Gain-Sharing Model-
Gain-Sharing also known as Profit sharing. It is a service model where pricing based on the value delivered by the vendor beyond its typical
responsibilities but deriving from its expertise and contribution. Gain-Sharing Service Model is best for customers who want to create a true
association with IT suppliers & seeking for remarkable business improvements. This model encourages association and inventive problem-solving
as both parties work toward common business goals.
Gain-sharing requires a high level of trust, reasonable distribution of risk and reward, and momentous unlock investment. In reason without guarantee
of repay, neither the vendor nor customer gets ready to fund the savings.
The outsourcing of IT activities is considered by the organization as a relationship in which both parties (buyer and provider) will obtain economical
advantages by maintaining a focus on their respective businesses objectives. In this type of relationships, measurement issue of gain-sharing arises.
Gain-sharing refers to the contribution of a profit obtained by developing an activity in a more inexpensive way in relative to an established parameter.
The gain-sharing concept is linked with cost savings produce by providers of services in an outsourcing relationship.
The implementation of the projected model, based on budget parameters, allows the measurement of gain-sharing and contributes to greater simplicity in
the relationship between the companies. This Gain-Sharing model allows an analysis of the earnings in detail, thus identifying business opportunities for
enhancement. Carrying out of this model can result in cost savings and provide quantifiable benefits & opportunities for both parties to an outsourcing
relationship.
