TCS started to use outcome based pricing in 2006 during which it signed some deals but the major deal it did was in 2008, when it won a project from Ministry of External Affairs to automate passports and is paid a combination of project fee and an outcome fee based on number of applications it process. In 2007, TCS signed a $1.2 billion deal with Nielsen, provider of consumer and media information services spread over 10 years and as soon as the finance and the HRO processes are centralized onto the new platforms, TCS has an option to review the deal and move to outcome-based pricing. TCS has used outcome-based pricing models in its BPO deal with Pearl Insurance in the UK and in the $250m IT infrastructure management deal with Tata Teleservices in 2005. TCS' British BPO subsidiary, Diligenta, will be taking over the IT and customer services functions of the UK business of Friends Life earlier known as Friends Provident, for 15 years and the deal is worth $2.2 billion. It is outcome-based pricing and TCS will charge per policy to the client.
In December 2008, AstraZeneca has awarded Infosys a five year, multi-million dollar global sourcing deal Infosys is delivering the services through a global shared-services model that offers fixed price for outcome-based deliverables, and flexible, unit pricing for managing changes in the base scope of the engagement. Infosys signed three-year Services agreement to manage Microsoft's Internal IT Services in April 2010 and the deal includes IT Help Desk, Desk Side Services, and IT Infrastructure and Applications Support and the engagement is delivered based on outcome based pricing model, enabling Microsoft to associate and manage IT costs directly to business variables and demand. Infosys highlighted that outcome-based model was at the core of its new strategic vision 'Infosys 3.0' and the main vehicle for the new model was the firm's 'Infosys Edge portfolio of platforms. “Each of the Infosys Edge platforms guarantees a business outcome to our clients - it either contributes to clients' revenues or it contributes to profitability by driving efficiency. This is a strong differentiator for us," the firm said. Infosys' result-oriented model provides clients with "outcome-based", "transaction-based" or "function-based" pricing and CEO Shibulal highlighted the increasing acceptance of customers for Infosys’ new engagement model based on variable pricing. The model is based on the number of transactions, events, maintenance tickets or devices.
Cognizant’s earliest projects based on outcome were with pharmaceutical company AstraZeneca. For 3M too, Cognizant used an outcome-based, managed service engagement model with productivity benefits over the long term. In its partnership with Sanofi Pasteur, there was an increase in effectiveness as measured by time. This reduced process hiccups in bringing the drug maker’s vaccines to the market. One area where PAC (a privately held research & consulting firm for the software and ICT services market) believes Cognizant has a particularly strong story is in moving towards outcome-based pricing models. In the F&A space, Cognizant is looking beyond taking out cost and hitting SLAs, to committing to targets that increase its client’s revenue and working capital, or improve compliance and control. In life sciences, the vendor is talking about moving towards being charged per study for handling clinical trials, while in the area of mortgage administration, it is looking at charging lenders for only processing the loans that are signed rather than the quotes they provide for customers. Recently Cognizant signed a deal with Royal Philips Electronics for services like consulting and application services on a global basis. As per the terms of the multiyear engagement, Cognizant will allow Philips to switch the IT organization to a platform and output-based managed services model across multiple business lines and corporate functions.
Wipro said that it has numerous clients whose billing/payments are intimately linked to the client's business. "Some of our clients, like airports, pay us based on the number of boarding passes or the baggage tags issued," said Suresh Senapaty, Wipro's chief financial officer. In December 2011, as part of the five year strategic relationship, Wipro will be supporting both systems and processes to enhance efficiency of Premier Foods’ supply chain. Wipro’s strong partnership with SAP, global SAP consultant base, end to end implementation coverage, delivery innovation, and outcome based service models and competencies in cloud based services will be leveraged for this engagement. In June 2011 Wipro won an outcome-based deal from Chaucer Syndicates, a specialist insurer at Lloyd’s, to develop an end-to-end regulatory compliance solution that would generate better analytics and improved management reporting for the client In 2009, Wipro has won a new application development and support contract with long-time client, UK insurer Friends Provident. The ‘fixed price, outcome-based’ deal runs for three years with a two-year extension option. Wipro says that if they get the full 5-years, it will be worth £40m over the period. TK Kurien, CEO, Wipro Technologies told FE: “We are seeing a great uptick in outcome-based pricing. There is a clear increase in outcome-based models among customers, who want to have their business outcome linked to the actual work done. Most of them love to go for long-term, but you are not sure of the long-term perspective. Not all of them are going for long term.”
HCL Technologies, India's fourth largest IT outsourcer, claimed that it had actually "pioneered the outcome-based pricing model in the mid-2000s". "We have many active client engagements based on outcome-based pricing models," a spokesperson for the firm said, citing its multi-million dollar contract with aircraft-maker Boeing where it works on a "risk-reward sharing model". In July 2008, HCL BPO acquired UK-based Liberata Financial with revenues of $80 million, which is to life insurance and pensions and US-based Control Point Solutions, a provider of voice, data and wireless telecom expense management services with revenues of $37 million and both the companies helped the company to increase its outcome based pricing revenues. HCL BPO is offering platform-based offering, a combination of software platforms and services such as administering payroll for a client and charging the client based on transaction or outcomes. HCL Tech, which acquired Axon, an SAP consulting company in 2008 which has significant capability in terms of outcome based pricing models. “We have worked with number of companies on business outcomes based on our outsourcing work and this is an area that we will continue to build on,” says Shami Khorana, President, HCL America. However, he added that the company will look at a combination of regular outsourcing and outcomes-based outsourcing, in the future.