OutSourcing Models

The rapid growth of indian IT sector has brought into picture various outsourcing models prevalent in the market.On the first look it might seem that outsourcing isn't a big nut to crack but then there are quite a few critical decisions which come into the foray while taking decisions pertaining to outsourcing some work.



From the fringe there are three vibrant types of offshoring models:



Joint Venture offshoring (JV)

Subsidiary/Captive Development Centre Offshoring

Service Provider OffShoring



Joint Venture offshoring

In a Joint Venture an organization ties up with a local firm or company either by taking an equity stake or by forming an independent company in which either of the companies contributes resources.A joint venture contract may sometimes include build-operate-transfer (BOT) clauses to motivate both parties to work towards a clearly defined exit strategy.



Subsidiary/Captive Development Centre Offshoring

Companies may decide to bypass the JV model altogether and go directly in for a subsidiary or local office if the management is comfortable in dealing with the nitty-gritty of internationalization and local market operations. Some of the popular terms used to describe the model include offshore development center (ODC), captive development center or in some cases simply branch or local office.



Service Provider Offshoring
The JV and subsidiary models of outsourcing may involve deep commitment on the part of a client organization, a move that management at traditional companies may sometimes be averse to. To counter the perceived risks of these models and to capitalize on the benefits of offshoring, companies resort to outsourcing projects, programs and individual work orders to offshore vendors.