A Practitioner's Perspective

This article gives you a high level framework to structure an IT outsourcing project from the perspective of contracts and agreements.

Firstly, you need to identify the type of outsourcing model you would want to adopt. Once you have decided the model, the following contract and agreements apply for each situation.  Read more…

 You can download a free sample of a Staff Augmentation Contract (agreement) or Professional Services Contract by accessing the downloads section of this site.

Staff Augmentation is widely used by IT managers as a model of choice for outsourcing. Due to the inherent nature of the model, controlling quality of output or delivery is quite a challenge. 

This article explores how a certain level of quality can be maintained in a Staff Augmentation situation. More often than not, the following considerations apply to any Staff Augmentation model:  Read more…

I have consolidated below links to articles describing the various types of Information Technology Outsourcing Models. Have a good read!

Read more…

In most organizations, a hybrid model of information technology outsourcing can be seen in operation. The hybrid model may comprise Staff Augmentation, Managed Services, Managed Capacity, Fixed Price, Time and Material or T & M and Co-Managed.  

Read more…

As the name itself implies, this is a Price based information technology outsourcing model and arguably the most mature of models. An earlier article that was published on this site describes all the information technology outsourcing models in existence today. 

In this model, a fixed amount of money is guaranteed to the vendor for delivering a piece of work subject to mutually agreed milestones. Read more…

Managed Capacity is a pricing based information technology outsourcing model. A full description of all the information technology outsourcing models is captured in another article on this site. 

In Managed Capacity, the customer buys a certain quantity of person-hours or person-days from the vendor at a pre-negotiated rate.

In certain situations, these are also bought as a certain number of seats in a designated development centre of the vendor. Read more…

An earlier article published on this site, describes at a high level the various types of information technology outsourcing models in operation today. 

Time and Material or T & M is a pricing based information technology outsourcing model. This model is utilized not only in the information technology industry, but in other industries as well, and as such it has been in existence for quite some time now.

As the name implies, the payments to the vendors or contractors are based on the number of hours of work completed per day. Read more…

As described in the article ‘types of technology outsourcing models‘, Co-Managed Model is another of the Governance based Models.

This is a bridging model between the Staff Augmentation model and the Managed Services model and is usually adopted by organizations to reduce the risks associated with Staff Augmentation. Co-Managed model retains a certain level of management control with the outsourcing organization and the vendor is only required to manage certain aspects of the engagement.

This is also a model that can be leveraged to achieve an improved measure of quality control in the Staff Augmentation model and as a consequence organizations often tend to use this model as a risk mitigation approach. Read more…

As detailed in the article titled ‘types of technology outsourcing models‘, yet another governance based technology outsourcing model is Managed Services.

Managed Services is widely acknowledged as the best model to adopt for technology outsourcing if you have a long term outlook. Widely tipped as the holy grail of technology outsourcing, Managed Services model is an attractive proposition both to vendors as well as the outsourcing organization.

Salient Features

Salient features or key characteristics of the model are as described below:

• Also known as the Fully Outsourced Model, this is where the vendor takes complete, end-to-end responsibility of a set of deliverables in a project.
• Vendor also has complete decision making responsibilities in providing the agreed set of deliverables. Read more…

As detailed in the article titled ‘types of technology outsourcing models‘, Professional Services or Staff Augmentation is a governance based outsourcing model.

In this model, consultants from the outsourcing vendor act as an extension of the client’s project team and they will be supervised by a client manager responsible for that project delivery. Read more…

There are several types of technology outsourcing models that are employed by CIOs. In a typical IT organization, you could see a combination of these models in operation.

Let us see how many different types are in existence today.

Broadly speaking, there are three different types of outsourcing models in practice. These are:

1. Governance Based Model
2. Pricing Based Model
3. Project Based Model

Read more…

CIOs often ponder upon this very important aspect of their outsourcing strategy. What IT functions should I outsource?

A broad classification of an IT department will be under two heads – Infrastructure and Applications. We can further classify these two as below:

Infrastructure

1. Primary Systems: These include your Data Centers, Networks, Servers, System Software, Databases, Storage Systems, Enterprise Service Bus and Desktops.
2. Secondary Systems: These will include Email and Softwares running on desktops.

Applications

1. Enterprise Applications: These will include those core applications that form the basic foundation of running the business such as ERP systems and Business Applications such as a Banking System in a Bank or a Crew Management System in an Airline.
2. Support or Periphery Applications: These will include any Business Intelligence and Datawarehousing tools, Document Management Systems, e-Learning Systems and Intranet Portals.

Can you outsource all of these? The answer is yes. Read more…

IT practitioners are often faced with this burning question: Why outsource? Or should I outsource?

Outsourcing of manufacturing functions were the predecessor to IT outsourcing. Answers to the aforesaid question will be similar to answers to why manufacturing groups took the outsourcing route as early as IT departments.

Is it always cost? Or is it to achieve better economies of scale? Is it shortage of technically trained people? Has it something to do with global reach in terms of supply and demand? Or is it just technology spread or the lack of it? Read more…