Picking the right engagement model to work with your offshore partners is never an easy task. There is no “One Size Fits All” kind of a solution. You need to understand the existing engagement models in the market such as Fixed Bid and Time & Material. Weigh in the pros and cons of those models and see which one works for you better.
We have put together this eBook to give you some insights into how you can pick the right engagement model. Once you have a clear understanding of the models, you could get into a partnership that works for you as well as the service provider.
Fixed Bid Engagement Model
This is generally preferred by the customers. The maximum amount they would pay is set. In order to mitigate the risk, the service provider bumps up the estimate a little. So if the project is done in time, the service provider benefits. The mindset of the service provider is to get the project over and done with, as soon as possible. It is no longer about putting their best foot forward and delivering the best quality code. They will go only as far as it makes sense to get your sign-off.
Time & Material Engagement
This is of course loved by the service provider. They will keep building code and billing you until you have the money. If you have a large budget, they will keep going. Their monthly margins are now set and they do not have to worry.
As a customer, you will soon start to notice that you are burning cash. You are not getting as much value for the money you are spending. You could question them on speed and they will have all the right answers. The requirements changed or were underestimated. Something unknown took us more time. And the list goes on and on. The point is, it does not work in your favour eventually.
Hybrid Engagement Model
For the lack of a better word, I am going to call this new model a hybrid model. First the customer needs to set the right expectations of work with the service provider. So for instance you decide that it should not go beyond $60K. The second part to this is that the service provider must mention the bare minimum that they need per month to operate. Both these numbers should not be set in stone and the point is to arrive at a middle ground which keeps both the customer and the service provider vested in the project.
That’s a gist of the engagement models currently prevalent in the industry, they may not be the best suited for your business requirements. At least you have a fair idea when you start engaging with potential partners. On our part we would go that extra mile, to make the engagement work for you. And that’s a promise! In the meantime, you could download our eBook on Engagement Models for Software Development to get some inside information and valuable tips.
Download the eBook here and get better business value from your engagement.
Founder CEO, Idyllic.
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