Resilience Adjusted Value+ (RAV+)
Outsourcing success isn’t just about lowering costs — it’s about building resilience, innovation, and measurable value. K&B Global’s Resilience-Adjusted Value+ (RAV+) framework helps organizations design smarter outsourcing strategies that balance efficiency with agility and long-term growth.
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For years, outsourcing has been viewed primarily as a cost lever. Contracts are negotiated to the lowest possible unit rate, and success is measured by headcount reduced or dollars saved. But this approach has created fragility. Organizations that prize savings above all else often find themselves unprepared for disruption — a cyber breach, a supply chain breakdown, a geopolitical shock.
Resilience is not a tax on outsourcing; it’s a savings multiplier. Enterprises that design outsourcing for flexibility, continuity, and innovation not only reduce their risk exposure but also unlock sustainable cost advantages and business agility.
This paper introduces the concept of Resilience-Adjusted Value+ (RAV+), a new way to measure outsourcing value that incorporates risk, resilience, and innovation alongside traditional savings. It also outlines practical steps for embedding these principles into contracts, governance, and supplier relationships — transforming outsourcing from a tactical cost tool into a strategic growth engine.
Chapter 1: The Outsourcing Dilemma
The outsourcing market has long wrestled with a paradox: optimize for cost or for resilience? Procurement leaders are conditioned to chase the lowest unit rate, yet those savings often prove illusory.
A European bank awarded its IT support to the lowest-cost offshore bidder. Within two years, service outages, slow response times, and compliance lapses forced costly remediation. The “cheapest” deal ultimately cost more than a balanced contract that had built-in resilience.
Up to 30% of negotiated outsourcing savings evaporate due to operational inefficiencies, downtime, or contract leakage. The problem isn’t outsourcing itself, but how value is defined and measured.
The false choice between savings and resilience must be replaced by a better question: How do we design outsourcing that delivers both?
Chapter 2: From RAV to RAV+ — Expanding the Value Equation
Traditional Model: Resilience-Adjusted Value (RAV)
Resilience-Adjusted Value (RAV) refines traditional NPV by accounting for risk:
RAV = NPV – Expected Losses + Resilience Benefits
This model recognizes that stronger continuity planning, cybersecurity, and recovery capabilities reduce long-term costs by avoiding losses.
K&B Global’s Advancement: RAV+
RAV+ expands this equation to capture a broader set of value multipliers that resilient outsourcing delivers:
- Savings & Premiums — Negotiated efficiencies minus the cost of flexibility.
- Risk Mitigation — Avoided costs from outages, penalties, or overruns.
- Capability Access — Scarce skills and tools that accelerate transformation.
- Structural Resilience — Diversified geographies, strong governance, adaptive delivery.
- Innovation — Vendor-driven initiatives that generate measurable business outcomes.
With RAV+, leaders can demonstrate that resilience and innovation are value drivers, not hidden costs. In head-to-head comparisons, the provider offering stronger resilience and innovation typically delivers higher enterprise value over time — even if the upfront rate is higher.
For CFOs, RAV+ reframes outsourcing in financial terms — a risk-adjusted return model that converts resilience from cost to capital efficiency.
Chapter 3: Turning Innovation from Aspiration to Execution
The Challenge: Innovation Theater
Too often, outsourcing contracts make space for “innovation” as a buzzword, but little materializes. Providers set aside credits, clients struggle to prioritize use cases, and ideas get lost in the shuffle. The result: executives see innovation promised but not delivered — eroding trust in outsourcing partnerships.
The K&B Approach: The Innovation Pipeline
At K&B Global, we’ve developed a disciplined process to move innovation from slideware to measurable business value. We treat innovation not as an “add-on,” but as a structured pipeline:
Fund It — Contracts include innovation credits that are flexible and tracked like budget line items.
Curate It — Joint innovation backlogs are prioritized by business impact and ROI.
Execute It — Projects are scoped, owned, and tracked with KPIs and timelines.
Measure It — Completed projects feed into the Value Tracker dashboard, quantifying realized value.
