Working Together: Finding the Right Outsourcing Model
The approach you take to organizing the relationship with your provider is typically referred to as an outsourcing model. The universe of outsourcing models is commonly categorized by a billing or pricing approach. No wonder, since the first question on a provider’s mind is usually “How will we be paid?”
Billing or Pricing Models
The most common billing methods in the outsourcing industry are time and materials (T&M) and fixed bid, or some combination of those. Under a T&M model, the customer pays the vendor the negotiated rate and reimburses expenses related to the service. The T&M model requires relatively little upfront work, but it has many disadvantages too. The most significant are ...
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