The global IT outsourcing market continues to grow exponentially and outsourced software development is definitely the best option for businesses for many reasons. The benefits of this approach are numerous, but IT services are specific and individual, so there is no one-fits-all solution for every project.
Today, the IT outsourcing industry offers a huge number of available options for cooperation between a client and a vendor that meet various requirements and business specifics. Connecting the right customer and project with the right supplier is a challenging task. The choice of an effective and optimal engagement model, and hence the success of the entire project, depends on understanding the features, advantages and disadvantages of these interaction options.
In this article, we talk about engagement models in the IT industry, explain what they are, describe the most popular ones, review their advantages and disadvantages, as well as share life hacks on how to choose the right collaboration option.
We will tell you about all the available models and help you choose the best client-vendor relationships scenario for your project. Keep reading to find out everything you need to know about software development engagement models.
Engagement Model Definition
So, what is an engagement model? In the software industry, an engagement model is a set of guidelines and a framework that defines how collaboration between an IT or software service company and a customer will be carried out. In fact, it establishes responsibilities, obligations, control, accountability, flexibility, and terms within the project implementation, as well as sets the foundation for future collaboration between client and vendor.
The most popular and widespread engagement model options in the IT industry are the Dedicated team model, Fixed price, Outstaff, Time & Material, and Offshore Development Center. However, it is important to understand that none of them is a universal solution or general-purpose approach that can satisfy the goals of each project, the challenges of each business, and the needs of each audience.
The success of the project implementation largely depends on the correct choice of method of interaction between the client and the implementer. The decision here is based on many factors, including the size and scope of the software development project, the timing and budget, the approach and overall strategy, and others.
So, in the software industry, the engagement model is a collaboration plan between the client and the supplier within the project development, and its main purpose is to agree on common goals, determine the overall result, define the roles of suppliers, as well as address pricing issues, deadlines, schedules, and so on.
The optimal engagement model must match the specifics of the project and the preferences of client-vendor relationships. It will avoid future problems with management, cost, timing, and so on. The most important thing is that the right engagement model works for both parties and it should be clearly defined and fully transparent.
Dedicated Team Model
This engagement model assumes the software development service provider offers specialists according to the required skills and technology stack. A dedicated team fills in the gaps in the experience, adapts to the needs of the business, and fully integrates into the project.
The effectiveness of the selection of a dedicated team depends on how accurately and completely the requirements, tasks, and features of the project were transferred. In practice, a dedicated team works together with an in-house one, and the client chooses how the project will be managed. It is the best option for long-standing relationships.
The Dedicated Team engagement model within an IT project is the best solution in the following cases:
- there is a need for more workforce for the in-house team;
- you seek to share knowledge and attract additional talents and third-party minds;
- you have a clear vision for the project, as well as enough time and resources to oversee all management processes;
- you want to manage the hired team as your own;
- the project is long-term with changing needs and shifting scope;
- the project is agile software development.
- economic efficiency and low cost compared to hiring full-time specialists;
- team focus on only one project;
- close cooperation between the client and the vendor;
- flexibility for large and complex projects;
- scaling resources according to the needs of the project;
- transparent pricing system and communication;
- manageability and controllability of the development process.
- the difficulty of selecting the specialists;
- the utmost importance of constant and seamless communication between the in-house and remote teams;
- the possibility of disagreements in ways of thinking and working;
- the likelihood of an increase in terms and costs in the process of project implementation;
- low level of efficiency for short-term projects.
This engagement model provides for an accurate fixation of the scope, requirements, cost, and timing of the project. The main thing for its successful implementation is accurate planning, careful assessment, and detailed analysis in the initial stages. In a project with a fixed price, any changes are very inefficient, and the main advantage of this model is the exact fixing of the budget. It is the best option for startups, as well as small and medium-sized software projects.
The Fixed Price engagement model within an IT project is the best solution in the following cases:
- project requirements are well-defined, clearly stated, and not expected to change;
- the project is small or medium with a lead time of approximately a few months;
- you already have experience in outsourcing such projects.
