Offshore Negotiations: a Macro View

Negotiations are an integral part of business life, that’s pretty much a truism. More so negotiations for business are very much like breathing for human beings. Sometimes it seems that you can not make a single step without getting involved in some kind of negotiations – project scope / resources / time / quality; multiple aspects of employment relationships; vendor relationships; customer relationships; and so on. So it’s no surprise that an ability to negotiate is one of those mandatory job requirements that somehow never make it to job description.

While negotiation skills are important for any professional they are particular important and are put to real test when working with third parties and in particular with offshore. That’s why I decided to put a few posts to cover some of the most important elements of the subject.

Offshore negotiations like many other ones often come down to drawing a line in sand demarcating what’s mine and what’s yours – reaching an agreement on resource allocation, responsibilities, financial aspects and so on. Negotiating in its isolated “pure” form is an ongoing and often major portion of communications through the lifecycle of the offshore partnership. It typically comes up first during the initial contract negotiations, possibly as early as signing an NDA and later comes up at every change in direction ort pace.

What institutes a good negotiation? In a classic form a negotiated agreement is considered good if it is fair, wise, was reached efficiently, and is stable. I would a few more bytes to it – A negotiation went well if your interests are addressed, relationships are intact, you did not lose more than you gained in the process, you did not get more than you bargained for, and you feel good about it.

So, how do we get there?

First and the most important – before entering any negotiation you should understand the situation, the subject of negotiations, and what is at stake. It is amazing how often people jump into negotiation when there is nothing to negotiate (both parties are in violent agreement), too early or too late, or when negotiation is not the way to move forward. Identify the situation by ask yourself:

  • What are the problems / issues?
  • What are the affected parties?
  • What are the timeframes?

Just a few days ago one of my providers called me with rather unexpected message “Nick, we need to increase the rate for some of our developers!” My initial reaction could have been “Rodrigo, are you completely out of your mind?” Tell you the truth that it actually was, internally. I did manage not to say it and instead asked the questions similar to those above. A few minutes late I realized that the problem was far less urgent and severe and that I had a plenty of negotiation space with potentially very promising outcomes…

Second step is gathering the information. In some negotiations that could be a rather involved process and it deserves a stand alone post, maybe a few; for now I will just mention the high points:

  • Identify high-level information pertaining to the negotiation for the all parties involved.
  • Identify position of your opponents – their stated goals and objectives in terms of what they “want”.
  • Discover true interests behind the positions of your opponents – their true goals and objectives or what they actually “need”.
  • Identify the situation as it pertains to your negotiation power, timing and skills.
  • Discover the same about the situation of your opponents, pressures they are under.

Third step (time wise it could be preceding second step or done in parallel with it) involves defining your own position, your own “wants” and “needs”. As Seneca put it: “If a man knows not what harbor he seeks, any wind is the right wind.” Interestingly enough negotiating for the sake of negotiating is not such an uncommon event. Maybe an emotional rollercoaster of high pressure negotiations, blood taste in the mouth, or twisted pleasure of seeing your negotiation partner crumble to pieces is enough of a motivation, but what will it do for you in a long term?

Start with setting the desired outcomes – Best and Realistic:

  • What exactly are we trying to achieve by the negotiations?
  • What / Where / When / How do we want it?
  • What / Where / When / How do we NOT want it?
  • What is gained / lost by resolution?
  • What are the achievement criteria?

Next go through some brainstorming and identify your alternatives:

  • What are the alternatives that are available away from the table?
  • What is your Best Alternative To Negotiated Agreement (BATNA)?
  • What is gained / lost in case of no resolution?
  • Exactly What / Where / When / How is BATNA manifested?
  • Exit criteria. At what point do you stop negotiating and revert to BATNA?

The fourth step, involves tactical and organizational actions for preparing to the “official negotiations” or the process of reaching the agreement. It involves obtaining negotiating authority, setting up negotiation team and addressing all logistic components. There is much to be said about setting up environment for negotiation, in particular in cross-cultural negotiations.

And finally the last step – reaching the agreement. This step is by far the most complex and comprehensive. It requires plenty of skills, knowledge and patience. This step might vary in its complexity, length and structure depending on the complexity of the topic, positions of the parties involved, negotiation space, techniques, and many other dimensions. It definitely deserves a stand-alone post. For now let me just mention a few elements common for many comprehensive business negotiations:

  • Initial Discussion(s) – at this stage the parties typically outline negotiations landscape and share their “wants”.
  • Regrouping / Final Preparation – at this stage the negotiating teams define / adjust their strategy and tactical approach.
  • Reaching an agreement – the “face to face combat”, the heart of the negotiations.
  • Paperwork – preparing and finalizing documentation pertaining to the subject negations.
  • Closure – signatures, handshakes, and communications.

