Thursday, November 19, 2009 |
The rapid development of the outsourcing industry has given rise to multiple variations of service providers – offering end-to-end services within multiple disciplines delivered across varying parts of the globe. Selecting a service provider increasingly depends on the service delivery method or the sourcing model that is appropriate for the buyer's outsourcing needs. In an article regarding such, Infosys expressed that each model will offer a host of advantages that will be applicable only to specific situations. Let us have a closer look at one such situation in which service providers are given full responsibility for an outsourced project: Project Based Outsourcing
Project based outsourcing is an increasingly popular sourcing model among clients as more and more buyer organizations develop sourcing maturity – efficiently assessing needs, setting expectations, and applying outsourcing as a tool for strategic enterprise-wide improvement. Project based outsourcing dictates that the service provider manage all tasks involved in an outsourced project until the agreed upon outcome is achieved or a certain deliverable is received. Such will require that the service provider possesses the manpower with necessary skills to accomplish tasks involved. The service provider will also provide project management expertise in order to run the project. The client will thus not need to be involved in day-to-day operations but will rather focus on the final outcome of the project.
Vendor management mechanisms in this case are reliant on end-to-end project outcomes and ensuring quality levels in each task. The vendor/buyer relationship is the cornerstone of project based outsourcing. The buyer will only need to benchmark and monitor outcomes as the responsibility of the project rests solely on the vendor.
The client's loss of control over day-to-day operations can be both a pro and a con in project based outsourcing. This will require a better understanding of the offshore model on the part of the client and a assurance of operational management capabilities from the part of the vendor.
Overall, project outsourcing highly depends on clearly defining requirements and specifications of the project from the start. When successful, project outsourcing can provide a high level of productivity at lower costs. Documentation, programming, testing, quality assurance and detailed design are all entrusted to the vendor – requiring advanced skills and a high level of expertise in the relative field of the project being outsourced.