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App Development
6 minutes read

Understanding the Various Engagement Models in IT and Software Development 

By Robert Kazmi
By Robert Kazmi
App Development
6 minutes read

Choosing the right engagement model during the development process is critical to project execution. You might be surprised to learn that there are several different types of project engagement models in software development. 

Selecting the right engagement model depends primarily on project requirements and the status of your in-house team. Unfortunately, most organizations don’t have unlimited resources. 

Therefore, selecting a project engagement model that gets the most out of your existing team, optimizes project costs, and helps your business save money is vital.

This post will explain what engagement models are in the context of the IT industry and software development. In addition, we will also explore the types of engagement models most commonly used by organizations for IT and software development projects. 

What Is an Engagement Model? 

In the context of the IT industry, an engagement model is a framework that establishes how a software development partner provides services. An IT engagement model will define project expectations such as responsibilities, obligations, commitments, and project duration.

In addition, an IT engagement model will establish project management guidelines and payment terms. Engagement models do not come in one-size-fits-all. The most suitable engagement model will depend primarily on your organization’s unique needs and project features. 

Therefore, your organization must understand the various engagement models and the core competencies of its in-house teams. Let’s learn more about popular engagement models and how they work.

Popular Engagement Models in IT Development 

Several engagement models might be suitable for your organization. However, choosing the wrong IT engagement model can lead to frustration and strained business relationships with your technology partner. 

A good tech partner should help your company choose the right engagement model. However, technology partners cannot be expected to always fully understand what business engagement model best suits your organization’s interests. 

Therefore, your company must take the time to understand the following engagement model examples: 

  • Time and materials 
  • Fixed-price
  • Dedicated team
  • Staff augmentation 
  • Managed services 
  • Hybrid 

Time and Materials 

In the time and materials model, a service provider delivers the right tools and IT resources at an agreed-upon billing rate. This engagement model is ideal when there is no tightly defined project scope.

The time and materials model is an excellent option for support and maintenance contracts, research and consulting jobs, and large, complex projects with a scope of work that will evolve. 

A software design and development provider might use this engagement model to tightly define a scope of work and then shift to a fixed-price model once the requirements of the software solution are clear. 

Many organizations like this approach to customer engagement because it offers them more flexibility as priorities and market conditions shift over time. Typically, these contracts are accompanied by strict reporting practices to ensure the client pays a fair price. 

Fixed-Price 

Under the fixed-price model, project scope and costs are agreed to before a contract is signed, and the project is executed per the terms of the fixed-price contract

The fixed-price model best suits projects with budget restraints and clearly defined goals, requirements, and expectations. A fixed price requires well-defined project deliverables. 

While this pricing model doesn’t seem to offer much flexibility, changes to the project can be made in a fixed-price model, but it requires organizations and their tech partners to agree to amend the original contract with additional requirements, timelines, costs, etc. 

Organizations like the fixed-price model because it offers greater visibility than other engagement models and minimizes project risk.  

Dedicated Team 

The dedicated team model involves hiring a team of professionals to handle an aspect or the entirety of a software development project. A dedicated team will include every position that the task requires, such as business analysts, developers, and a project manager. 

Typically, the dedicated team consists of remote developers. However, just because they are a remote team does not mean they are necessarily employed in an offshore development center. 

You could hire a dedicated team that works down the street from your office. However, many organizations hire an offshore development center to facilitate the dedicated team to cut costs. 

The most efficient and cost-effective solutions for dedicated teams are nearshore rather than offshore. A nearshore development center is closely aligned with your timezone, culture, and native language. 

Using the dedicated team model, your organization retains full control over the project from the very beginning. 

Staff Augmentation 

Staff augmentation is similar to the dedicated team model. However, instead of hiring a complete development team, your organization hires professionals to augment its in-house team

Staff augmentation can be as little as one employee or, in rare cases, as large as hundreds or thousands of employees. Your organization retains full control over its project in this engagement model. 

The staff augmentation model is perfect for organizations that want to temporarily bolster their in-house skills to meet their project’s needs. Generally, augmented staff joins in-house teams remotely.

These staff members are in constant communication with your in-house project management teams. These professionals are full members of your organization for the duration of their contract. 

Managed Services 

The managed services engagement model involves a technology partner holistically managing all services for your organization. The provider handles any requirements or issues that arise. 

The managed services engagement model is a hands-off approach to IT services. It is an excellent option for organizations that want to focus solely on their core business functions and leave the technical duties to a provider. 

Some organizations prefer to completely outsource the development process. However, customer success in this model requires trust that the provider will meet or exceed project expectations. In addition, your organization will have little to no control over the project beyond hiring the provider. 

Hybrid 

The hybrid engagement model mixes on-shore and offshore or nearshore support. Some projects might require on-site support and guidance as well as remote. 

The hybrid model is more flexible than other dedicated team models that are all on, off, or nearshore. This approach enables organizations to quickly scale while still getting a hands-on customer experience. 

The hybrid engagement model will likely only be perfect for select small projects. In most cases, choosing a different engagement model will be more efficient and cost-effective. 

Final Thoughts 

Getting the right technical services can be difficult when you don’t know exactly what your project requires. If you need help figuring out the best engagement model for your organization and project, reach out to a skilled technology partner like Koombea to learn more about what model will work best for your needs.

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