OK, that’s enough for now; it also looks like I will need at least half a dozen of follow on posts; that will keep me busy. Hopefully there will be seats on BART at least on one leg of my commute, otherwise that might take awhile…

Offshore Negotiations Basics: Rules of Haggling

hugglingFirst, let me repeat something I wrote in an earlier post: negotiation is a complex skill if not art. If negotiations are not particular your cup of tea you may consider involving professionals, in particular those who have experience negotiating offshore contracts. At least you owe it to yourself to go through some serious reading on the topic prior to diving into the deal making. Let me recommend a few classic books on the subject: Secrets of Power Negotiatingby Roger Dawson, You Can Negotiate Anything by Herb Cohen, and Getting Past No: Negotiating with Difficult People by William Ury.

Through the years in IT leadership position I negotiated many contracts with service providers, various vendors, consultants, employees and offshore companies. That doesn’t make me professional, so do take my advice with a grain of salt. More so, every negotiation is different in so many aspects that what worked in one could absolutely fail you in another.

Anyway, as introduction to offshore contract negotiations I am going to cover ten golden rules of haggling. You might ask: what does it have to do with professional contract negotiations? Well, barraging is the mother of all negotiations and more so there is a high chance that you will be negotiating with a vendor who’s coming from a culture with deep roots in a market style haggling.

Here they are the Ten Golden Rules:

  1. You must be ready to walk away. If you are attached to the goals of negotiation, if you can not walk away, you ability to get what you want is significantly impaired. Using Herb Cohen’s advice from You Can Negotiate Anything – you should care, but not that much. I strongly recommend reading Herb’s book or even better get it in audio version – he’s a great story teller and covers many of these rules at great depth.
  2. Look / act interested but never desperate. As a matter of fact if you feel / are desperate you should get someone else to negotiate for you. Acting is an extension of the rule number one. Basically you need to show that “you care, but not that much” and are ready to walk away.
  3. Keep your eyes on the ball. Negotiation is emotional process and in order to be successful you should never forget what the process is all about, what the goals and the rules are.
  4. Don’t try impress on the other side. That’s to some degree an extension of the rule 3. Your image is not the subject of the negotiations so just keep your eyes on the ball.
  5. Always ask for more than you expect. First, you might just get it. Even more important is that higher demands create negotiation space for both partners, and allow your opponent to save face even if they make bigger concessions.
  6. Gasp and act shocked (flinch) at the other side first proposal. This simple technique does a few things: it sets the pace of negotiation, puts you in the right set of mind, and helps to push your opponent to make the first concession.
  7. Never say yes to the first offer. By saying yes to the first offer you are not only setting yourself up for missing on a possibly huge opportunity, you are leaving your opponent with buyer / seller remorse.
  8. Never go down on price or make a concession first. Get the other side to step forward. Like many of the golden rules that one is easier said that done so if you are stuck just remember the rule one and make it clear that you are ready to walk away.
  9. Never make a concession without asking for something in return. Breaking this rule will put you up on a slippery slope of chain concessions.
  10. Always congratulate the other side. That is more than just being polite, it leaves the best path for the future negotiations.

Now let me give you the unofficial 11th rule: Sometimes the rules meant to be broken or Know where to stop. In many situations following golden rules might be detrimental to building a win-win relationship. For example if the other party is inexperienced in negotiations or in providing the services as the result your opponent gives up to much ground, paints itself in the corner, or brings negotiation to an impasse.

Your negotiating opponent is meant to be you partner and probably for a long time. So consider a metaphor of sparing with your friend in a kick-boxing gym: while you do want to win you do not want to inflict lasting injuries; now add to it little twist – what if you are far superior to your friend in the skill and power.

A few months ago acting as an intermediary between a US-based customer and a small, bright and very ambitious outsourcing company I was helping to negotiate a fixed bid engagement for developing a windows app. The initial bid came with the “asking” price of ~$100K. At that point I could have pulled out my 10 golden rules check list, I could have flinched, whined, screamed, pushed and threatened to walk away… and would’ve probably gotten the contract down to $70K or $80K. Instead I got on a phone with the vendor, than with the customer, than with vendor’s technical team, back with the client, etc. I finally got them to agree on $350K after two weeks of strenuous back and force. Yes, not a typo, 3.5 times the original bid. And that number I am certain would still keep the vendor on their toes and gives the client superb deal for the product.

