How To Choose The Right Business Engagement Model While Outsourcing software development

Businesses have finally begun to understand the importance of software as they’ve seen how unprecedented events in the present world can take any type of business off-rails

But the first step to developing a digital strategy is to build the best set of software products for an organization. There are many key challenges faced by businesses that are looking for software outsourcing of their projects to third-party software development companies. The first thing is to choose the right business engagement model, second is about allocating of budget. Here are some of the other challenges.

1) The communication gap between the development team and the client.

2) Inability to deliver good quality projects on time.

3) Software Development project according to the requirements of the business.

4) Many projects remaining incomplete due to fake commitments.  

Business Engagement Model

Here is the graph below it shows the representation of the software development outsourcing challenges faced by businesses & IT outsourcing companies frequently:

Outsourcing Challenges

In this blog, we will talk about resolving IT outsourcing challenges related to a business engagement model. Here is a checklist you should implement before opting for the business engagement model:

1) Making plans for the software development project and ensuring that all the activities are pre-decided helps in completing the milestones on time. Therefore, before choosing the right model for IT Outsourcing, your planning should be ready on the table.

2) You should make sure that the expectations with respect to the software development outsourcing project are very clear and there is no any sort of confusion. This will definitely help you cut short the list of parameters.

3) The key to better IT outsourcing is to develop a strong relationship with the outsourcing vendor. This leads to collaborative methods for the working environment resulting in improving the efficiency of business processes. Therefore, before choosing the model, businesses should check the transparency of the software development vendor.

4) Being futuristic about your software development project helps in getting great results. Therefore, you should prepare yourself for the upcoming challenges and be ready for them.

5) You should always check for a proper Service Level Agreement(SLA) so that all the software development outsourcing work can be done as required by businesses.

HOW TO CHOOSE THE RIGHT business engagement model

The scope within which the relationship between the IT outsourcing partner and client exists is called a business engagement model. Here are some of the most popular business engagement models mentioned below:

Retainer Model

In a retainer model, billing is done periodically, usually 2 to 4 weeks. In this model, a fixed rate is defined for each period.

  1. The fee is based on the scope of the software development outsourcing project and the resource requirements. Once they are decided, the IT outsourcing company gives an estimated retainer rate for the project.
  2. The milestones are also decided previously. If the client feels comfortable with the rate, the project starts according to the stipulated terms and conditions.
  3. This type of engagement model is more suitable for long and long-term software development outsourcing projects.

Hourly Model

In this type of engagement model, billing is done to the client according to the hours the team spent in the project. This engagement model is suitable for small and short-term software development outsourcing projects.

  1. In this case, a rate per hour is predefined for the project. Once approved by the client, the ETA of the project is provided to the client by the IT Outsourcing company.
  2. Billing takes is done at the successful completion of the milestones, as decided.

Fixed Cost Model

In case of projects in which the client is absolutely clear about the scope and requirements of the project, then this model is used.

  1. The IT outsourcing partner, in this case, provides a fixed estimated cost according to the nature of the project.
  2. The stipulated time of completion is also defined. This model is suitable for medium and large software development projects with definitive requirements.

Wrapping Up

In this article, we discussed the three most well-known business engagement models and learned how each model affects your project’s scope, size, and expenses. At ValueCoders, we work on all these three engagement models and our expert team of analysts and tech consultants can help you even further.

W are among the top IT Outsourcing companies across the world with 2500+ happy clients.

Upon partnering with us on a software development project, we offer a few additional benefits along with our software development services. These include:

  1. 2 Weeks free trial
  2. Guaranteed SLAs
  3. Satisfactory project delivery 

Discuss your project details with our experts here.

About the Author

Mantra is a Business Consultant & strategic thought leader bridging the divide between technology and client satisfaction. With 12 years of knowledge, innovation and hands-on experience in providing consultations to Startups, ISVs & Agencies who need dedicated development & technology partners. He has also lead to the delivery of countless successful projects.
Blogging is his passion & he shares his expertise here through ValueCoders.. Follow him on Twitter & LinkedIn

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