Like every strategic partnership, IT outsourcing requires proper planning phase, which includes defining clear goals and setting up the most effective cooperation model. Today IT outsourcing companies provide highly adaptable and flexible partnership options to meet the needs of the businesses in a rapidly changing world. Still, these options are usually based on traditional engagement models: Dedicated team or Outstaffing, Time & Material and Fixed Price. Choosing the right one can boost the effectiveness and help to establish a mutually-beneficial partnership with your software development provider.

While going through the discovery phase, your outsourcing vendor will probably ask a bunch of questions. For example: Do you have a well-defined project with fixed requirements or scope of work is likely to change during the development process?  What is the size and budget of your project? Are there strict deadlines? Does your project require control over the team and involvement into development? So the final engagement model will be offered based on your answers.

Let's take a deeper look into the details of each type of cooperation.   

We prepared an overview of the most popular IT outsourcing engagement models by pricing and method of delivery.

Fixed price:

This model requires detailed negotiations. The initial phase here plays a significant role so meticulous planning directly determines the successful outcome. Fixed price approach works well for relatively small projects with a limited budget, where the scope of work is clear and it's easy to estimate the amount of time needed. It’s a great choice for new-born startups and developing your first MVP. In KeyToTech we provide ready-made solutions for startups taking into consideration challenges they may face.

However, in the case of not clearly defined or longer-term projects, it’s difficult to predict all the future changes and adjustments. So it's better to consider more flexible options.

Time and Material:

Also called “pay as you go” model is often used in Agile methodologies. The client and provider usually agree upon the programmer’s hourly rates and the payment are based on an actual time spent on development. Having become very popular among outsourcing companies it has proven to be an effective approach for medium and large projects. Especially when the scope of work is hard to determine in advance. The client is practically involved in project development and has the ability to change the requirements during the process of work without modification of the agreement.  

Dedicated team or Outstuffing:

Basically, this model is often used when a company decides to enhance its in-house development team. The client can choose a group of professionals with specific skills to meet the requirements and scale it when necessary. Offshore developers integrate into the company to the point where they become a natural part of the development department. Outsourcing provider in his turn is responsible for wages and taxes, office facilities, HR issues, and Data security. This makes such cooperation more cost-efficient for the client. Moreover, this approach is very flexible and allows you to decide whether to handle the team by yourself or assign team/project management to your outsourcing partner.

Today, IT outsourcing companies are perhaps the most flexible partners in terms of providing collaborative models. You can either stick to one cooperation option or combine all of them if it suits you best in the long-run. KeyToTech professionals have rich experience in various technical and business challenges. We evaluate each project based on its individual requirements offering the best solutions and long-lasting partnership.