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Engagement Models: Choose the One That Fits Your Needs

496 Views | 1 min | Published On: May 22, 2023 Last Updated: July 4, 2024
Engagement Models

If we go with a recent survey, the revenue in the IT Services market is expected to reach 1,204.00bn USD in 2023. The market’s largest segment is IT Outsourcing which is expected to touch a market volume of 430.50bn USD.

Apart from this, the revenue is expected to show an annual growth rate of 6.86% (CAGR 2023-2027). This way it can touch a whopping 1,570.00bn USD by 2027.

Revenue in the IT services

What does this mean?

This means it is essential for businesses to go with the right business engagement model. It will not only save you a lot of money but time and effort too.

You might be wondering what this engagement model is all about and what it has to do with these stats.

Well, let’s dig deeper to find out the same.

Getting into the Nitty-Gritty of the Engagement Model

If we have to describe an engagement model in a single sentence then, in the context of the software industry, an engagement model is a structure that directs how a provider offers IT, software, or other related services.

In other words, it establishes the basis for the responsibilities, obligations, and commitments between the two parties. It also controls how the parties interact with each other during the contract period.

Based on what meets an organization’s particular needs best, a suitable engagement model is essential to help both parties get their job done without issues.

Now as the basis of software outsourcing is the business engagement model, the success of the app development process depends significantly on it.

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Types of IT Engagement Models

Well, there isn’t a single magic solution, or universal engagement model in the IT business, that can handle all project requirements. Instead, you must decide which model is best based on several factors like the project’s scope, duration, objectives, and concept.

To help you with the same, here are the top 4 IT Engagement Models, you can go with.

Types of engagement models

1.Fixed Price Model

Based on predetermined requirements, a well-thought-out plan, and a pre-set budget, this model is quite structured in nature. It is an excellent fit for short-term, small & medium-sized projects because of the absence of client engagement.

Moreover, for this model, it is imperative to give your software development vendor, all the project information and a preset single-rated bill, as no changes to the plan or the amount allotted can be made at a later stage. So a fixed pricing approach gives you complete control over the money you spend, but it might be difficult for IT companies to improve their product because there is no project flexibility in this model.

Pros of Going with the Fixed Price Model

  • Defined budget
  • Fixed scope of work
  • Rigid time frame

Cons of Going with the Fixed Price Model

  • No flexibility
  • Extra planning time
  • No control over project management

2.Time & Material Model

In this method, the consumer pays the daily rate of each professional working on the project rather than paying for a final product at once. The consumer is charged on an hourly basis under the “full-time equivalent of one employee” payment plan. For this kind of contract, all bills are accompanied by project reports.

This plan is completely customizable and doesn’t necessitate extensive initial research. So the clients can easily modify the software development process anytime they want as per specific business requirements.

Pros of Going with the Time & Material Model

  • The flexibility of making a change at any stage
  • Ease in starting a project without planning
  • More control during development

Cons of Going with the Time & Material Model

  • Improper budget planning
  • Unclear deadlines
  • Constant communication with full involvement 

3.Dedicated Team Model

This engagement model is ideal for long-term evolving projects. The good thing about this model is, it doesn’t call for meticulous planning and gives the client, the flexibility to change the project’s specifications, budget, duration, resources, and team size any time in between. Additionally, it offers complete control over the execution of the project.

However, there are a few nuances to take into account before considering this model. Instead of establishing a project budget, you are required to employ a vendor’s team of foreign programmers and pay a predetermined monthly invoice (which includes the team’s remuneration and the provider’s fee).

In addition to this, keep in mind that in a dedicated team model, the technical team you recruited works for the Outstaffing firm and is not completely subordinate to you. Furthermore, there is a high probability that these workers won’t treat the given project dedicatedly. 

As a result, neither additional effort nor quality work would be produced. Moreover, you can be charged extra for specialized tools and extra services. Apart from this, the out-staffed specialists can unintentionally disclose certain internal information to their coworkers on other projects, thereby violating IP rights that can go against your project.

Pros of Going with the Dedicated Team Model

  • High flexibility with requirements, budget, duration, resources, and the size of the team
  • More control over the fulfillment of the project
  • Ready-made solution for long-term evolving projects

Cons of Going with the Dedicated Team Model

  • Unpredicted expenses at various stages of the project
  • A lack of dedication can affect the overall quality of the project
  • Possibility of IP rights violation

4.Outstaffing Model

An Outstaffing approach is implemented when there is a need for an extension of the internal team. In this model, the companies turn to outsourcing organizations that conduct staff recruitment and onboarding of new employees. Basically, these new workers join inside staff but on a legal basis, they are employed by an outsourced company.

An outsourcing company offers workspaces, tools, benefits, HR managers, etc. to developers. As a result, you can save money on all the expenses related to these development-related aspects. Moreover, the client is in charge of supervising the workers and controlling their activity.

Outstaffing frequently entails working remotely with extension teams because they are from other locations worldwide. But to make collaboration easier in that situation, it can be a good idea to hire someone who lives close to you in terms of time zone.

Pros of Going with the Outstaffing Model

  • Ability to scale a team up or down anytime you want
  • Good background industry-specific knowledge.
  • Complete control over developers’ work.

Cons of Going with the Outstaffing Model

  • Language & cultural barriers
  • More responsibility and involvement
  • Difficulty in communication because of different time zones

How to Select the Right Engagement Model that Fulfills Your Business Needs?

After going through these engagement models you must have gotten some idea, which is best for you as per your specific needs. Still, if you have some doubts here are a few questions you can ask yourself. This will provide you with more clarity on choosing the right model.

  • What is the type of my project?
  • What is my overall budget?
  • What is the flexibility level?
  • On which date do I have to release the product?
  • What are the deadlines for various phases?
  • What will be my management level during the development process?

Once you get clear with answers to these questions, you will hardly face any difficulty.

But one more thing you need to take care of is, hiring the top software development company. The right software development agency will not only make your task easier by helping you select the best model but can also help you reduce your overall development cost. 

Apptunix offers a variety of software services with flexible engagement models tailored to your business requirement at competitive prices. So, if you are looking for a customer-oriented mobile app development company, we can give you the breakthrough you are looking for.

time and cost to develop a software

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