TCS seems to be bending the rules of outsourcing once more. In order to get closer to the pricing model used by global consulting firms such as Accenture and IBM, TCS has started using a new success based pricing models in some of its pricing contracts similar to one it entered into with Pearl Insurance. This could serve as an example for the whole industry which charges its clients on efforts rather than outcome.
Most of the Indian software companies operate on the fixed hourly rate basis which is known in the industry as time and material pricing whereas in typical outsourcing contract, companies such as Accenture would be promising clients a certain level of process improvement, revenue enhancement and cost reduction. In case the results are met the software company would get a share.
S Ramadorai, CEO and MD, TCS, said:
Computer hardware and auto are two large industries where the customer pays for the outcome. We think in the future, software makers will have to move to this sort of guaranteed levels of performance and successful outcome.
