Demand Based Pricing Model for Outsourced Software Application Maintenance

The maintenance of the software applications are being outsourced across countries. There are increased concerns from the customers regarding productivity of the personnel of the vendor working out of a different country. Traditional methods of estimating effort and cost for outsourced software application maintenance are proving to be inadequate. Companies are looking for a flexible model where they will pay for the exact amount of service they are consuming and the cost should not be dependent on productivity of the individual programmers, familiarity of the programmers with the application, organization climate of the vendor etc. The Demand Based Pricing model suggested by the authors provides a solution which is addresses productivity concerns of the programmers of the vendor as well as provides the flexibility required by the customer in terms of the production capacity.