Perspicacious Priyadarshi

Thoughts, Observations, Interpretations

Delivered Globally: Outsourcing Models

Outsourcing as a business strategy has evolved in manifolds. Core to the outsourcing strategy are the business models using which organizations offload their non-core functions to their outsourcing partner. These business models are often referred as “global delivery models,” as outsourcing happens at a global scale across geographies, across nations, worldwide. The prime purpose of such global delivery models is to manage work efficiently, at lesser cost, with better focus, and better quality. These global delivery models have now become business imperatives. Today every project or product development initiative is being done by using such global delivery models. There are primarily five types of models:

  • Offshore: Client sets up its development center at a service provider’s premise. Each member working at the ODC (offshore development center) is a billable employee. There’s a well-defined communication plan with key people acting as nodes on the communication network. There is a onsite coordinator from the service provider’s side based at the client site who facilitates the actions with the help of ODC staff. Then there are activities like builds, releases, testing, change management, renewed requirements review, etc that are a part of software engineering.
  • Onsite: Service providers work at the client’s premise. A model that lured millions of IT professionals to abroad. This model was followed before the ODC concept became more prevalent. Most Indian companies bagged projects on the basis of price and skills.
  • Offsite: Client sets up its own premise at the location where the service provider is based. Or the client jointly sets up a development center near or inside the service provider’s premises. The service provider helps the client to set up the facility, recruit people, manage people, and almost everything else.
  • Onshore: Service provider sets up its own facility near the client site, and delivers work with its people. Refer to an interesting example: http://www.networkworld.com/news/2005/062705widernet.html, http://www.sea-code.com. This model is also referred as nearshore.
  • Hybrid: This engagement model encompasses two or more of the above models.

There are offcourse fancy terms like “Rightshore”, “Offshore 2.0”, “Offshore-outsource”, “Outsource-offshore” , “Hybrid-sourcing”, or “whatever-offshore” used by third party product development companies or software service providers to attract clients. These are used to sell the capabilities of service providers to deliver products and projects in any of the delivery models.

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