To minimize costs and improve service levels an outsourcer should seek which of the following contract
clauses?

A.
O/S and hardware refresh frequencies

B.
Gain-sharing performance bonuses

C.
Penalties for noncompliance

D.
Charges tied to variable cost metrics

Explanation:
Because the outsourcer will share a percentage of the achieved savings, gain-sharing performance bonuses
provide a financial incentive to go above and beyond the stated terms of the contract and can lead to cost
savings for the client. Refresh frequencies and penalties for noncompliance would only encourage the
outsourcer to meet minimum requirements. Similarly, tying charges to variable cost metrics would not
encourage the outsourcer to seek additional efficiencies that might benefit the client.