You could easily reverse engineer the situation – the client being not very clear with the requirements vs. provider with typical overly aggressive “developer” mind set. All too common I am afraid. I love those small, bright and ambitious companies; unfortunately after being beaten into pulp by “professional” negotiators on the client side they either never deliver or end up one-hit wonders.

Outsourcing Piecemeal – Out-tasking

In BPO world Out-tasking has been known for quite some time. See for example
CompuPacific outsourcing whitepaper – “Outsourcing vs. Out-Tasking: Practical Advice” or an oldie but goodie – a white paper on out-tasking from CISCO.  The basic idea is simple – out-tasking is typically described as farming out business processes or IT functions piecemeal rather than all at once. Examples of tasks that may be farmed out are data entry, document-based processing, such as claim handling, graphic arts development, and or document translation / localization.

Most typical definition goes as “Instead of divesting their back-office functions as a whole, companies contract out in an incremental and manageable way”. The top line benefit of out-tasking is typically stated as “out-tasking helps cut cost quickly without loss of control or high set-up costs.” The geography for out-tasking is similar to regular outsourcing with India and Philippines being far ahead of the pack.

Out-tasking could be indeed an efficient and effective way of supporting a technology organization, that if you can find a good partner, and that could be a little tricky. The issue is in volume of tasks that fall into the sweet spot of out-tasking. There are many ways of dealing with it, but first, what are good tasks to consider for out-tasking. Here are just a few to consider:

  • All kind of graphical arts – need a power point presentation for a board meeting? face lift for a corp. website? helping your clients with corporate identity? Often these tasks do not justify in-house graphical arts staff.
  • Creative and technical writing – press releases, web content, articles, newsletters, white papers, copywriting, editing, etc.
  • Email and ad campaigns, in particular if they need to be run on ad hoc basis and do not require a lot of back and force with marketing.
  • Occasional or even ongoing Search Engine Optimization activities (SEO); large spectrum of tasks here from SE submission to link building, etc.
  • Usability testing. Rather controversial item, many usability exports tell you that outsourcing usability testing is doomed to fail. I do not belong to that camp though.
  • Marketing materials from creative writing to brochures and campaign designs, sales and sales support materials. Outsourcing of these tasks is especially meaningful for small companies.
  • Translation, internationalization, localization, etc. especially if these are once off or occasional tasks rather than ongoing activities
  • Data entry of all kinds, for example transferring paper-based documents into electronic formats. BTW, these activities almost always benefit from outsourcing.
  • Many types of legal tasks and services, for example developing agreements such as MSA, software licenses, terms of services, privacy policies, NDA, etc.

As you can see from the list above almost any company has a good deal of tasks that could be out-tasked. The next step is finding a vendor, or more likely vendors that can provide the services on out-tasking basis.

Finding an out-tasking partner require a different mind-set / different approach from those used when selecting an outsourcing vendor. The first rule and the main difference are to measure invest of the efforts in the search process versus the scope of task. Chances are you do not need to invest much and in case you made a mistake in selecting a partner it’s usually fairly easy to fix and find another partner.

Not that long ago we needed to build basic corporate identity for our new venture. The requirements for logo and look & feel of the site were rather ambiguous. Instead of going through the process of refining requirements we used what we had, got multiple graphical artist to bid on the project, picked half a dozen that replied first. In just a few days we had just under a hundred of logo prototypes. After a few internal meetings we picked the winner who completed the entire corp. identity package in a couple weeks. Yes, we paid a bit more that we could have but time savings alone justified it.

Similar approach could be used for many out-tasking activities. Finding providers that are eager to bid for your business is also fairly easy task, especially for things like creative writing, graphical arts, and most of the items in the list above. For example you are looking for Search Engine Optimization services. You may just google SEO services and logically those who understand anything in SEO would appear on the top of the list. Another approach could be as easy as posting a few sentences about your project under computer gigs on http://www.craigslist.org; make sure to stay anonymous otherwise vendor spam will be chasing you for months. Another, very efficient way is to use freelancing sites. There are a few dozens of them with very large community of individual freelancers and small to midsized companies offering the services. Most popular sites are www.odesk.com, www.elance.com, and www.guru.com. In addition to offering access to thousands of providers these site offer some value add by helping in managing vendor-provider relationship, for example offering escrow services.

