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How to Choose the Right Software Development Engagement Model?

However, it requires clear well-defined requirements and project scope and effective In today’s rapidly evolving technological landscape, software development plays a crucial role in the businesses success. As any kind of complex process, software development contains various approaches aimed to fulfill the same need – deliver necessary products with less time and money expenses, and with higher efficiency and quality. The solution to this task lies in the sphere of project requirements evaluation. A lot of things have to be considered: from the project size (including budget, development team size, estimated implementation time) to the technical requirements (platforms, integration, functionality, etc.). Outsourcing software development teams may cover key needs and significantly reduce costs while accelerating the development time but only if a customer selects the most rational approach for him and his initiative.

While choosing an outsourcing software development company it is important to remember that successful product implementation begins with the choice of suitable type of contract and project development model. The right decision helps to avoid the vast majority of issues that may appear during the development process.

Whether you are a startup, a small business, or a large enterprise, choosing the right software development engagement model is essential for achieving your goals.

This article will guide you through the process of selecting the most appropriate engagement model for your software development project.

What Is the Software Development Engagement Model?

The software development engagement model refers to the approach that outlines the relationship between a client and a software vendor during the development project.

It defines the terms, conditions, roles and responsibilities between the client and the development team.

The engagement model serves as a foundation for collaboration, setting clear expectations and guidelines for both parties involved.

It helps establish an understanding of the project scope, delivery timeline, pricing structure, and resource allocation. The chosen engagement model also determines how the project will be executed, managed, and monitored throughout its lifecycle.

Different software development engagement models offer varying levels of client involvement, control, and resource allocation. The selection of the engagement model depends on the project’s complexity, budget, timeline, and the client’s specific needs and preferences.

By choosing an appropriate engagement model, clients can effectively manage their software development projects, optimize costs, and ensure smooth communication and collaboration between the client and the development team.

Types of Software Development Engagement Models

When choosing a software development engagement model, it’s important to consider your project’s unique requirements, budget constraints, and long-term goals. Here are three common types of engagement with a software provider:

Outsourcing Entire Project Development

IT outsourcing is a popular engagement model where a client partners with an external software development company to handle the entire project.

The client usually has minimal involvement in the day-to-day operations of the project, focusing on core business activities instead.

It offers cost-effectiveness, access to a wider talent pool, and fast scalability.

project management to ensure successful collaboration.


  • Cost-effective as it doesn’t require having an in-house development team.
  • Access to a larger talent pool and expertise from the outsourcing company.
  • Scalability and flexibility in resource allocation.
  • Allows the client to focus on more important activities.

Pricing Models for IT Outsourcing:

There are basically two pricing models when outsourcing your project entity to the software provider – fixed bid, time & material – each has its pros and cons and can effectively work for some particular projects. Detailed comparison is presented below as well as some tips on which one to choose.

Fixed Bid

This type of contract is ideal for small-size or urgent projects. Fixed bid perfectly works when the project specifications are clearly defined and unlikely to change. Such an engagement model implies that a client has a clear understanding of how the final result should look and the work is clearly stated in the SRS (Software Requirements Specification).

  • Efficient for projects with clear, stable, and settled requirements
  • The final cost to develop a solution is fixed unless there are no additional changes
  • Minimal client involvement and communication

Time and Materials

The main idea of the Time & Material approach is in its name, it is more flexible and transparent for a client. In a T&M engagement, the customer usually gets an estimate on the number of hours needed for project implementation and an hourly rate to calculate the total software development cost. Any additional work can be easily evaluated based on the preliminary discussed hourly rate.

  • Ideal for projects that don’t have clear requirements or expected to change
  • Flexible price and estimated development time
  • Suitable for large and long-term projects

IT Outstaffing aka Staff Augmentation

IT outstaffing, also known as staff augmentation, involves hiring remote software developers or a whole team to work exclusively on your project.

In this engagement model, the client retains control over the project’s scope, timeline, and overall management, while the outstaffing company provides the necessary resources.

IT outstaffing is beneficial for businesses that have a specific project but lack the required in-house expertise or resources.

It allows for more flexibility, direct communication with the developers, and greater control over the project’s direction.

However, effective coordination and communication between the client and the remote team are vital to ensure successful project execution.


  • More control and involvement in the development process.
  • Flexibility in selecting and managing the remote developers.
  • Direct communication and collaboration with the team.
  • Cost-effective compared to maintaining a full in-house team.

Usually the time and materials pricing approach is applied where the customer only pays for the time vendor’s specialists actually spend on the project tasks. However very often such an approach is transformed into a dedicated team engagement in the long run.

Dedicated Team

The dedicated team engagement