Recently, I read a couple of articles where iGate’s CEO Phaneesh Murthy stressed on Results-based billing model for IT services companies and claimed that it is going to be the future. I have heard him speak about it even before his acquisition of Patni and even then the media didn’t pick this story up as a game changer. Now again, he has started speaking about it and the ones that have picked up this story are newsletters which are primarily content aggregators. Hence, I could feel that this is being racked up again and again only towards seeking attention. I am providing an invisible percentage of that attention through this blog.

iGate couldn’t progress with the model of results-based pricing then, when they were mid-sized. He felt that there was no future in the middle and hence went ahead and managed the acquisition of a much larger Patni to enter the billion dollar league. Even now, there doesn’t seem to be any takers for the pricing model. I am sure it is not because the customers don’t find this model exciting, it is because the model is primarily articulated only as a PR message and not as a potential business model that can be discussed with a customer.

All along, companies have done milestone based deliveries where the Project Management has been the responsibility of the customer and they provided bodies and made their money. Now, he is talking about outcome-based, which essentially would be milestone-based and that means project management will have to be completely handled by the services company and most likely with consulting thrown in. This PR message alone wouldn’t be sufficient to get into that kind of relationship with the customers. Instead, there has to be clearly defined model with focus on a few domains of expertise where you know the expected outcome and what it takes to reach there. With that, you don’t have to seek the customers, instead they would seek you.