Alphonso established an Offshore Development Center for a Software Product OEM based in Tokyo, Japan.
The ODC works on Time & Material basis and engages in Product Engineering activities for the customer.
The center was established in early 2011 and has continued to provide ever increasing value to the customer since then.
One of the strong points of Alphonso is its flexibility with respect to engagement model. Depending on the customer requirements and business situation, Alphonso can work out an innovative business and cost model, that can pave way for long term partnership on win-win basis.
Some of the standard engagement approaches are as below, though this is in no way an exhaustive list & usually a customised model by combining multiple of these standard options is worked out.
The ODC model helps a customer increase its scale of operations and achieve higher productivity by leveraging offshore talent. Since team and infrastructure are owned and managed by Alphonso, customer does not have to worry about multiple operational and legal complexities and can instead focus on its core activities. This model is relatively easier to implement and if implemented effectively, makes product engineering process more predictable in terms of cost & quality.
Sometimes customer has intentions to setup its own subsidiary in India for product engineering, but is skeptical to commit energy & resources until the model is established and proven to be successful. BOT model comes handy in such situations, where Alphonso builds the team and infrastructure almost like an ODC, but with clear plan to transfer it to customer. In this model, customer's initial risk is significantly reduced, without having to compromise on long term plans.
In some cases, customer has clear plans to setup product engineering center in India, but is looking to reduce risks in terms of investment and operational knowhow. In such cases, it is possible to create a joint venture between customer and Alphonso, where ownership and investments are shared between the two. Alphonso's focus on transparency, knowledge of the local ecosystem and experience in running product engineering centers, makes it a preferred partner for creating a Joint Venture.
If customer has finalized to setup its own subsidiary in India & has already drawn up plans for the same, Alphonso can help the customer in executing the plan. Alphonso can assist the customer in fine tuning the plan, provide inputs, point out possible pitfalls and help execute some of the action items in organized & timely manner.
This traditional model of costing on the basis of Time & Material offers simplicity and flexibility well suited long term engagement. Non-intrusive nature of the model enables both the parties to focus on executing work and improving quality, rather than worry about costs. Once established, this model helps the parties in building a trust based relationship, founded on transparency and service quality. The ODC type of engagement works particularly well in combination with T&M cost model.
Sometimes one of the main objectives of offshoring for the customer is cost effectiveness. In such cases, it is necessary to focus tirelessly on costs and go on optimising them continuously, without impacting quality. Cost Plus model is suitable in such cases, where complete cost structure of the offshore operation is shared with the customer and all cost related decisions are taken jointly. Margin of Alphonso is predetermined in percentage terms of total cost.
In cases where customer has clearly identified portions of work to be outsourced and there is enough clarity about scope and complexity of work, the Fixed Cost model can prove to be suitable. Alphonso can understand the scope of work and provide cost estimates to the customer, along with schedule and manpower loading plan. Once both the parties agree, Alphonso can execute the plan at agreed cost. In case of Fixed Cost model, it is usually necessary to implement strict change management process.
In cases where customer's ambitious plans are constrained by budget and resources, Alphonso may agree to share risk with the customer, by offering subsidised rates in return for potential future rewards like stock or royalty. This is determined case by case on the basis of potential value of the initiative as perceived by Alphonso.