Paying for outcomes instead of hours: what the shift really changes
Industry surveys describe a fast shift towards outcome-linked contracts. Automation removes the obstacle that used to block the model — and moves the difficulty to defining what gets measured.
For thirty years, outsourcing has been sold by the hour, by the seat or by the ticket. Industry surveys over the past two years describe a clear shift towards contracts whose payment depends on a measured outcome. Deloitte’s global outsourcing survey, quoted by several summaries, puts adoption of outcome-linked models at around two thirds of programmes, against less than half two years earlier. The figures vary between panels; the direction does not.
Why now
Outcome-based pricing is not a new idea. What blocked it was an attribution problem: when a task crosses three teams and two tools, nobody can say who the result belongs to, and the discussion turns into a trial of intentions. Instrumenting workflows through automation changed that: it is now possible to know, case by case, what was handled automatically, what a person took over, how long it took and at what rework rate.
A second, more prosaic reason: when a growing share of the work is performed by agents, billing a number of human hours becomes incoherent. That is the direct consequence of the hybrid model we described: if automation absorbs the volume, time spent stops being a measure of the value delivered.
What can reasonably be indexed
Not everything lends itself to outcome-based payment. Indicators that work share three properties: they are measurable without dispute, they depend mostly on the provider, and they matter to the client. For example:
- Processing time for a case, an invoice, a request, measured end to end.
- Compliance rate of data entry, checked on a sample.
- First-contact resolution rate, where the scope of requests is stable.
- Volume actually handled, when variation in activity is the real issue.
By contrast, an indicator the provider does not control — a deadline that depends on a client-side approval, a collection rate that depends on debtors' solvency — should not condition their payment. It produces disputes, not performance.
The model that holds: a base plus a variable share
Fully variable arrangements are rare and fragile: they transfer a risk to the provider, who either prices it in or absorbs it by degrading quality. The most common — and healthiest — scheme combines a base covering the capacity made available and a variable share indexed on two or three indicators. The proportions are negotiable; the principle is that neither party should have an interest in the relationship deteriorating.
Five things to write down explicitly
- The exact definition of each indicator: what is counted, what is excluded, from which event to which.
- The measurement source: which tool produces the figure, who has access to it, and what happens in case of disagreement.
- Client-side prerequisites: approval times, the quality of the data provided, the accesses. A commitment to results presupposes reciprocal commitments.
- Handling of outliers: complex cases must not be penalized, or they get avoided.
- A review clause: an indicator that is relevant in year one is not necessarily relevant in year three, especially as automation progresses.
The risk that gets underestimated
A badly written outcome contract optimizes exactly what it measures, and nothing else. Pay for speed and difficult cases wait; pay for volume and quality erodes. The countermeasure is well known: always pair a speed indicator with a quality indicator, and provide for sample checks carried out by a person. That is also what protects the client in a largely automated setup — human oversight is what you are actually buying.
Our position
We work with both models, because not every need suits the same arrangement. A stable, measurable activity benefits from an outcome-based contract; a start-up phase, an activity still being built or a shifting scope are better steered with a clear capacity and readable billing. The configurator gives an order of magnitude, and we would rather discuss it on your actual case than impose a model on principle.
Sources
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