How to Decide on the Right Engagement Model for Software Development

In this article, the IT Master Soft team is going to review the main engagement models in the IT industry, draw a clear line between them and help you with making the right choice.

Posted by IT Master Soft Dec 01 | 2021

While hiring an in-house tech team seems the most intuitive tactic to develop your software, this is not the only opportunity you can take advantage of. You are also welcome to consider a partnership with a development vendor, choosing an engagement model that will be as winning for your business as having an in-house team.

Already have a software development strategy in mind? Let’s discuss it!

What is an engagement model?

An engagement model is the set of pre-agreed guidelines and practices, according to which your application will be created by or with the help of your software development vendor. To explain it even simpler, an engagement model in software development defines what types of services you will get and how you will collaborate during the process of software building.

Fortunately, engagement models in software development are pretty flexible, and there is an opportunity to combine their best features into a holistic strategy to get better results, use only those resources you actually need and optimize your costs. Below are some essential things to consider before choosing the right tactic.

What to consider to choose the engagement model?

  • Project specifics. While every project is one of its kind, first you have to analyze its specifics, taking into account the core idea and the project scope.
  • Your budget and its predictability. Having a fixed budget for a small project and a flexible one to create a larger solution means following completely different development strategies and choosing different engagement models.
  • The resources you already have. For example, companies with experience in software project management and an in-house tech team may leave these operations on their side, while the companies just getting started with software development are better to ensure stronger support from their vendor.
  • Market risks. The careful analysis of market risks will be helpful for choosing the development methodology, and the chosen methodology will hint at the best approach to the pricing model.

Two main types of engagement models in software development

Generally, there are two types of engagement models - software development outsourcing and outstaffing or team extension. Let’s review them in more detail.

Development processes outsourcing

As the name suggests, the process of software development outsourcing stands for transferring all the tasks to create software to the third-party vendor. Gathering the team or dedicating it to the project, supplying the team with all the necessary resources, paying salaries and taxes, managing the process of software development are the responsibilities of the vendor. The process of product development in this case is fully remote.

The customer, in turn, can control the remote team using dedicated software, get daily, weekly and monthly reports from the Project Manager, and keep a remote team flexible. That is, in the case the development course changes, the customer can shorten the team, or vice versa, ask the vendor to strengthen it with additional hands or specific talents.

Pros

  • Running the software development remotely
  • Accessing top tech expertise from the global talent pool
  • Making use of the best development practices already proven by the vendor
  • Cutting costs because of the salary gap between the homeland country and the outsourcing destination
  • Enrolling in long-term relations with a vendor
  • Choosing from several pricing models depending on the project specifics
  • Making use of the “pay as you go” model by shortening or expanding the remote team

Cons

  • Choosing a reliable software development vendor can be a very time-consuming task
  • There can be cultural and mentality gaps if outsourcing to far-distant countries
  • Controlling the team remotely requires an effort
  • There can be communication delays because of the time zones differences and misunderstandings because of the language barrier

Possible challenges
As mentioned above, one of the main challenges of software development outsourcing is choosing the right development vendor. On the other hand, if you find a vendor you can trust, all the possible risks and pitfalls tend to zero. We have shared the best practices related to this question in our article on how to hire a software development company in our recent article.

Outsourcing pricing models

Creating custom software following the outsourcing engagement model also leaves room for pricing flexibility. Below are three main types of outsourcing contracts you can perfectly tailor to your project requirements and business specifics.

  • Fixed price model. As the name suggests, in this case, the customer pays the vendor a fixed sum for the services. This approach is suitable for small and well-predictable projects created according to the Waterfall development methodology.
  • Time and material model. According to this pricing model, the customer is billed according to the actually used resources (time of the team members). This model is good for less predictable projects of medium size, for example, legacy system modernization.
  • Dedicated development team model. This is the most expensive approach, according to which the vendor dedicates the development team to the customer’s project. Dedicated development is a top choice for large-scale, flexible, and relatively risky projects, usually created according to Agile methodology.

So, software development outsourcing as an engagement model is suitable for:

  • The companies with no in-house tech team
  • The companies need to get started with development project asap
  • The companies in need of a specific tech expertise
  • The companies are looking for the opportunity to create software in the most affordable way.

