A former Infosys executive is challenging the information technology (IT) outsourcing industry's billing model by charging for results, instead of basing fees on the time and labour put in by the armies of staff working for the country’s big firms.
Outcomes-based billing, growing as a share of revenue across the industry and pursued most aggressively by iGate Corp Chief Executive Phaneesh Murthy, is meant to appeal to clients with less-certain budgets in a tough economy.
If the services don't deliver an agreed-upon result, such as reducing the cost of processing a loan or cutting the reject rate in an auto parts factory, the customer pays less.
But the strategy also boosts profit margins for IT companies, raising questions about which model is better for customers.
Murthy was a rising star at Infosys as California-based global head of sales before leaving in 2002 after a sexual harassment lawsuit against him and the company, which made headlines at the time and was settled out of court.