Contract & Commercial Structuring
Industry professionals, giving you negotiating leverage.
We benchmark your commercial model against real market terms and advise on the structure so incentives point where you need them — not where the agency’s margin does.
Solutions for you.
Insider expertise
Full review, from pitch to signature, in plain language.
Deep dive into commercials.
Including FTE-based stacked margins that may be misaligning incentives.
The holdcos don’t like us very much, and that’s the point.
Identifying margin inflation built into the model beyond what the work actually justifies
A note on role: We advise on terms — we don’t hold the pen on building them or make material contract changes ourselves. Your team maintains full control of contract language and final terms throughout.
Common holdco acronyms, explained plainly:
- MSA — the master service agreement: the document that rules out surprises, if read closely.
- SOW — the statement of work: where scope is supposed to stay fixed, and rarely does.
- FTE — pay tied to staff’s hourly or daily rate card, not the time they actually spend on your account — even when the deal structure is fixed or project-based, the underlying rates rarely are. This is the single biggest driver of margin inflation, with duplicative capabilities across agencies close behind.
What it compounds to
A blended rate looks fixed at signing. It rarely stays that way. Because it averages across skill levels and locations rather than locking in a specific team, a provider can shift delivery toward more junior staff over time without technically breaking the contract — and the rate on paper never moves. Independent contract audits routinely turn up exactly this: role redundancies and staffing-mix drift that a blended rate was never built to catch. A margin modeled at 15% at signing can run well past that by year three, with nothing in the contract language that would have told you.[1][2]
Margin inflation is compensation built into a holding-company agency’s fee structure beyond what the actual scope of work justifies — often hidden inside an FTE-based staffing model rather than stated as a flat markup.
Sources Cited
- Information Services Group (ISG), “Contractual Pricing Assurance” white paper — on blended rate cards: “the provider is incentivised to use lower skilled resource to maintain a higher margin,” and a “triple blended” rate can incentivize shifting work from onshore to offshore; also warns that a competitively-negotiated rate card can still conceal a “top-heavy skills pyramid.”
- Everest Group, “Third-Party Contract Benchmarking In Outsourcing: Going Beyond Cost Optimization To Drive Transformation” — on what independent rate-card benchmarking typically finds post-signing: “role redundancies, unnecessary clubbing or the blending of diverse roles, varied experience bands associated with the same role, mix-up of role and skills hierarchy.”
