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.