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.
Not all models will be in operation, but most will be. Usually choice of models for each project or engagement is decided based upon a few parameters that are detailed below:
- Maturity: If the system is highly mature and is understood clearly by the client organization and the vendor, then such a system is a perfect candidate for Managed Services or Capacity. If it is not mature, then it could be subjected to Staff Augmentation or T & M or even Co-Managed.
- Price: If there is a concern about Price, and the client wants a model that will optimize the cost of executing the project, the options could be offshore based T & M or Managed Services. It could even be a Fixed Price with delivery from an offshore location.
- Work: The nature of the work itself can decide the outsourcing model. An Oracle EBS implementation will in all probability be a Fixed Price or T & M engagement that is delivered from a near-shore location. Or if it is an engagement that has to be supported by personnel from within the client organization, we might look at Staff Augmentation. This will again be the model of choice if the client is only looking at a short term engagement.
- Long Term Outlook: More often, client organizations outsource with a long term perspective. A phased out approach to outsourcing often begins with Staff Augmentation and moves into Managed Services or Managed Capacity. Such an approach will build confidence into the client organization as well as for the vendor.
Here is an example of a Hybrid Model in operation:
- An Airline company has outsourced its infrastructure management to a vendor with whom the company has signed a 3 year Managed Services contract. The delivery of these services is done partly from onshore and majority from an offshore location.
- Support for a product platform has been outsourced to another vendor and since the platform is business critical the support team is based at the client location and directly managed by a Client Manager. The model being followed is a Staff Augmentation model with a long term view to move into a Managed Services one.
- The company has also bought a fixed bucket of seats at an offshore location which houses the call centre that provides sales support and after-sales service.
- The company has awarded a fixed price project to a vendor to implement an invoice processing system.