Buyers increase use of risk and reward consulting contracts

25 July 2013

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26 July 2013 | Adam Leach

Consultancy buyers are increasingly linking the amount they pay consultants to the quality of services delivered, but many continue to be put off over a lack of clarity on how these deals can be enforced.

Views on the consulting industry: A procurement perspective, published this week by Source Information Services, found that the use of risk and reward contracts for consultants working on projects had increased to 15 per cent, roughly double what it was a year ago. But the findings indicated the use of such deals is still relatively minor. Almost a third of buyers had been offered this type of contract by a consultancy, but was only accepted by half the purchasers. 

Edward Haigh, a director at Source Information Services, said: “The rise in risk and reward contracts is good news for both clients and consultants, but there is still a huge number of clients that enter into discussions about risk-reward to reduce the chances of something going wrong, but get scared off the idea by a sudden realisation about what might happen if something goes right.”

The report, which was based on the responses of 100 procurement managers, found that leading IT consultancies Accenture, IBM and Capgemini Consulting are leading the consultancy market, with 35 per cent of all work being driven by technology projects. Large-scale projects that cover a range of functions or countries are also increasing.

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