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:
- Governance Based Model
- Pricing Based Model
- Project Based Model
These outsourcing models are described in detail below:
Governance based model
As the name itself suggests, this model is based on the strategy adopted to govern the project or the project organization or the project team. This model has three different flavours to it – Professional Services or Staff Augmentation, Co-Managed and Managed Services or Fully Outsourced.
Pricing based model
This model is based on Price, where the defining guidelines are the payments to vendors or the pricing of the work order. There are different types of Pricing Models in existence today. These are Time and Material, Managed Capacity and Fixed Price projects.
Project/Engagement based model or Hybrid model
This model is more of a combination of the different flavours of the Governance and Pricing based models described above. If you look at an IT organization from a holistic perspective, i.e the IT team as a whole, you can see all of the aforesaid models in operation across projects and support engagements.
Choice of models is dependent on project parameters such as your outsourcing strategy, price, location, delivery, scale, skills, the work itself, confidence to outsource, feasibility to outsource and vendor profiles among others. A discussion on approaches to select the most appropriate model is outside the scope of this article.