The choice of a model for IT outsourcing is as important as the choice of any service provider. Modern outsourcing offers cooperation options that meet various individual requirements and business needs. Understanding these cooperation options’ details, pros, cons, pricing, and compatibility with different projects is critical to choosing the suitable engagement model.
What is an engagement model?
An engagement model in the IT industry is a set of guidelines defining the relationship between the client and the developer. These are responsibilities, obligations, standards of execution, tasks, and duration of the assignments described in service-level agreements (SLAs).
The project engagement model is a plan that describes the details of cooperation between the customer and the contractor during the project development. It determines the degree of involvement of IT staff, areas of their responsibility, payment terms, deadlines, management issues, etc.
Although there is no one-size-fits-all interaction model suitable for any project, choosing the right one can help a client avoid many challenges with project management, budget planning, time to market due dates, etc.
Three types of IT engagement models
In pursuit of perfect interoperability, you need to understand the available models, their advantages and disadvantages. As a rule, three classic engagement model examples are offered, differing in the organization of processes, the level of flexibility, and payment.
The model assumes price-fixing to a certain specified amount. It includes a fixed quota, scope of work, and project deadlines. First off, the client turns to the provider with their vision of solving the problem. Next, the requirements are analyzed and established jointly, which leads to a clear understanding of the final result. Therefore, fixed-price cooperation is suitable for well-defined projects.
The Fixed Price model won’t work if a customer wants to constantly adapt the product to any market changes, test, and change its functionalities. This interaction model precludes flexibility. The changes will affect the time and cost of creating a product. So, Fixed Price works better for small projects (up to 6 months of development) or projects developed in several iterative stages.
Dedicated teams are usually required when there is a need for full-on end-to-end development project completion while no proper in-house expertise is available. It is one of the most popular engagement models in the IT industry as it offers a team that adapts to specific business needs and fills the tech and expertise gap for clients.
The service provider can select senior developers, or you can hire mid-level and junior specialists. Such a team is easily scalable as it can be replenished with new talents. Third-party developers are integrated into your environment and wholly absorbed in your project. The team gains and retains experience and knowledge throughout the entire cooperation. That is especially beneficial for long-term projects.
The model also implies specific, streamlined results, which helps save costs. The client and the outsourcing supplier agree on the rates of engineers for the entire period of cooperation. That minimizes costs and avoids management overhead.
The product owner or CTO takes over the project management. This gives complete control over the team, and the customer is responsible for planning and final results. In addition, the service provider may offer a piece of advice.
A common practice is the IT engagement model example when a developer’s technical lead is added to the team. It is also common for clients to focus more on the product development business, delegating all authority to the outsourcing service provider.
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Time and Material
In this model, the initial requirements are not clearly defined-. It is usually used when a project cannot be estimated in advance. New specifications can be created in the process, or as a result of work. The costs are agreed upon in advance.
This model best fits long-term projects where dynamic requirements are implied, as well as projects with a yet unclear scope of work and experimental projects. The utter focus here is on the flexibility of processes and work that can be tweaked and changed at any time without going far or risking costs.
The model is also flexible in terms of distributing the time of specialists, depending on the needs of the project. However, the main hidden risk, is that the customer may lose focus, becoming absorbed in a constant process of improving the product. Thus, it is very important to have clear goals and stay focused on the result.
With a dynamic formulation of project essentials, as opposed to the fixed price model, the time and material model allows to kick off projects faster and, above all, avoid hidden extra costs and keep project financing more transparent as a whole.
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How to choose the right engagement model
The client’s goal is to get a valuable product as quickly as possible, at reasonable costs and minimal risks. Therefore, choosing a suitable interaction model has a significant impact on the products’ success. So, the goal is to select the best model for your particular software product development.
