Off shoring Pricing Models

1.Time and Material: In this model outsourcing enterprise pays for the number of hours put in by Service provider. This model is very popular among Service provider because of its minimal risk. This pricing model is successful in the scenario where requirements are evolving and work involves lot of thinking.
2.Fixed Pricing: In this model Service Provider is paid a fixed amount for a fixed amount of work. In this model Service Provider assumes larger risk because of inaccurate estimation of work.
3. Outcome Based Pricing: In this pricing model relationship of outsourcer and service provider morphed into collaborative business entities where outcome of project decides fate not only of outsourcer but also of service provider. In this model service provider has highest level of engagement with outsourcer. In this model service provider assumes highest risk. This type of engagements are form of consulting where consulting starts much earlier and service providers understands outsourcers business in depth.