All the rage in the world of outsourcing as of recent has been the pricing models that strike the right balance between the incentives and risks for both the provider and the client. Fixed price projects often carry a risk for the provider due to the vague or assumed requirements. On the other hand the time-and-materials pricing model is often seen as a risk by the customer due to the lack of visibility into the projected cost and undefined timelines.
Recently a hybrid model that combines the two has become popular where the initial, well defined requirements are implemented based on the fixed cost. The requirements unknown at the start or that come up during the initial phases are implemented subsequently based on the time-and-materials pricing model. This hybrid model allows for the both sides to hedge their risk.
Interestingly enough CompuSight has been using a similar model for several years. It is actually quite common in the “build and enhance” scenarios. Furthermore, CompuSight is often recruited in a reverse hybrid model of the one described. Our consultants help establish the architectural approach and perform feasibility studies as the initial phases of the project based on the time-and-materials model. Once the anticipated technological and integration challenges are solved and the proof of concept exists we are able to perform the implementation work based on the fixed cost basis. This approach has proven quite successful and well received by our clients.
Tags: Outsourcing, pricing models