An introduction to Offshore development center billing models.
The offshore development model now is evolving by leaps and bounds.
For those who would like to get familiar with the outsourcing, we introduce this article. Here we present main offshore development models for the outsourcing.
Offshore development team models of engagement are severely important as the outsourcing contract’s life cycle is contingent on them.
As such, it’s vital that the proper billing model is used to enforce correct risk mitigation. In doing so, confidence in the IT outsourcing company remains intact.
Time and material model
The average time-and-materials approaches of productivity, as per specific expenditures.
This is generally tracked through weekly progress reports and timesheets provided by the offshore development team.
From the customer’s point of view, you obtain only what you require and pay for just that.
Time and materials tasks tend to work out with a positive outcome when there are variables involved with a project. Because there is no complete certainty here, a time and materials job that lacks expense regulation is a problem waiting to happen.
A not-to-exceed clause (costs won’t surpass a specific figure) should be integrated to regulate the job’s expenses.
It’s very important that all factors of the software development project are kept in mind and a scope is maintained for incidentals.
Fixed-price Outsourcing Project
The fixed-price contract is another model which you can use in the project-based engagements. It means that the payment does not depend on how much time and resources vendor will spend to complete the project.
What differentiates fixed-price contracts from the time and material outsourcing model is that the scope of work and the resources needed to complete the objective are not disclosed to the customer.
The time & material model saves the time you’d spend on planning.
The preparation stage is completely performed on the provider’s side which comes at a cost of transparency and awareness.
Offshore development center
The Dedicated Development Center or the Offshore Development Center is basically the same dedicated team outsourcing model with some global differences.
Enterprises use this model in case they don’t have an internal IT department capable of the full cycle of software development.
In opposite to the dedicated team model, where external specialists are used rather as an augmentation to the in-house IT team, dedicated centers are used to outsource the whole IT processes on the service provider’s premise.
The types of contracts in software project management are pretty flexible. There is no one size fits all solution but everybody can find something that will work well with the project of particular scale and different goals.
Main selection criteria will be the following:
- The size of the team
- Project duration and the budget size
- Level of the control you require over the team
- Technologies and the overall project complexity
After years on outsourcing services market Kite has chosen the time and material model for the projects with the clear goal and dedicated development model for the projects where the long-term day-to-day collaboration with the client is a must.
We believe that those two approaches give our partners the best value out of outsourcing. We hope that this article will help you to decide which outsourcing type is the best for you.