Whenever we outsource our software application development work to some offshore software vendor we normally pay for the hours spent by the vendor’s team on our project and not for what they deliver. If the vendor is spending some hours on our project obviously they have to deliver what we expected right? So why can’t we just pay for what the vendor delivers?
Well, in many cases the vendor will not agree to engage with you if your plan is to pay for what they deliver. It’s simply because your vendor is not confident of whether they can deliver what you have expected, or whether they can deliver within your timeframe. Plus, this will not give them any room for making extra billing or to work in their comfort zone.
What happens if your vendor agrees to get paid for what they deliver? Well, at first they have to deliver what you have expected and secondly within your timeframe. But your vendor doesn’t want to take either of these responsibility. They just want to work in their comfort zone.
Ideally the whole software services industry should move towards a stage where the project payment model moves to the new age model where in the customer only pays for what the vendor delivers.
There is nothing to be scared about this model. In fact this payment model will be great for the entire software industry eco system, let’s explain this further. So what happens when a vendor (a software services company) gets paid only for what they deliver? Firstly, the customer will get what he expected & within his timeframe, this way all software projects will get completed as per the customer expectation & time. So the customer always wins.
All the vendors (software services companies) will also wins in this model because they will get paid only if they delivers what customer has expected & within customer timeline. So to cope up with this the vendor will find many innovative & creative ways of executing the project, they will do the proper project planning, architect the requirement properly and use their team/resources efficiently.
Just pressurizing the internal team to work for more hours will not work at all because the customer only pays you for what you deliver which means the whole organization has to start thinking in a new level, use new technology/tools, use innovative ways of executing & completing the work.
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