These initiatives demonstrate how innovation credits translate into measurable operational and financial outcomes:
- Automation of invoice reconciliation, reducing manual effort and cycle time.
- Analytics dashboards that improve spend transparency.
- Nearshore delivery pilots that shorten response times and strengthen alignment.
Why It Matters: Procurement leaders can no longer afford innovation theater. The Innovation Pipeline delivers practical, measurable results that strengthen business resilience, reduce cost, and accelerate growth.
Chapter 4: Proving Value with the Outsourcing Value Tracker
The Challenge: Value Leakage
Many outsourcing programs start with a strong business case but quickly lose visibility once execution begins. Savings erode through scope creep, inefficiencies, and untracked changes.
The K&B Solution: The Value Tracker
The Value Tracker provides transparency and discipline across critical levers:
- SOW consolidation and efficiency capture.
- KPI tracking versus baseline commitments.
- Timesheet quality and compliance.
- Rate discrepancy identification.
- Invoice validation and chargeback accuracy.
- Innovation delivery measurement.
Case in Point: In one engagement (anonymized), the Value Tracker revealed over $15M in savings beyond the original case by surfacing discrepancies in rate cards, consolidating contracts, and accelerating automation initiatives. More importantly, it gave the client’s CFO the confidence to expand outsourcing because they could see, in black and white, the realized value.
Why It Matters: The Value Tracker proves, quarter after quarter, that outsourcing is delivering measurable value, protecting credibility with Finance and the business.
Chapter 5: The Nearshoring Advantage
The Shift in Location Strategy
For years, outsourcing location strategy was driven by labor arbitrage. But volatility and talent challenges have shifted the calculus. Nearshoring now enables a balance of cost, risk, and agility.
Why Nearshoring is Rising
- Time Zone Alignment — Real-time collaboration, fewer delays.
- Cultural Proximity — Shared fluency and norms that reduce friction.
- Geographic Risk Diversification — Mitigation against natural, political, and regulatory risks.
- Talent Access — Deep technical or functional skill pools in regions like Latin America and Eastern Europe.
Designing for Nearshore Value
We help clients structure nearshoring not as a fallback, but as a strategic complement:
- Assess the Right Fit
- Match processes to the strengths of nearshore talent markets.
- Example: Agile development teams in Mexico; finance and analytics hubs in Poland.
- Integrate with Core/Flex Models
- Core operations may sit offshore or onshore, while flex capacity is nearshored to accelerate surge projects with fewer time zone or cultural barriers.
- Embed in the Contract
- Ensure nearshore delivery is explicitly accounted for in the sourcing model.
- Rate cards, performance SLAs, and governance processes should cover nearshore centers distinctly.
Why It Matters: Nearshoring delivers collaboration, continuity, and speed — transforming delivery resilience from theory to practice.
Chapter 6: Structuring Outsourcing with Core/Flex Resources
The Challenge: Static Capacity Models
Traditional outsourcing contracts often lock clients into fixed capacity models. This rigidity causes inefficiency during slow periods and strain during peak demand.
The Solution: Core/Flex Structuring
We recommend designing outsourcing contracts around a Core/Flex resource model. This approach creates a stable foundation while preserving the agility to scale for new business needs.
- Core Resources: The Stable Base
- Defined Scope: Core resources are responsible for ongoing operations and critical processes.
- Clear Work Boundaries: Contracts should define the type of work these teams handle — ensuring the base scope is well-governed.
- Built-in Flex Time: We recommend allocating a small percentage of core team capacity for “overflow” or adjacent tasks. This provides day-to-day agility without destabilizing operations.
- Flex Resources: The Agility Lever
- Project-Based Engagements: Flex resources are activated for incremental projects, surge demand, or specialized tasks.
- Commercial Alignment: Flex work uses the same negotiated rate cards and contributes toward overall spend commitments — ensuring fairness and predictability.
- Continuity: By using the same provider ecosystem, flex resources ramp up faster and integrate seamlessly with core delivery.