- clear definition of project features and minimal probability of errors;
- optional participation of the client in management processes;
- stable cost of the project and no exaggeration of the originally set budget;
- absolute accuracy of the project.
- low level of flexibility;
- the critical importance of error-free input data and clear statement of requirements;
- additional charge for any last-minute changes;
- the need for a large number of conversations and meetings before the start of the project.
This engagement model fills the need for specific expertise for a specific task. IT outstaffing service providers identify customer requests and provide the necessary resources to fulfill them.
In fact, under this model, specialists are on the staff of one company while working in another. This type of engagement works on the principle of rent, where the client pays for each employee involved. Specialists work on the terms of the customer’s business and can even go to the office as a full-time team.
The Outstaff engagement model within an IT project is the best solution in the following cases:
- you need a technical specialist for a specific task, but you are not ready to hire in-house staff;
- you have employees in your team with the skills necessary to control the work of outstaff developers.
- the possibility of quick and flexible expansion of in-house staff, when there is a need to attract additional resources for certain tasks;
- more opportunities to hire a narrow-profile or top IT specialist;
- direct communication between the client company and the outstaffed employee;
- outstaffing agreement, which obliges specialists to fulfill their obligations;
- greater accessibility and financial benefit compared to hiring in-house developers.
- high level of responsibility on the part of the client;
- differences in time zones, corporate culture, and values.
Time & Material
This engagement model is cost-effective and ensures that the client’s budget is fully commensurate with the amount of work received from the vendor. In this type of cooperation, the parties agree on a rate (per hour, day, or week), and the cost of the project is carefully estimated. The model is flexible, allowing you to make changes to the project, properly distribute the workload, and add or remove resources as needed. The Time & Material approach provides for payment only for the resources and services received, it also allows the quickly launching of projects and ensures absolute transparency of their financing.
The Time & Material engagement model within an IT project is the best solution in the following cases:
- your project is big, long-term, and complicated;
- project requirements are constantly changing and not clearly defined;
- transparency in cooperation with vendors is a must for you.
- dynamism and flexibility;
- full control for the client throughout the life cycle of the project;
- the ability to make changes at all stages;
- no need for long and careful planning.
- obligatory direct participation and full involvement of the client;
- the likelihood of an increase in the cost of the project;
- inefficiency for time-limited projects;
- blurred deadlines and delays due to constant changes.
Offshore Development Center
This engagement model provides a subdivision of a technology company to work on a client’s software development project. This means that the office with the team is located in another country.
This allows you to find a location with a wider talent pool, lower cost, and more profitable opportunities and actually create a team there. In fact, an offshore development center usually functions as a branch of an enterprise in another country and represents a remote office of your company.
The Offshore Development Center engagement model within an IT project is the best solution in the following cases:
- you need from 20 to 40 specialists at the same time;
- the project is large, complex, and requires a lot of services;
- your business consists of different products and each of them needs different teams;
- you want to enter the market of other countries;
- security is your key priority.
- established infrastructure for the implementation of global projects;
- a high level of flexibility in terms of management;
- reduced development time and increased efficiency;
- high level of security and minimization of the risk of confidential data leakage;
- the opportunity for the customer to focus on priority business tasks.
- the likelihood of communication difficulties due to language barriers and cultural differences;
- higher price compared to alternative solutions;
- legal challenges caused by the law environment of other countries.
How to Choose the Right Software Development Model?
So, each engagement model has its own features, advantages, disadvantages, and, most importantly, application cases for successful project implementation. What points should be taken into account when analyzing needs in order to choose a win-win solution?
- Type of project and its level of complexity.
- Budget and the possibility of its expansion if necessary.
- Flexibility and the need to make changes in the development process.
- Deadlines and time limits.
- Project management and level of involvement in control processes.
- Expertise: strengthening your own team or hiring an external team.
The result that you get directly depends on the choice of a technology partner. Regardless of the engagement model you prefer, outsource software development company Brights implements successful projects based on any of them.
Brights offers flexible approaches to getting involved in your project, provides advanced IT services, and helps companies at any stage of the project life cycle. Choose only trusted technical vendors with comprehensive expertise, advanced solutions, and a versatile technology stack.