Dealing with individuals and very small vendors has its pitfalls though. The rating systems provided by freelancing services are far from perfect. Continuity of services, quality of deliverables, and turn around time could be far below your expectations. I will cover some tips on dealing with it in a separate post.

If dealing with freelancers is not your cup of tee you may consider larger vendors who would be prepared to establish out-tasking relationship. There are many of those, in particular in India and Philippines. You may want to team up with a few of those on one side and with a couple of companies (buyers like yourself) on the other to provide sufficient volume of revenue stream to the vendors and meaningful pricing for yourselves.

Path toward Disposable Outsourcing: S/W Development

There are many very important aspects of SDLC related to s/w development activities which should be implemented whether you outsource or not. Some of them are essential to DOM. Your intermediary whether internal or external must verify that these steps are taken and not just as a checkmark on a  SDLC compliance list, they have to be made consistently and to a degree that satisfies the intent.

The first is the code standards. Of course following language naming conventions goes without saying; there are a few more standards that have to be diligently followed:

  • All names are in English (classes, variables, methods, etc.) ALL
  • Sufficient level of comments, of course in proper grammatically correct English. Developers must understand that they are not required to write essays; they just have to get comments to unambiguous level.
  • Same applies to headers, check in notes, etc.

Next is the documentation. Creating the documentation that could be used to learn about the code and its intent, that doesn’t lose concurrency and go stale, and that doesn’t cost you an arm and a leg is not a trivial exercise. As a matter of fact a detailed design / technical design documentation is one of the most controversial topics in s/w development methodology. In a large degree the documentation’s level of detail depends on the SDLC model employed. In particular the level of documentation details digresses considerably with level of agility of the process. That is often exacerbated by a low level of maturity of organizations electing agile methodology. I do not want to get too deep into this topic at this point, just want to point out several mandatory elements:

  • High level functional and technical design documentation.
  • Functional and technical design documentation at detail level, specific artifacts depend on SDLC methodology, type of the project, rate of change and many other organization specifics.
  • Comments in the code written in a standard way that allow JavaDoc or similar tools to generate meaningful documentation is one of the most important steps. Same goes for DB schema.

A couple relevant notes here:

  • Waterfall style processes with their high degree of details in documentation, staged delivery and isolated hand-offs work naturally with DOM, in particular when the vendor offers a higher level of CMMI maturity.
  • Agile methodologies work exceptionally well DOM unless they are taken superficially. That becomes particular clear in attitude towards documentation. It’s amazing how many times I heard things like “we run agile development process, so we do not do the documentation”, never from anyone who understands agile though.
  • In order to define an appropriate level of documentation for your process you need continuously evaluate value of documentation for the process and for execution on DOM vs. the cost of producing and supporting it.

Next, in no particular order some of great development practices that have been proven to work under broad range of models from clean room waterfall to XP:

  • Unit Test written before the code, at best taken all the way to Test Driven Development. Take a look at www.testdriven.com a site with a lot of good references by Eric Vautier and David Vydra.
  • Continues Integration. There is a plenty of info on CI and supporting tools. In CI builds I strongly recommend include smoke tests, subset of unit test suite, and a number of management reports. CI scope is typically different for check-in runs and nightly builds.
  • Code Review. Somewhat controversial technique which might backfire if not performed properly; I would strongly recommend using tools to facilitate code reviews, in particular I suggest crucible.
  • Frequent progress reviews with live demos; I recommend at least bi-weekly.
  • Collective Code Ownership (CCO). There is however a plenty of controversy associated with this practice, in particular accountability. I see huge value in eliminating blind spots which CCO offers and recommend introducing “feature” or “area” lead. Under that model CCO still is taken to full extent when it comes to work unit allocation and yet there is a single point of contact for each “area”.

