & analysis, Treasury and Risk Management, Internal Audit, Budgeting and Forecasting, the need to drive more value from the suppliers by engaging them as their strategic partner has risen. This move has propelled the buyers to adopt innovative value based pricing approaches like Transaction based pricing and Outcome Based Pricing to gain maximum value from suppliers, which will ensure supplier commitment to buyer?s Finance and Accounting Processes and also match the buyers? maturity. This whitepaper focusses on addressing the opportunities and risks associated with the adoption of Transaction based pricing and Outcome Based Pricing models, the areas of applicability of these models, the roadmap to implement these models and the parameters to measure the success of these models. Nearly 60% of the current FAO contracts are FTE Based; here the price is determined on the level of inputs like Labour, Materials and Facilities. Currently, buyers are looking at a more mutually beneficial pricing approach, which would be closely linked to process efficiencies and gains. Introduction: Finance and Accounting Outsourcing Pricing Approaches