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.
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?
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:
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.
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:
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.
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:
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.
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
Designing for Nearshore Value
We help clients structure nearshoring not as a fallback, but as a strategic complement:
Why It Matters: Nearshoring delivers collaboration, continuity, and speed — transforming delivery resilience from theory to practice.
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.
Benefits of the Core/Flex Model
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.
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
Operational Enablers of Outcome-Based Success
To make OBC work, organizations must modernize delivery and governance models:
The Bottom Line: OBC isn’t just about metrics — it’s about re-architecting delivery for performance, adaptability, and resilience.
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.
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.
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.
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.