Estimation Models For IT Infrastructure Outsourcing Providers

The need for estimation models when proposing cost elements in large IT Infrastructure Services contracts plays an important role. The models need to cover all aspects of delivering service which impact cost:

• Manpower
• Tools
• Connectivity and enabling infrastructure
• Administrative costs like travel and communication
• Corporate overheads like physical space and air/light/water etc.

Often companies may use composite rates which combine some of the above into a single unit of rate. These then need to be linked to the volume of work to develop a costing solution with sufficient elasticity but at the same time optimal and competitive.

In the absence of standard models, these have lend a competitive edge to some of the leaders while other companies are trying to find theirs. Since many companies evolved from the application services space, which were typically Time & Material contracts, they find it difficult to have a solid estimation model for fixed priced, managed services contract.