Large enterprises are increasingly recognising the limitations of traditional hiring models in the tech industry, particularly the Time and Materials (T&M) model under a Statement of Work (SoW). This approach is often seen as suboptimal and, at times, even as “rogue” buying. But what’s the alternative? The answer lies in outcome-based SoW, a strategy that is rapidly proving to be the most efficient and cost-effective way to hire tech talent.
The conventional T&M SoW model, widely used for procuring resources, comes with significant drawbacks. Firstly, it leads to considerable overspending on what are essentially commodity-based skills. This is because T&M SoW lacks defined outcomes or deliverables and doesn’t penalise non-delivery. Essentially, organisations pay for time spent rather than results achieved, leading to inflated costs and inefficiencies, particularly when multiple T&M resources are involved in a single SoW.
Outcome-based SoW represents a transformative shift in hiring tech talent. This approach focuses on predefined results and deliverables, ensuring that organisations pay for the achievement of specific objectives rather than just the input of time and materials. The benefits of this approach are multifold:
An illustrative example of the shift towards outcome-based SoW is the case study of how our enterprise client Gobeyond Partners have optimised their project delivery though embracing Outcome-Based SOW. Full case study available here.
For businesses looking to make this transition, the journey involves several key steps:
The shift towards an outcome-based SoW is not just a trend but a necessary evolution in the hiring practices within the tech industry. As organisations continue to grapple with the challenges of procuring tech talent efficiently, outcome-based SoW stands out as a beacon of cost-effectiveness, efficiency, and results-driven hiring.
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