Feel like software development outsourcing can be winning for your project? Partner with us!

Outstaffing or team extension

Outstaffing or team extension is the second IT engagement model in project management. According to this approach, the development vendor sources the necessary tech specialist to power an in-house team the customer already has. In the case the vendor doesn’t have the necessary talents available or the skills needed are too specific, the vendor can find them according to the customer’s request.

After the vendor has gathered the team members and validated their suitability for the customer’s project, they become a part of the customer’s team, fully managed and controlled by them.

Pros

  • The outstaffed team can work both remotely and in-house, depending on the customer’s preferences and remote project management experience
  • Customers can quickly access top tech talents without spending their time on searching, shortlisting, and hiring
  • In most cases, the extended teams can get started with the project pretty fast
  • As a rule, the vendor helps the customer to onboard the team and make it feel like the part of the project
  • The customer can ask for additional hands and talents anytime
  • The payroll process is the vendor's responsibility
  • Outstaffing adds flexibility to your project - you can use the services of an outstaffed team during the workload peaks

Cons

  • There is a need for an even more accurate candidate-project match, since the companies usually use outstaffing services when there is an urgent need to expand the team
  • The customer is responsible for the development and team management processes
  • Remote communication with an extended team can also sometimes be challenging
  • Sometimes, an in-house team and its extended part find it difficult to understand each other and collaborate effectively.

Possible challenges
The main challenge of outstaffing as a project management model is ensuring new team members’ compatibility and suitability for the customer's project. To meet this goal, the vendor has to carefully screen, shortlist and interview the candidates, paying attention to both technical background and team members’ personalities. In some cases, the candidates also have to pass the interview with the customer to get started with their project.

So, to make the process of developers interviewing less challenging, we have gathered the interview questions you are welcome to ask your:

Outstaffing pricing models
The outstaffing pricing model is salary-based. That is, the vendor pays salaries to the outstaffed developers as long as they work on the customer’s project. The payroll process is also running on the vendor’s side so that the customer can fully concentrate on project management and development, avoiding routine tasks.

    Need to expand your team with the best-in-class software developers? Let us make a perfect match for you. Contact IT Master Soft for quick team extension services!

    Engagement opportunities with IT Master Soft

    IT Master Soft is a Ukrainian development company with almost ten years of experience. Our core values are meeting customers’ expectations, suggesting the most effective engagement model for each of the projects, code quality, data security, and communication transparency.

    Below are just some of the reasons our customers from different industries choose us:

    • Cross-domain expertise. We specialize in creating solutions for eCommerce, retail, marketing, and education, but limited to these industries only. Following the latest IT market trends, we are also well-versed in AI, ML, and blockchain development.
    • The developers are skilled with the latest technologies. We are proud to gather top Ukrainian tech talents to source them for your project. With our help, you are welcome to hire web, mobile, desktop, and cross-platform developers who are perfectly skilled with the latest technologies to make your software as powerful as possible.
    • Experience with European customers. Most of our customers are from Europe. That’s why we have also established two representative offices in Germany and Bulgaria, welcoming our customers to meet their teams anytime.
    • Long-term partnership. Most of our customers have worked with us for several years already. The developers we have outstaffed to their projects continue the collaboration for 4-6 years as well. We are always striving for building a long-term partnership to become your reliable supporter on the way to digital transformation.
    • Flexible engagement opportunities. As for the engagement models we offer, you are welcome to choose between software development outsourcing and outstaffing, depending on your project need. We also stand for flexibility and transparency so if you feel like you need an out-of-the-box approach, we are right here to help.

      Let’s meet each other right now to discuss an engagement model that will suit your business and proceed with creating your best app ever!

      Conclusion

      Both software development outsourcing and outstaffing are equally effective when they are tailored to the project’s goals and specifics correctly. While outsourcing allows you to fully transfer all the operations to the vendor, and only control the result delivery, outstaffing requires you to manage the development process and the team on your own. IT Master Soft will be glad to support you with any of the strategies, making sure you are on the right way to your project success.

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