This model is based on an optimal division of responsibilities and focuses on cost provisioning and labour delivery. An IT governance model allows the customer to maintain optimal alignment of strategic IT functions to meet their business needs and increase competitiveness. There are three types within this model.
Specialist at customer
In this model, consultants from the outsourcing vendor act as an extension of the customer’s project team and they will be supervised by a customer manager responsible for the delivery. This model is mostly applicable when certain skills are not available in-house. Another reason for its use is when additional headcount is needed.
Managed Services Model
Managed Services is widely acknowledged as the best model to adopt for technology outsourcing if you have a long-term outlook. Vendor will be responsible for selection of resources as well as take responsibility of managing stakeholder expectations.
As the name already indicates, this model is based on the price, where the defining guideline are the payments to vendors or the pricing of the work order. A sound knowledge of pricing models and the Pros and Cons can make your decision process easier. Every company can greatly benefit from outsourcing software development tasks to another team, ensuring project completion on time and within the budget. There are some basic models you can choose from: the time & material model and the outcome-based model.
Time & material based-model
The payments are based on work delivered in regular intervals. The customer has an important role in the software development process. Good cooperation between the team and the customer is crucial. It is the customer who carries risks related to the scope.
Outcome based collaboration
The customer and the developer team set KPIs before the beginning of the software development.
Payment is done after achieving the predefined KPIs only after the customer is justified with the milestone achieved.