Cost, Time, Team, and Resources are the essentials of any project, and finding out them all together in a reliable manner is the most significant flex for your software project. With increasing competition between development companies, every organization offers numerous IT engagement models to retain and gain new clients. Also, any firm must select an authentic digital partner who can assure quality and transparency throughout the development procedure.

Many organizations only focus on the final product and pass over the step to pick out the most suitable engagement model, which causes them to pay more than the required amount. Therefore, it is a vital process that every enterprise must consider while looking for a software development company.

Furthermore, one should understand the meaning of the engagement model, types of engagement models, their benefits over the traditional hiring methods, and a brief overview about selecting a model for a project. Let’s find it all.

What is Engagement Model for Software Development?

For determining the basis of collaboration between both parties, engagement models are used to define the guidelines, level of responsibilities, and control. In simple terms, these models are availed to lay out the guidelines, commitments, tasks, cost, duration, and obligations for the entire steps included in the procedure to furnish a business application.

Moreover, it shows how a team member is involved in the project, what type of tasks are assigned to him, how much time the specific work must be completed and how the Client will pay the IT company. Therefore, choosing a suitable model must be in the list of the company’s prime objectives when finding a source to hire technical and business experts for any software project.

Moreover, the Client has a well-defined structure of total cost to be paid and is assured by the quality of the final product.

Benefits of Software Development Engagement Models

The question is raised: Why one must go for an engagement model when one can sign the contract and define your budget to the IT firm. For solving your queries, exclusive advantages of choosing an engagement model are listed below:

  • Aids reduce the overall cost, as required team members and resources are defined before project initiation.
  • Any hidden charges are terminated, which helps to select the assets within the cost constraint.
  • One can change team size anytime by opting for a different model and customizing the currently selected approach.
  • Overall efficiency increases due to outsourcing, as the Client can avail of Full-Stack services affordably.
  • An edge over the competition is gained due to the low pricing and high-quality standards.
  • A feasibility study is effortlessly performed and cross-verified the business requirements.
  • Any modification according to change in the business strategies and internal working of enterprise can be impeccably integrated within the application.
  • You can get the professionals and robust hardware/software assets for furnishing the app before the deadline.
  • The Client has more control over each project phase, and seamless communication is performed with each teammate.

Most offered Engagement Model for Software Development

Companies offer several engagement models, which creates a hassle to select the right one out. However, every approach has its standards, followed throughout the industry. In addition, you can easily create your engagement mechanism as per your business needs and finalize it by consulting with the firm you are joining forces with. We have provided a list of the most common and scalable models:

Fixed Price based model

Adopting the Fixed Price model does not mean providing random changes between development in exchange for the amount explicated with the digital partner. Instead, this model permanently defines the overall cost, business needs, scope, and other software project requirements. Once the planning phase is completed and the software’s final crafting is started, there is no way to go back and add some additional features. The client has to pay the overall amount when the software is successfully tested and deployed.

Moreover, any modification in scope can extend time-to-market, and all other procedures need to be executed from the beginning. This model eliminates the need to have a variable +/-10% of the initial project cost and guarantees your enterprise solution within the timeline.

Time and Resource-based Model

Upon selecting this model, you can be assured of the quality and performance of your software. However, the amount spent on creating the solution is directly proportional to the time and number of resources utilized to fulfill dynamic business necessities. Also, time and material risks are discovered in the initial phase, as multiple evaluations are processed in small iterations. One has to pay the cost of the outsourcing company’s expenditure on hardware, software, and human assets.

This model is best suited for medium and large-scale projects, where cost is not an issue, and the prime purpose of the enterprise is to attain the described goals. Agile methodology is followed under this model, which integrates various new components, modules, and technologies in the software solution until the business requirements are not met.

Milestone Based Model

In this model type, milestones are declared during the initial project phase, and the overall cost is divided into small segments. Once a milestone is completed, payment is released, and development teams move further to achieve the next milepost.

This approach is highly beneficial for the Client, as the amount can be deducted from the resource pool only if a target is achieved and provided the quality is as expected. Also, the team focuses more on each detail promptly to reach the next point for receiving their payment. Furthermore, sometimes timeline and requirement of resources are not adequately clarified, which delays the project completion and pulls the budget bar a little higher.

Dedicated Team Model

This is one of the most compatible and popular engagement models, as human resources are hired to work on multiple projects. Professionals agree on a fixed hourly or monthly rate, and the Client is leveraged to modify the project scope anytime. However, the Client has to pay wages to the team after a fixed interval and ensure that all the hardware and software assets are available.

With this, real-time progress is tracked, and budget is maintained, regardless of the complexity, workload, and changing user demands. The only drawback of this model is that the Client has to plan the number of team members and task allocation accurately; otherwise, extended cost and time can lead to heavy losses. 

Hybrid Model

These models combine two or more engagement models, such as the blended version of the Fixed Cost and Resource-based model and Fixed Cost with Dedicated Team Model. As a result, the Client can divide the project into small segments to save cost and timely completion. For Example, the requisites gathering, assessment, and planning phase can be conducted upon a fixed cost, and the development stage can be performed according to the resource-based model.

The hybrid model can be opted for any project. As a result, it can be flawlessly customized, and the Client is promised an up-to-date software solution catering to every aspect of core business operation. In addition, transparency and control over the project are optimized, which leads to preparing a workflow plan to streamline all processes.

How to select a relevant Engagement Model

We have discovered and written the most relevant elements, which every organization must analyze before choosing any IT engagement model for software development.

Analyze Project Scope and Type

At first, we need to generate the project scope and classify in-scope and out-scope to better understand the stakeholder’s requirements. The timeline should also be determined, leading to picking out a suitable engagement model. Further, you must consider the type of software, whether you need a website, web app, or application, and be sure about the gathered requirements; as, in the fixed model, every aspect is set decided in the planning phase.

Determine Budget and Time-to-market

After collecting all the necessary business demands, the next step is to research the market to get a rough idea of the required budget. Go through websites of a different software development companies to get a consultation and know about wages demanded by individual team members. In addition, search through freelancing websites to outsource people on an hourly, monthly, or milestone basis.

Technology Suite to be used for Software Project

This is a crucial step, as it helps to understand the resource requirement of the project. Then, after knowing about the technology, you can precisely search across the web and compare it with the process of other companies offering the same services. By this, you can quickly negotiate and crack the deal of creating a tailored engagement model for fabricating your business solution.


Besides budget, schedule, and assets, flexibility is a vital aspect of any engagement model. It is considered to assure that client modifications can be added anytime and agile methodology is followed for better collaboration.

Control and Transparency

One should select an engagement structure that provides the overall control and seamless communication with the team for continually updating current project progress and plan for further operations. Also, all the terms and conditions must be cleared and signed between both parties in the beginning.


As discussed above, IT organizations offer numerous engagement models, although it purely depends on your business demands, budget, and timeline while choosing one for your project. Every structure has its advantages and disadvantages, so it is essential to know about every model before finalizing anything.

In addition, you should understand components, such as project scope, business prerequisites, and terms and conditions of both organizations before going further with the development process. Finally, one must always consult with the IT firm to get an overview of the services included in each model and then only go for it.

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