Benefits of the Core/Flex Model
- Cost Efficiency: Avoids overpaying for unused capacity while ensuring surge coverage.
- Agility: Scales quickly with business change without lengthy re-contracting.
- Transparency: Flex costs remain visible and governed under the same commercial framework.
- Resilience: Maintains continuity by balancing stability with adaptability.
Why It Matters
The Core/Flex model shifts outsourcing from static contracts to dynamic capacity frameworks. Procurement leaders gain the best of both worlds: predictable base operations, plus the flexibility to respond to change — without sacrificing cost discipline or vendor accountability.
Chapter 7: Outcome-Based Contracting — From Inputs to Business Value
The Limitations of Traditional Contracting
Most outsourcing agreements still rely on input-based measures: headcount, hourly rates, transaction volumes. While predictable, they reward activity, not impact.
The Shift to Outcomes
Outcome-Based Contracting (OBC) redefines success. Instead of policing SLAs, it ties vendor performance and compensation directly to business outcomes — resilience, speed, customer experience, innovation, and cost efficiency. It’s a shift from managing transactions to partnering for enterprise value.
Three Core Design Principles for OBC
- Define Outcomes and Align Metrics
- Move beyond efficiency-only KPIs.
- Establish a hierarchy: efficiency → value contribution → service innovation → enterprise innovation.
- Examples: cycle-time reduction, continuity measures, customer satisfaction, innovation delivery.
- Embed Flexibility and Innovation Incentives
- Use innovation credits tied to measurable projects.
- Add change-velocity SLAs for adaptability.
- Employ hybrid pricing models (fixed + outcome-based) to balance risk and reward.
- Sustain Long-Term Partnership Health
- Apply dual indexing to manage rate adjustments.
- Introduce gainshare/painshare models.
- Allow rebid rights on micro-projects to maintain competitiveness.
Operational Enablers of Outcome-Based Success
To make OBC work, organizations must modernize delivery and governance models:
- Innovation as a Pipeline, Not a Promise
Bankable innovation credits, joint backlogs, disciplined execution, and quarterly reporting ensure that innovation delivers measurable outcomes. - Flexibility through Core/Flex Models
Combining steady-state Core Teams with agile Flex Pools allows scalability, speed, and governance stability. - Nearshoring as a Resilience Multiplier
Time-zone overlap, geographic diversification, and cultural alignment boost collaboration and reduce risk — often yielding 15–25% higher productivity.
The Bottom Line: OBC isn’t just about metrics — it’s about re-architecting delivery for performance, adaptability, and resilience.
Chapter 8: Four Steps to Transform Outsourcing into a Strategic Lever
Procurement leaders face rising expectations: reduce costs, build resilience, and enable growth. Outsourcing can deliver all three — but only if managed as more than a transactional cost play. Based on our work across industries, K&B Global has identified four practical steps that elevate outsourcing into a true strategic lever.
- Quantify RAV+ — Move beyond cost and NPV by integrating risk, resilience, and innovation.
- Diversify Suppliers, Locations & Flex Capacity — Balance cost and risk through nearshoring and Core/Flex models.
- Contract for Outcomes, Innovation & Agility — Incentivize vendors with measurable outcomes and gainshare models.
- Prove Realized Value Transparently — Use Value Tracker tools to measure, report, and sustain performance.
By following these four steps — Quantify, Diversify, Contract, Prove — procurement leaders can reposition outsourcing as a strategic growth driver. The organizations that embrace this playbook will not only weather volatility but thrive in it, turning outsourcing into a competitive advantage.
Conclusion
The outsourcing equation has changed. Savings alone no longer define success; they may even mask fragility. By adopting the RAV+ framework, enterprises can price resilience, contract for innovation, and prove realized value.
Resilience is the true savings multiplier. Those who embrace it will not only withstand disruption — they’ll set the new standard for adaptive value creation.
Next Steps
Resilience isn’t a cost — it’s your next competitive advantage.
Let’s explore how your organization can build agility, innovation, and measurable value into every outsourcing partnership.
