How to Reduce Costs with SOW Hiring


March 8, 2024

In our recent survey of 255 tech leaders in the UK, 57% said they had a hiring freeze in 2024. The chances are you are going to need to reduce permanent and contract headcount this year. No easy task, especially when you need to deliver on that digital transformation that is already behind.

Understanding and leveraging the power of Statement of Work (SOW) can be an effective way to reduce costs. Specifically, transitioning from Day Rate Contractor or Time and Material (T&M) SOW to Outcome-Based SOW presents a significant opportunity for cost savings. Let’s look into what these terms mean and how making this shift can benefit your organisation financially at a time of cost cutting.

Understanding Time and Material SOW

Time and Material SOW is a traditional procurement model where businesses pay for the time spent and materials used by the external supplier to complete a project. While this model offers simplicity and flexibility, it often leads to inefficiencies and higher costs. Without predefined outcomes or deliverables, there’s a risk of paying for effort rather than results, potentially leading to budget overruns and wasted resources. 

Embracing Outcome-Based SOW

Outcome-Based SOW, on the other hand, focuses on delivering specific results or outcomes. Payments are tied to the achievement of these predefined objectives, not the amount of time or resources expended. This model incentivizes efficiency and effectiveness, aligning to the goals of the client.

Cost Savings with Outcome-Based SOW

The shift to Outcome-Based SOW can lead to significant cost savings in several ways:

  • Reduced Waste: By paying for outcomes rather than time, businesses can eliminate the wastage associated with day rates where work might be stretched to fill the available time.
  • Enhanced Efficiency: Contractors are motivated to work more efficiently and innovatively to meet the defined outcomes, potentially reducing the project timeline and associated costs.
  • Predictable Budgeting: With clear deliverables, businesses can predict costs more accurately, avoiding the budget overruns common in T&M projects.

Gigged.AI’s Transparent Costing Advantage

Gigged.AI’’s Open Talent Marketplace is an easy way to hire on an outcome-based SOW. Cost savings comes from the transparent costing model offered by platforms like Gigged.AI. Traditional staffing firms often charge a markup of 30% or more for SOW work, significantly increasing project costs. Gigged.AI stands out by charging only a 15% markup for Outcome-Based SOW, offering a more cost-effective solution for businesses looking to maximise their budget. All vetting and compliance is included in the fee.


In conclusion, shifting from Time and Material to Outcome-Based SOW not only aligns project goals with business objectives but also offers a clear path to cost savings. With the added advantage of transparent, reduced margins from platforms like Gigged.AI, businesses can further optimise their expenditure, ensuring that every dollar spent contributes directly to tangible, valuable outcomes. This strategic approach to project management and procurement is essential for businesses aiming to thrive in a competitive, cost-conscious environment.

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