What to choose between Dedicated Team vs. Fixed price and Materials?

When you finally decide to develop an app, the most significant challenge is selecting the development partner or development company. Selecting the IT outsourcing model can be confusing because the phrase outsourcing refers to a situation where a company provides certain services to another company. Outsourcing has been a Blessing to many companies; needless to say, it helps companies to reach fantastic expertise.   However, there are always two sides to everything, and Outsourcing is no exception. But then why are we here, don’t worry, we have got you covered. If you are confused about choosing an outsourcing model from the Dedicated team vs. Fixed price vs. time and materials for your business idea, then welcome aboard! This article will compare the dedicated team, fixed price, and time and materials business models for your project. We will analyze all kinds of groups in detail, and we will provide tips for who can be the right team for your project. But before we move ahead, let’s understand what the types of IT outsourcing services are. 

• Relocate services overseas for low cost and make more profit
• Shift services to bordering countries
• Allow employees to work from home. 

There are two sides to outsourcing, Advantages, and disadvantages. Let’s understand both in the section below. 

Advantages of outsourcing

 

• The most significant advantage of outsourcing is it will reduce the cost of development.
• Outsourcing will help you increase the productivity of the team. 
• You can acquire team flexibility in Outsourcing. 
• Outsourcing allows you to gain a competitive advantage in the market.
• You don’t have to fear the risk as outsourcing has low chances of failures.

Disadvantages of outsourcing

 

• There can be a Linguistic barrier to outsourcing.
• You will no longer have control over your project in outsourcing models.
• In outsourcing, there might be some hidden charges at the end.  
• The most problematic disadvantage is time zone issues due to different regions.  
• Stability problems in case the company runs out of business.
• If the outsourcing company is in another part of the globe, Quality assurance can be an issue.  

 

Types of outsourcing models

  Now that you already have an idea about the pros and cons of outsourcing for your IT requirements, we will discuss all the models, respectively, from the Dedicated team, fixed price, to time and materials.  However, the selection of outsourcing will depend on the type of business you have and your project’s requirements. 

Dedicated team 

  The dedicated team model can be used for projects where you are unclear about your business requirements.  You can also use this model when you own a team that lacks your client’s specific experiences or expertise. In this particular outsourcing model, the outsourcing team can connect with the client’s team, and they can fulfill the client’s requirements without growing the customer’s team.  Okay, that might look a little complex. Let us explain this with an example. Let’s say you want to develop software that is not in your team’s expertise, you can hire a team who can do this. In this case, you can outsource to an experienced team that can help you fulfill the client’s needs by creating rich quality projects. This will enable you to maintain stability between your team and the dedicated team.

Time and material team 

  This model will be dependent on the cost of time, labor, and efforts consumed on the development project, which includes the total time used for planning, executing, and developing the project. This is one of the common outsourcing models in the software development department. Not only is it convenient, but it is comparatively reliable as well. 

Fixed price model 

  This particular model can be quite flattering for the clients as they can have the option to extend the payment. You can use this model for the long, medium, and short term projects with few iterations. If you have a low or fixed budget issue, you can go for this method. This is also great for developing an MVP for your startup.  Now, let’s understand the comparison in a simple table. 

Dedicated team vs. time and materials vs. fixed price

  For your better understanding, we have explained the comparison in the table below. We have tried to collect all the aspects of each model mentioned in this blog article. 

Characteristics	Dedicated team	Time and materials	Fixed-price
Size	Large	Medium	Small
Price	Fixed prices for individual members	Price per hour	A fixed price for the entire project
Requirement	Emerging	Emerging	Determined
Scope of work	Predicted	Unsettled	Defined
Resources	Expandable	Unclear	Clear
Timings	Predicted	Can be fluctuating	Estimated
Method	Easy-moving	Agile	Clumsy
Technology	Unfixed	Fixed	Pre-defined
Ultimate project	Vague	Vague	Transparent

 

Challenges of Outsourcing 

  Now that we have seen all the aspects of comparing the Dedicated Team vs. Fixed Price vs. Time and Materials let’s understand the common mistakes that might occur in Outsourcing.  Do check these challenges so that you can avoid them in the future. 

Abrupt Expenditures

  Selecting Outsourcing for your software development means you have to be ready to spend a surprising amount of money. Let’s say, for example, the development might need some functionality, or maybe your project might need a little longer than the predicted time. In this case, you have to pay the extra money. 

Human Factor 

  The most challenging part of outsourcing your project is Human Factor. Human interaction is vital for any IT outsourcing projects, as you can not rely on the “On-screen” interactions for every little change that might occur.  However, this part is entirely personal and depends on the individual’s style of work. According to statistics, about 80% of IT projects are outsourced and are running successfully. 

Time Barriers

  The time Barrier is not as challenging, but it can be a little problematic in some situations. For example, you have to wait for a professional to solve your issue or make some efforts to bring people up to your speed. The point is this challenge can be solved easily by doing the right communication at the right time. 

Linguistic barriers

  The other challenge for outsourcing is the Language barrier. If the team you select does not speak the native language, there can be significant misunderstandings and miscommunication issues. 

Management issues 

  Keeping track of your project management can be a problem in outsourcing. When your project is taking shape in another region, it will be hard to control your project’s day-to-day activities, power, and development. You can appoint a project manager who can take care of your project from scratch in such a scenario.   

Conclusion 

  To know what to choose for your project from the various outsourcing models, first, understand your business model’s requirement. After determining your project’s needs, you can select the right outsourcing model and start with it.  Furthermore, if you are an emerging Start-up or a blooming business with budget and pricing issues, building a minimum viable product will be best for you. What this MVP will do is that you will be able to determine whether or not your product is doing well in the market.  In the end, we would like to add that every outsourcing model has its own advantages and disadvantages. To choose from a Dedicated team, Time and materials, and fixed priced model is your take.  If you are still confused about comparing the dedicated team, fixed price, and time and materials, don’t hesitate to connect with us to know more about Outsourcing models. We are an agile Software development company based in the UAE.