Tag Archives: software

How IT Outsourcing global rates play

Many India pure play firms negotiate global rates – the same rates apply wherever the resources work under T&M, staff augmentation type of contracts. Once agreed upon IT firms work on a ratio that will help them drive towards making sure they can still make profits in the competitive market.

The rates are broadly anywhere from 75% offshore and rest on site or even lower at times to 90% offshore depending on complexity. Most operations nature of work is higher in offshore ratio while more complex development will have around 60% or above. support nature of work falls somewhere in between.

it is important to understand the contract and keep an eye on the ratio on the leverage is not unduly benefiting one side. ofcourse there are always ways to negotiate. Also checking weekly or monthly on how the ratios prevail is a good idea.

Lot depends on how big the contract is. Smaller contracts don’t make a lot of difference while large contracts with more than thousand resources will make a good impact on ratios.

Initially the ratio on site would be higher to gain knowledge and as the learning curve improves the ratios start to level off to contractual levels.

Embedding your resources offshore

This is one of the successful techniques in IT outsourcing and has several benefits. If you can afford the costs this is the fastest way to help develop some good SME skills on your offshore teams, building the camaraderie, sharing expectations, transitioning projects, handing off support, explaining design and development strategy, test methodology just to name a few.

It gets a bit expensive if you are sending few resources from US or Europe for example. For those visiting India, the IT outsourcing hub, Temporary accommodations are not readily available or convenient so you will ending putting your staff in 3 or 5 start hotels which can be much expensive then rooms back home racking up costs. Add to these costs Visa, and healthcare insurance and other incidental costs. Some of the enterprising staff have charged the cost of visiting Taj Mahal also into their office budgets – so keep an eye.

There are lots of clients that do this on a regular basis, often encouraging movement of people on both sides. It depends on how we use this technique. Take for example a large projects with a huge offshore component really merits a visit to transition requirements or design, and set upfront expectations, align teams and establish communications and reporting protocols.

The ability to develop those personal connections is another important benefit. The feedback that you get being physically there is not something you can read in an email or gauge from a series of phone calls or video calls. Inspite of all the collaboration tools, the ability to video conference etc. there is nothing that beats that personal touch and getting the feedback and assessing what you have at offshore – after all that is an extension of your work space isn’t it?