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Types of Engagement Models for Software Development

For many companies it has become a common practice to opt for outsourcing software development services when building their own custom solutions. However, establishing smooth and effective cooperation with a chosen software development partner requires much attention to a wide range of details. One of them is opting for the right engagement model at the very start of the development project.

A carefully chosen engagement model helps companies avoid many issues during the software development process. It allows effective planning of budgets and timeframes, using proper software development strategies, successfully implementing the most complex technologies, and, all in all, being completely satisfied with the resulting product.

In this article, we’ll dive into the details of each engagement model and explain when to choose each for a particular software development project.

Top Popular Engagement Models

There is no one size fits all solution when it comes to a software development project. Each has its own size, duration, concept, strategy, and much more. Therefore, software development companies usually provide several engagement models to their partners. The most popular ones include outstaffing, dedicated team, fixed bid, time and materials.

Read on to find out more about the features and peculiarities of each model and when to use each one best of all.

Outstaffing Model

An outstaffing model is the best option for companies with much software development experience. They usually have their own in-house teams who are short of particular expertise or software development specialists for certain positions. In this case, companies choose to refer to outsourcing companies that provide them with ready-to-onboard specialists. This way, the outstaff software developers become a part of the in-house team and come under the guidance of the company’s inner managers.

Outstaffing Model

While working as a part of the in-house team, an outstaff employee remains legally employed by the outsourcing company. Moreover, it’s not necessary that such employees move to work on client company premises. The outsourcing software development company can outstaff remote software developers, providing them with the necessary equipment and workspace. As a result, when hiring outstaff software developers, client companies save up on the infrastructure provision costs while having full control over the development process.

When it’s good to hire IT specialists on an outstaffing basis:

  • Lack of qualified software development specialists such as front-end developers, back-end developers, QA engineers, DevOps experts, software architects, and others.
  • When there is an in-house team that requires some extra resources for quick team extension for successful product delivery.
  • For the companies that have enough tech skills to control the software developers and the software development process.

Dedicated Team Model

Companies that want to build a software solution from scratch but have no IT department on their premises or want to quickly augment the existing team often prefer hiring a dedicated team. This engagement model means that an outsourcing service provider gathers an entire team of the required specialists to ensure successful project completion.

Dedicated Team Model

In a dedicated team model, companies are not confined only to hiring a software development team. The outsourcing provider can also help select the right tech stack or provide the required software development infrastructure. This way, companies don’t waste their time and money on recruiting, onboarding, and establishing a tech environment. Client companies have to pay a certain fee each month for the dedicated team who will work as their own employees.

It’s up to the client company how to organize the dedicated team. This means that a dedicated team can be added to the existing project, an in-house team, or involve project managers from the outsourcing provider’s side. Everything depends on the client’s requirements and expectations from the developed product or service.

When it’s good to hire a dedicated team:

  • When a client company needs a full-fledged team focused on only one development project.
  • For long-term and complex software development projects.
  • When it’s required to quickly find a fully-equipped team of IT experts and launch the software development project.
  • Industry-specific expertise – the selected team of IT specialists can specialize in a certain software development field such as IoT, Blockchain, mobile or web development, and many others.

Fixed Bid

The main idea of this engagement model comes from its name: everything is fixed. The development team creates a project according to the precise list of requirements a client company provides at the beginning. This way, the customer company needs to plan in advance how much time they want to spend, what the task scope is, and which materials they want to use on the project. The final budget is set based on the project scope estimation and it doesn’t change throughout the development process unless the client company wants to change it.

Fixed Bid

The greatest advantage of the Fixed Bid type is that companies already know the final cost even before the development process starts. At the same time, it allows minimum involvement in case the client company has no opportunity or desire to control the development process. On the other hand, everything should be carefully analyzed and planned before the work begins. Therefore, if some extra development will be needed, e.g. embedding new features or providing more services, it should be outlined in an additional contractual agreement.

When it’s best to opt for the Fixed Bid Model:

  • Small projects with a limited budget and scope of work, e.g. this suits best for non-technical companies that want to develop a small app to provide their services online.
  • When the outcomes are well-planned and won’t require any unexpected budget changes.
  • The company wants to avoid constant development process management, checking only the milestone results instead.

Time and Materials