Outsourcing Trends for ‘09

As I mentioned earlier in ‘08 – the Year of Predictions it’s difficult to not to yield the temptation of making predictions. First, in the uncertainty of today’s economy almost every one is looking for those; second, all of us with strong opinions on the outsourcing have some predictions at least in our minds; and third, personally I am very curious whether I can get any close to what ’09 will eventually show…

Being new to the fortune telling market I have been considering cold reading techniques, the art of creative vagueness, and audacity of stating the obvious. Those all seem like winning strategies and after some considerations I decided to use them all and present my predictions in a form of Outsourcing Trends for ’09, so here we go:

1. India will remain the leading outsourcing destination. How about that? Well, let me add at least something meaningful to this “discovery”. When it comes to India I expect:

  • a notable decrease in the rate of growth, I’d say mid teens to low twenties;
  • minor decrease in a market share;
  • consolidation with many casualties in the low end of the market;
  • improvements in quality of resources and general metrics of the services such as turnover ratio for top providers;
  • we will see a few megadeals mostly from the top tier vendors.

2. China will continue to straggle to grow its IT outsourcing offering:

  • there won’t be substantial growth in IT outsourcing, the figures at best reaching high single digits;
  • there will be some reshuffle of the top tier with some of the current leaders substantially giving up their position; my bet on the biggest loser is Freeborders;
  • the outsourcing for Japan will grow stronger, US business will grow at a lower rate.

3. Russia, Ukraine and Byelorussia will continue loosing their edge:

  • there won’t be any considerable growth in IT outsourcing, the figures will be in low single digits;
  • there will be no reshuffle of the top / second tier; a few of the current leaders will be responsible for the most of the growth figures; companies below second tier won’t show growth and many cease to exist; the big guys will get bigger and stronger, my bets are on Luxoft and ePAM.
  • the outsourcing for Europe will be responsible for majority of the growth, US business will grow at a very low rate.

4. Brazil, Argentina, Mexico will show some positive signs:

  • the growth figures in IT outsourcing will be in a mid to high teens;
  • formation of tier one will create a few prominent names with some companies really pushing for leadership position, in Argentina my bets are on Globant;
  • emerging leaders in LA market will build ODC in smaller or less developed in terms of outsourcing countries;

5. Supply of IT resources will increase across the world:

  • there won’t be any considerable growth in IT outsourcing in gross volume sense, the figures will be in low to mid single digits;
  • the new outsourcing players such as Egypt, Morocco, Nigeria won’t make any ripples or bring anything substantial to the market just a few 100K of additional resources that will play in the low end of the market;
  • while overall number of IT resources will go up, the rate of growth will go down, with less interest in the IT arena across the world;

6. IT outsourcing volume from US, UK, Germany, Japan, and other large IT consumers will grow at very low pace:

  • there won’t be any considerable growth in IT outsourcing in gross volume sense, the figures will be in low to mid single digits;
  • there will be however increase in percentage of work outsourced across the industry;
  • geographical pie chart won’t change dramatically yet it will show more aggressive outsourcing to new destinations and nearshore.

7. ’09 will be a buyer’s market:

  • Closing new deals, renewing existing and retain current customers will become increasingly more challenging; companies that do not invest in “farmers” and solid account management will pay for that dearly.
  • The price wars and cost pressure will affect everyone; boutique shops with typical sales pitch “we do not compete on price” or “we are not the most inexpensive but we have excellent people” will need to adjust their message or get ready to face dwindling revenue stream.
  • Vendors catering to small companies need to be ready for a wild ride, especially in the first couple quarters of ’09 – many contracts will broken, payments delayed, AR will grow and cash flow degenerate; even “good clients” will develop hearing problems and it will take much longer for US mail to deliver checks.

8. Rates on average will fall slightly or stay the same:

  • the disparity in rates among offshore destinations will narrow: rates from Asia will grow while Latin America and Eastern Europe rates will fall;
  • the average ratio of US “full time” rate to Offshore rate will slide notably;
  • the gap between freelance rates across the world will continue to narrow.

9. One of the most interesting trends with some tangible events will come from top tier vendors going outside of their native land:

  • The trend will be led by Indian outsourcers building ODCs in Asia (other than India) and Latin America. I would expect top destinations being China, Philippines, Brazil, Chile, and Mexico in no particular order.
  • There will be some moves in opposite direction, e.g. China companies opening centers in India. The volume of those would be rather small.
  • We’ll see some promising cross country hiring, in particular in sales and executive roles; this activities are likely for many vendors even outside of top echelon.

10. Engagement structure, contracting approaches and model usage will generally remain the same with a few emerging trends:

  • We will see more large corporations with substantial offshore engagements buying those engagements from the vendors. Some companies will execute of their BOT strategy, some will approach vendors with “offers they can’t refuse”, some, especially smaller companies won’t be too generous and would cut the relationships without giving much warning.
  • The new contracts will become more complex and will aim for accounting for currency exchange volatility, political instability, changes in standards of living, etc.
  • We will see more usage of Disposable Outsourcing Model mainly driven by readers of this blog.

