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.

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.

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.

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

This one is the opposite of the previous engagement model in terms of budget predictability and flexibility to changes. The client company pays for the time and resources that were spent during the development process. For this, the outsourcing provider and their client set certain hourly/daily/other rates for the resources involved in the working process before the project starts. The more time and other resources are to be spent, the higher is the total cost. As a result, the client company pays for the actually completed tasks rather than guessing them beforehand.

This model works ideally for companies that want to make changes along the development process and implement new features, depending on the constantly changing user and business requirements. Although this also means more involvement in the project from the client side. This makes the development process highly flexible and the client company can scale its team up and down whenever it’s needed.

When opting for Time and Materials will work best for the project:

• For flexibility during the development process – the budget, timeline, and materials are roughly estimated and usually changed on a monthly basis during the development process.
• For those companies that don’t mind controlling the development process and suggesting any changes based on their business requirements.

Engagement Model Comparison

To make a short and simple comparison, let’s put all the significant features of the discussed engagement models together.

Which One to Choose

Which software development engagement model to choose for your project? It is quite obvious that different business targets and conditions require different approaches to the software development process. Hence, each engagement model has projects that make it a perfect match.

The outstaffing model works best for projects that require several, often niche-specific, software development specialists to enhance overall team expertise. This can be the implementation of particular cutting-edge technologies or building a complicated part of the project.

The fixed bid perfectly suits projects with a limited budget or a tight deadline, because at the beginning you know the exact time and money that will be spent on the development.

This model is also an excellent option for short-term projects with well-defined requirements. For example, when you need to develop an MVP (minimum viable product) for your start-up to attract investors.

If the project has no timeframe or unclear requirements, it is better to go with flexible models: time and material or a dedicated team. The market is changing all the time, so you have to keep up with it in order to stay on top.

The time and materials model is the best bet for projects with an inconsistent workflow. Since this model means paying only for the time that was spent on tasks related to the project development, you do not waste money on equipment, employee benefits, etc.

The dedicated team model is a perfect choice for large strategic projects and businesses planning to expand in the foreseeable future. This approach implies your full control and involvement, which simplifies the implementation of all emerging business needs.

Bottom Line

Choosing the right type of engagement model means that the project is one step closer to its success. Though no project will be successful without a solid team of software development specialists. Scand has a large pool of experts and is ready to provide you with a team or standalone software development specialists depending on your project requirements and the engagement model you opt for.