Neo_Group_Sourcing_Advisory_Benchmarking_8_Slides
                     SOURCING ADVISORY SERVICES
Benchmarking Before
an Outsourcing Renewal
What to compare, why timing matters, and how to 
build a stronger renewal position.
An executive briefing based on insights from Neo Group
NEO GROUP  •  GLOBAL SOURCING
01 / 08
01 • THE RENEWAL CHALLENGE
Don’t let the supplier set the starting point
When benchmarking begins only after a renewal proposal arrives, the buyer may be reacting to 
the supplier’s assumptions instead of shaping the next contract.
Scope has changed Pricing can be anchored Time creates leverage
Volumes, service levels, technology A blended rate may hide An independent fact base gives 
and responsibilities evolve over the differences in roles, locations, leaders time to assess options 
life of a contract. complexity and delivery structure. before negotiations begin.
Key idea: build the evidence first; negotiate from a position of clarity.
02  /  08
02 • BUILD A FAIR COMPARISON
Benchmark the work—not just the rate
Price comparisons are meaningful only when the underlying scope and service requirements are 
normalized.
01 02 03 04
Define scope Normalize Compare Decide
Services, volumes, Complexity, Roles, locations, Renew, redesign,
service levels geography, commercial model compete or transition
technology and 
coverage
Ask: are we comparing like-for-like services—and is this still the right scope for the next 
contract?
03  /  08
03 • LOOK BENEATH THE HEADLINE NUMBER
Four dimensions that shape renewal economics
Role mix Location mix
Skills, seniority, management layers and who Talent availability, delivery capability, transition cost 
performs each activity. and operational risk.
Productivity assumptions Contract flexibility
Separate demonstrated efficiency from future Review volume bands, indexation, change controls, 
savings that are only forecast. SLAs, exit terms and accountability.
The lowest rate is not automatically the best-value operating model.
04  /  08
04 • PERFORMANCE AND RISK
Renewal decisions must reflect real-world delivery
Use the previous 12–24 months of performance to understand what the next contract should improve
—not simply what it should cost.
SLA trends Operational Productivity Commitments Business value
health
Attainment, recurring Incidents, backlogs Measured gains and Benefits promised Whether service 
failures and service and resolution times automation delivered versus benefits outcomes justify the 
credits realized spend
A competitive price cannot compensate for weak accountability, poor fit or unmanaged risk.
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05 • START EARLY
A practical 12-month renewal roadmap
12 MONTHS Establish baseline Capture scope, pricing, volumes, performance and 
1 commitments.
9 MONTHS Normalize & Compare like-for-like scope and relevant market reference points.
2 benchmark
6 MONTHS Evaluate options Test renewal, redesign, competitive tension and alternative 
3 models.
3 MONTHS Prepare Set priorities, evidence, risks, alternatives and target outcomes.
4 negotiation
The negotiation should apply the fact base—not be the first time it is created.
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06 • TURN INSIGHT INTO ACTION
The renewal fact base should answer seven questions
✓ Is the current scope still appropriate? ✓ Is supplier performance delivering value?
✓ Are roles, locations and costs aligned? ✓ What risks or dependencies need attention?
✓ Are productivity assumptions credible? ✓ Should we renew, redesign or introduce 
competition?
✓ Does the contract allow necessary change?
Benchmarking is a decision tool—
not the outcome itself.
07  /  08
THE TAKEAWAY
Benchmark early.
Decide with evidence.
Start the renewal process early enough to test the economics, 
assess performance, understand risk and choose the right 
sourcing path before negotiations begin.
Read the full article by Neo Group
https://www.neogroup.com/articles/benchmarking-before-outsourcing-renewal-sourcing-adv
isory-services/
Source: Neo Group — “Benchmarking Before an Outsourcing Renewal: A Sourcing Advisory Services Perspective on What to Compare and Why.”
08 / 08