G-Special: ‘Put your money where mouth is’

By : |November 30, 2009 0

 

What is this Guarantee/Outcome-based service approach all about? How does it help in making your positioning unique and relevant in the current times?

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With the evolution of the OPD space in the last few years, companies are looking at innovative ways to assist customers. As customers continue to seek enhanced value delivery and look for guaranteed results, Symphony Services has introduced new corporate positioning ‘Engineering Outcome Certainty’. This comes at a time when clients are seeking partners that can help maximize the ROI on their software engineering initiatives.

How does it exactly work?

It works according to customers. There are customers with legacy products where we take up end-to-end work, for every aspect of the product, from development to support. They pay us a percentage of revenue. It’s not like the yesteryears’ headcount-linked or rate-based contracts. It makes sense for clients also from a higher margin, higher revenue angle as the product stays around longer, has a larger life, and future s/w gets focus that might have been bereft of till now.

Outcomes would mean?

It is defined as per the customer, and differs from client to client. In an OPD (Offshore Product Development) industry, some main outcome areas are time-to-market, quality, customer satisfaction, transformation, increased revenues, efficiency etc.

It shouldn’t be easy of course?

It’s hard no doubt as it gets more difficult, specially in a product area, which is our domain. We waited to design our business goals with client goals. Service line experience, IP department’s strengths, efficiency etc were areas we worked on a lot in the last couple of years.

And did recession play an advocate here?

Recession really helped a lot because inefficiencies are not easy to hide in tough times.

Is it really a breakthrough approach from vendors/service providers?

There have been outcome-based services in case of data centers often. This is because that area is more transaction-based and it is easier to build that model. Even if it has been around, we have a very good methodology and are doing it very differently, more so, as it’s not an easy model to work. A customer for instance, may not know how to track, even if someone promises a track-based format.

It should be pretty risky to wager one’s deals on an outcome? There could be things beyond scope and control.

It depends on what the customer is doing. Our revenue-to-risk factor can range from ten per cent to anything, based on the output. Rest is based on time-to-market factors. Yes, it can also be 100 per cent profit at risk, in a profit sharing mode. It’s simple with us – If we don’t deliver, we don’t make money.

What does it translate into for employees?

Traditionally, salary-, people-, and bonus-based models were a given when it came to assessing and rewarding performance. Today we have seven categories of performance. These range from client satisfaction, delivery etc to interconnecting more closely with client outcomes.

What kind of impact, particularly from a revenue-linkage angle, has this model brought to your Balance Sheets?

It is evolving from being loosely-tied to tightly-linked. From 30 per cent in 2008, to 61 per cent in 2009; that’s the portion of our revenues that is shaping up in some form of outcome-based arrangements. For now, it’s a hybrid approach, when it comes to how much of our revenues are tied directly to the new flavour of contracts.

And this model won’t be a flash in the pan?

The time for grading on a curve is over.  At the end of the day you should get what you pay for. Symphony Services is amongst one of the first few companies to extensively implement this business model across clients.
We think Symphony is uniquely positioned to guarantee the success of our clients’ R&D initiatives and we have the confidence to ‘put our money where our mouth is’.

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