Sunday, June 06, 2004

Models for Business Process Outsourcing

Onsite Model of Business Process Outsourcing

The success of any business process outsourcing contract lies in the appropriate and precise gathering of information about the project. According to the onsite business process outsourcing model, the whole set of processes starting from information gathering to implementation is done at the client's premises. This model ensures that the result is correct at the first instance. Based on the needs and requirements of the client, the design, development and test teams are deployed for a short time frame at the client's location. The business process outsourcing service provider utilizes its workforce for service of its clients at their premises. This business process outsourcing model becomes essential and suitable if the project needs a specific resource type of post-deployment, maintenance, support and follow-up activities. This model is helpful for those projects that are mission-critical, require proper and constant attention and also need everything to be done in the client's location. Thus, the onsite business process outsourcing approach is ideal for:

1.Requirements not being defined at length
2.Dynamic changes in deliverables or requirements
3.Tough and Rigid deadlines
4.Constant need of support
5.Direct interaction with client
6.Scalable staff augmentation
7.Moving across time lines
8.Mission Critical Projects
9.Product engineering-related services
10.Open-ended and iterative nature of project scope
11.Projects that are highly secured and confidential

In this approach, all the activities mentioned below are executed onsite:

1.Initial Study/Understanding the client's requirements
3.Technology Assessment
8.Maintenance and Support
9.Offsite Model of Business Process Outsourcing

According to this model of business process outsourcing, the service provider will have its office near the client location. Not only does the business process outsourcing offsite center have the benefit of being close to the client, but it also gives support to the onsite team and the offshore development activities at the offshore center. Thus the experts at the business process outsourcing offsite center in tandem with the corresponding offshore center team ensure on time, quality service through collaborative skills across different time zones. This business process outsourcing model is appropriate:

1.For short-term business process outsourcing projects
2.When requirements are defined beforehand
3.When there are no frequent changes in the business process outsourcing project
4.When the client's location may not have extra capacity

Offshore Model of Business Process Outsourcing
This model of business process outsourcing entails that the project-related activity; right from initial study to testing is done at the service provider's premises. The business process outsourcing service provider will not have any presence at the client's location but the client will interact directly with the offshore team. This model is best suited when the project plan is well defined and the development team has a clear understanding of client requirements. The team members at the business process outsourcing offshore location interact with the client through various communications means such as telephone, fax, email etc.

This business process outsourcing model has been proved to be effective in terms of:
1.High quality service with low labor cost
2.Effective utilization of time zone (24x7 service)
3.Availability of multi-technology skills
4.30 to 50% reduction in project cost

But the high level of risks associated with this business process outsourcing delivery model becomes a critical success factor for some clients. Some analysts are of the opinion that a 100% business process outsourcing offshore model is not workable. The risks, which are associated with this model:

1.Risk of communication gap between the vendor and client
2.Client requirements may not be captured in real terms

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