Well, that is a lot of trends, and some are neither sufficiently vague nor 100% obvious. We’ll see how well the world of outsourcing performs on a challenging task of meeting my expectations. The trick is of course will be in measuring the performance versus my objectives… Some of the stats should be available in late ’09 / early ’10, some would be very difficult to find, I guess I will run some polls or try other bullet proof methods of gathering BI…

Mumbai Sad Nomination

An interesting and very important aspect of selecting an outsourcing destination is the location safety.  And it is quite different from what it used to be just a few years ago.  The recent terror in Mumbai brought a lot of attention to the subject and put Mumbai in the top ten riskiest places.    Here is a how the list looks today:

The Most Dangerous Ten

1. Jerusalem (Israel)
2. Mumbai (India)
3. Rio de Janeiro/ Sao Paulo (Brazil)
4. Manila/Cebu/Makati (Philippines)
5. Delhi/ Noida/ Gurgaon (India)
6. Kingston (Jamaica)
7. Kuala Lumpur (Malaysia)
8. Johannesburg (South Africa)
9. Bangkok (Thailand)
10. Bogota (Colombia)

The Safest Ten

1. Singapore
2. Dublin (Ireland)
3. Santiago (Chile)
4. Krakow/Warsaw (Poland)
5. Toronto (Canada)
6. Prague/Brno (Czech Republic)
7. Budapest (Hungary)
8. Monterrey (Mexico)
9. Beijing (China)
10. Cairo (Egypt)

See more in Mumbai named second most dangerous outsourcing location by Matthew Scott

Selecting Outsourcing Engagement Model

Model selection in terms of Outsourcing Engagement Models is not a trivial process and your choice depends on large number of factors such as nature of the outsourced activities, organizational maturity, budget, risk tolerance, and so on. Below are some simple guidelines that you may consider when making the selection. See also earlier post Offshore Model Selection: T&M vs. Fixed Bid for relevant info.

Resource Augmentation / Classic Augmentation / Extended Team.

  • One of the easiest ways to start with offshore outsourcing.
  • Scales well both up and down (adding or taking resources off the project).
  • Works well for poorly defined projects and activities.
  • Requires high management overhead.
  • Tends to be costly especially for not well defined activities.
  • Doesn’t leverage vendor’s processes / structure / quality.

Project-based Augmentation / Task-based Augmentation.

  • Good transitional model, in particular applies well for large number smaller projects.
  • Scales up and down reasonably well.
  • Offers good control of the scope and budget
  • Offers less control over the resource productivity.
  • Requires fairly high management overhead.
  • Requires high maturity of the vendor processes and structure.

Project Outsourcing / Full (Activity) Outsourcing.

  • Good model for well defined projects with clear scope and deliverables.
  • Requires minimum management overhead.
  • Well control budget (assuming well defined project and low scope creep).
  • Very dangerous model for large (scope / duration) projects.
  • Very high risk due to low control of productivity and performance of the resources.
  • Requires exceptional maturity of both customer and the vendor.

Offshore Development Center (ODC) / Captive ODC / Captive Teams.

  • Could very cost effective in terms of total cost of outsourcing.
  • Offers ultimate control of the resources.
  • Allows using cohesive processes across organization.
  • Very high management overhead.
  • Very high internal resource / cost impact.
  • Requires customer to perform many operations in offshore location.

Hybrid Model.

  • Inherits pluses and minuses of the underlying models.
  • Some minuses could be addressed by combining model.
  • The pluses of the underlying models become weaker.

Build – Operate – Transfer (BOT).

  • Inherits pluses and minuses of the underlying models.
  • Introduces wide spectrum of new challenges, as both vendor and the customer need to operate well in three distinct different phases with completely different models.
  • Requires exceptional maturity of both vendor and the customer.

Disposable Outsourcing.

  • As I mentioned in my earlier post the model falls out from the list above since it’s more like an overall approach toward outsourcing rather than just a way to structure the engagement.
  • The model could be applied on a top of different models.
  • Minimizes risk associated with outsourcing.
  • Is more expensive than underlying models.
  • Offers add-on value in many aspects of the project, e.g. reducing impact of turnover