While the possibility of using offshore / nearshore resources for the delivery of certain activities or business processes has been already established, long-term strategic feasibility and appropriateness of the various models of engagement they are still under consideration.
The most common approaches today are either working with a third-party outsourcing provider or laying down captive operations in lower cost locations. engagement models can be differentiated based on the customer's need for the organization of management control, the operating costs, risks, and other factors.
third parties Outsourcing
third-party outsourcing is a classic customer-supplier relationship governed by contractual obligations and agreements on service levels. E 'mainly due to tactical reasons such as reducing the short-term costs and flexibility of the staff. Non-core or non-critical activities are typical candidates for outsourcing.
third-party outsourcing Traditional comes in two main forms:
- Project-based outsourcing is considered the most appropriate for the development software with well-defined requirements and results. And 'suitable for irregular projects, but ongoing or one-off. On-site presence may be necessary to facilitate the estimation, specifications, and relationship management. Typical pricing models are time and materials (T & M) and fixed price.
- Dedicated development center model caters for software with changing needs, maintenance and support of large systems, research and development, testing, as well as other kinds of activities going on medium- or long-term complex. In this type of vendor commitment it provides the necessary facilities and allocates a team that works only on account of projects and is staffed by customer representative. This option is usually preferred when the resource requirements are low. The customer pays the fixed monthly fee for full-time employee (FTE).
When considering how to organize the remote delivery of software development services, the item controlled in captivity often do not receive full consideration compared to outsourcing . While it is generally agreed to outsource some non-critical activities, in some cases, this approach is not appropriate for the basic functions and critical activities. work Decision offshore / nearshore does not necessarily mean that you have to outsource it. The use of remote resources for the provision of functions close to core business while maintaining operational control and those that benefit from real cost advantages can be achieved by creating captive facility, thereby keeping the work inside the 'company.
Captive model means that the client organization makes strategic decision to establish its presence in the position lower cost and lead the work not as a part of its activities. The activities are performed remotely, but are not assigned to the supplier. So the customer is able to maintain full control and mitigate their risks associated with intellectual property and other sensitive corporate information.
The organizations wishing to establish captive centers have similar objectives to those of traditional corporate distribution or shared services operations. First prisoners are required to reduce costs through labor arbitrage. But recent research shows that buyers are looking for work not only cheaper, but adept at off positions / nearshore. They want to gain a competitive advantage and gains from process improvements. In order to avoid the risks of underutilizing capacity in captivity, organizations need to thoroughly evaluate their long-term operational requirements and predict service needs that might arise in the future.
The most common approaches to implement captive operations are as follows:
- Creating captive center from scratch (DO- -yourself in captivity) it can be successful when the client organization has the necessary resources, local expertise and market knowledge. The decision to set up its own center in captivity can evolve organically through growth. Organization can either perform extensive due diligence on its own or buy existing companies with operations in the chosen location.
- Build-Operate-Transfer (BOT) approach means partnerships with third-party vendors to create and stabilize the center. Seller is responsible for the initial installation, the staff and the prisoner management center during the predefined time period. At the end of the contract period the property is transferred to the customer. Thus organization takes center keys prisoner in hand-tailored to its specific needs. BOT option best suits organizations that do not have local expertise and extensive resources. In this type of engagement only logistics associated with the installation of the captive center is outsourced. Build-Operate-Transfer optimally combines the pure captive model control element with the flexibility of outsourcing. Essentially it provides the maximum to minimum risk control.
main benefits of having its own center in captivity:
- construction underway in savings on real costs
- operational control complete and monitoring
- completes the property after the transfer
- Minimization of intellectual property and the risks to the security of data
- knowledge brought industry-specific business processes and technical
- improved communications by the continuous reinforcement and experience
- Easy replication of the organization's processes parent
- Captive center can be marketed at some point in future
both outsourcing and captive operations have similar driving forces (reduction of costs and competitive pressures in the first place) and special benefits, but the main factors for the choice of one or the other will vary.
Both approaches will deliver benefits in terms of improving the focus, process optimization, reduced operating costs, faster time-to-market etc. But companies must carefully consider every option to identify what that represents the best solution for their specific needs, corporate culture and strategic objectives.
The approach depends on the fact that the main driver is the savings on short-term costs or if the company has a long view deadline for offshoring / nearshoring and intends to maintain control of processes and intellectual property.
Establish prisoner nearshore center in Ukraine through BOT model
If software development is a core competency of your company and you have a specialized long-term resource requirements, it makes sense to build their capacity in order to support the life cycle of the complete software, ensure intellectual property and build specific know-how. Nowadays this process is not as difficult as it once was. The key to success is to find a trusted partner that already operates in a country setting. In this way you will benefit from:
- put a well-defined methodology and time point
- Expected step-by-step implementation of
- The responsibility for all logistics associated with the creation of a captive center
- practical knowledge to establish business iT and dealing with legal and contractual issues related
- deep understanding of cost components and associated stress the creation and operation of an open / country sea nearshore software development center
- Hands-on experience in software engineering, generally accepted methodologies, processes, and quality assurance that can be adapted to the prisoner center
- established HR practices, experience in IT recruitment of qualified personnel
- attention to the problems of security and business continuity addressing
- advice and support during the installation process
- high level of business engagement and responsiveness
- flexible client specific approach
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