Have you ever been in a situation where you want to hire a firm or developer to develop a web or mobile application but are not sure which engagement model to choose out of the three popular engagement models i.e. dedicated resources, fixed price and time and material (T&M) model works better.
Since different type engagement models is suitable for different types of projects, having a clear understanding on pros and cons of each engagement model helps in taking an informed decision so that you get a better ROI and a smooth relationship.
Before going into details of pros and cons let us try to understand these engagement models in detail:
Dedicated Offshore Resources
This is a good fit when you want to hire resources that are hired only to work dedicatedly on your project.
By choosing a dedicated offshore resource model, you will be getting experienced and skilled resources dedicatedly working on your project minus the hassle of hiring them in house and taking care of their monthly allowances, medical benefits, annual leave and other issues related to hiring full-time in house employees.
How it works is that you as a business owner provide us initial requirements which could be either an idea or a concept, or a loose ended scope or feature list. Based on the initial requirements and your ideal time to market, we will allocate a team with resources best suited to do the job.
The advantage is that as your business needs evolve, you have the full flexibility to change the strength of the team. The team will report directly and regularly to you and you have full control over all aspects of the project. We will monitor the project for quality standards and step in whenever necessary.
If you have a fair idea about your requirements and want to focus extensively on core business instead of worrying about software development goes for this model.
When Front Rush, a US-based sports startup, approached Net Solutions to build their web platform they did not have a fixed scope or any documented requirements. On top of that they want to lunch their product in the market as soon as possible. Considering their needs, the Consulting guys at Net Solutions advised them to go hire dedicated resources in order to reach faster time to market. Using AGILE they can show some deliverable to them after every two weeks. The idea was to discover and scope out the requirements enough for two weeks so that something tangible is there to go and test thereby avoiding weeks and months of analysis and rework.
One of the most commonly used model, this is ideal when you want to make sure, you want the estimated costs to be known upfront before investing a dime. The caveat here is that it demands complete clarity and a well-defined scope to provide correct estimates on budget and timeline.
How it works is that is that once you get in touch with the agency for a quote they will ask for project scope or a feature list to estimate.
Good agencies will develop the scope for you in case you don’t have documented it yourself. They might ask you several questions to clarify the scope and you might end up exchanging multiple e-mails or phone calls before there is a document or RFP in place which is good enough to estimate. You might feel too much to invest time with them in defining the scope but the more you work on it and ensure everything is covered the more accurate estimates you will get.
Good organizations spent some time in preparing an RFP (Requirements for Proposal) before they send any project for estimation.
Xerox wanted to approach a large company that was active in the sea exploration space in the Northern Sea. They wanted to build a Proof of Concept (POC) iPad app for their client’s staff, which was an interactive map to help users locate different areas of the oil refinery. The ultimate goal was to use the POC iPad app as part of a pitch for a bigger project. They sent us a RFP (Requirements for Proposal) listing down each and every detail and for which they needed a quote upfront. Since the requirements were very clear it was easy to provide a quote considering all the known risks
Time and Material (T&M)
Last but not least, there is also a time and material (T&M) engagement model.
It is something similar to the pay as you go model that is increasingly used in cases where it is not possible to estimate a project or fix bugs in an existing project or in those cases where the requirements are so dynamic that they keep on changing. The amount that you need to pay will depend on the time that the developer spends on completing the project.
This engagement model is often preferred because of its flexibility. You can change the people working on your project, depending on the requirement or the stage that the project is at.
This is because you will be getting the best people working for your project whenever there are major changes.
When Truffledig, a startup from New York, worked with Net Solutions to develop an online gifting platform targeted towards customers visiting coffee shops and restaurants in New York City, we advised them to build a prototype first with limited features and test the prototype locally in New York to determine whether their concept would be accepted in the market, and whether it would be a financial success, before they tried to scale it.
The initial prototype was built using hourly engagement model since the client could track the visibility of work done by resources since they fly down to Net Solutions office to closely work with the team.
Comparison of Engagement Models
Following is a quick snapshot which will help you to take an informed decision on choosing the ‘right’ engagement model for you.
Although the information and comparison chart will help you in taking an informed decision, selecting the right engagement model is still very tricky.
It is always good to list down all your priorities like budget, timelines, flexibility on collaboration, clarity in scope, minimum period of engagement for which you need to hire resources etc. before you proceed with development. For more details feel free to get in touch with us and discuss this detail by completing the Request Free Consultation form below.