To build a long-term partnership, it is essential to evaluate the project taking into account requirements. When choosing a model for interaction with an IT outsourcing provider, the following things should be considered:
- Time to market scheduled or desired
- Available project budget
- Expected project outcomes
When it comes to engagement models in software development, a well-organized communication process is a must for any outsourcing company. Since each interaction model has its characteristics and may be ideal for one project, but becomes irrelevant for another, pay attention to its specifics.
A dedicated team works best when the scope of the project is large or unclear. When requirements are either vague or under-analyzed and the likelihood of changing them in the process is high, the development team will have to adapt to the implementation of new features.
A savvy, dedicated team, thus, will point the project in the most proper direction and help you save costs dramatically. Alternatively, suppose the client has strong project management skills and is willing to put in oversight effort. In that case, it makes sense to turn for help to a development or quality assurance outsourcing provider.
IT staff augmentation
When there’s a clear understanding of the product, and the client intends to make decisions on the business strategy himself, but he needs purely technical assistance in development or implementation, IT staff augmentation is an ideal option. If you need to expand your team with specific technical expertise, this model can be a good choice.
Please find more information on IT staff augmentation service from DICEUS
Are you on a tight budget but have a detailed description of your project that won’t change in the future? Do you need a software solution on time or start a small project with a limited set of functions and clearly defined requirements? Your option is a fixed-rate model. In this case, you will not face additional fees, and the development will be completed within a predictable time frame.
Are you starting from scratch or have an idea with no requirements? The IT business partner engagement model allows technical partners or outsourcing agencies to find a fully-fledged team for you in the shortest time possible and provide software advice.
Do you already have a plan and set of tasks? Both outstaffing and outsourcing will gladly take on such tasks. But do you know how to manage and set clear goals for technical teams? Do you know how to optimize the process and select only the necessary tasks or set of functions? If so, outstaffing might be a good option. Otherwise, a third-party project manager (PM) will be required.
How to decide on a suitable cooperation model?
To better understand your needs, ask yourself:
- Is my project small, medium, or big?
- Am I building MVP or full-featured software? Is the scope of work an important factor to consider in the process of choosing an engagement model?
- How much do I want to participate in the project: manage teams myself, with the help of a PM, or receive weekly updates from PM?
- What is the most important thing for me in the development process: timely delivery, comfortable communication, cost-effectiveness, or help developing an idea?
Once the needs are identified, it will be easy to find the best software engagement model. If you think this is not the case, you can discuss an individual model of interaction with the supplier.
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Engagement models we offer
For software development projects, we offer all three types of contracts described above. However, if you are not sure about your final choice, our experts will advise you and recommend the option that best suits your requirements.
Time and Material: If there is a chance that your requirements may change, divide them into smaller parts. To find a balance between quality and time spent, you need regular reports on the status and effectiveness of the project. This model is suitable for a long-term project with several iterations and flexible requirements change.
Fixed Price: If you want to fix the budget, clearly understand the project requirements, do not plan significant changes at the moment, or want to shift some of the risks to the seller. It is suitable for a short-term project with clearly defined goals and limited scope.
Dedicated Team: If you want to expand your IT team, gain a specific set of skills and experience, quickly scale the project. The model is suitable for startups and companies that need access to international expertise.
Our approach to determining the most relevant engagement model
Working with a software project is about design and building trust, managing confidential data, and meeting client expectations. Share your ideas and expectations with us, list the requirements, and we will become an integral part of your project.
Here’s how we can help you:
- Estimating project costs
- Brief analysis and free consultation on the project
- Suggestions for the tools, methods, and solutions to use
- CVs of specialists that can work for your project
We will study your request, clarify the preliminary plan and determine the number of specialists you need as soon as possible.
The modern model should make it possible to manage the project using metrics. By choosing the right engagement model, the customer must ensure that the software is delivered on time, benefits from well-defined quality assurance processes, and access to an extensive pool of talent.
If you are searching for a customized software development engagement model, a combination perfectly suited to your needs, contact the DICEUS experts. We will determine the most suitable cooperation structure and get started immediately.