Optimizing Bill Rates: A Case Study in Effective Rate Card Management

Effective rate card management is crucial for ensuring cost efficiency and competitiveness, especially for large corporations that rely on contingent workforce programs.

In this article, I’m going to share how Allegis Global Solutions assisted a multinational energy client in optimizing its bill rates for a technology division, leading to significant cost savings and operational improvements. If you’ve ever wondered how to stop bill rates from spiraling out of control, you’re in the right place.

Conquering Cost Challenges in IT Bill Rates

The client enlisted the AGS Managed Services (AGS) Program Management Office (PMO) to support one of its technology divisions. However, contingent worker bill rates were set directly by consulting firms without input from AGS’ market analytics team.

As a result, bill rates became significantly inflated, especially when compared to identical roles in other IT divisions. Rising wage inflation, cost-saving targets and challenges in sourcing niche skill sets prompted a comprehensive review of this business unit’s rate card.

Leveraging Market Analytics for Enhanced Cost Control

As part of the annual rate review, our market analytics team conducted a supplier request for information (RFI) across the client’s strategic supply base. The goal was to gather current market rate data for the specific skill sets being sourced by the IT business unit.

After a thorough analysis of the data, the market analytics team was able to determine that most bill rates were overmarket—some by as much as 40% compared to the current rate card. Additionally, this exercise helped identify 29 job titles where rates could be safely reduced without compromising performance metrics.

Two months after implementing the market-aligned rates, the PMO was able to successfully reduce the client’s competitive bill rate management metric by 5%. This result is consistent with those programs that choose to manage their rate cards through AGS’ market analytics team rather than via supplier-provided rates. Cost avoidance often becomes more difficult when suppliers inflate the market maximum rate or when the variance between position levels falls outside of competitive benchmarks. By selectively adjusting out-of-market rates, the program achieved additional spend control.

Additionally, the market analytics team collaborated with suppliers to develop a global offshoring strategy for nearly two dozen skill sets, ranging from entry-level to consultant roles, across 12 countries. Rather than relying solely on consultant feedback, AGS executed a crowdsourcing initiative with a variety of suppliers to ensure a neutral and unbiased response.

The team then analyzed raw RFI data, removed outliers and provided transparent final rate recommendations. This ensured the client understood how both AGS and suppliers viewed the market before finalizing a global off-shore rate card. AGS’ unique pricing methodology enabled the program to benefit from real-time data while balancing supplier feedback and applying clear criteria to identify outliers.

Delivering Cost Savings and Rate Card Management Gains

Implementing AGS’s pricing methodology and enabling the PMO to drive bill rate management led to significant improvements in cost avoidance for the affected roles. Despite lowering maximum bill rates for outlier IT positions, key cost management metrics improved following the rate review upload. Starts below the max rate increased by 15% one month after implementation, and by 22% after nine months. Rate management metrics improved from 1% above the max bill rate to 8% below max within one month. After nine months, starts remained 7% below the max rate.

Shifting rate card management for this IT business unit to the AGS Market Analytics team also enhanced transparency, increased supplier RFI participation, and improved operational efficiency by making it easier to benchmark and compare roles across AGS programs.

Driving Rate Card Management and Strategic Planning

This case study highlights the importance of effective rate card management in controlling costs and enhancing operational efficiency. By leveraging AGS' market analytics team and applying a strategic approach to data analysis and supplier collaboration, the client achieved remarkable improvements in cost management and transparency.

This success story underscores the value of continuous rate review and the application of data-driven methodologies to maintain competitive and fair bill rates. For organizations looking to optimize their contingent workforce programs, AGS' approach offers a proven pathway to achieving sustainable cost savings and operational excellence.