When a company decides to cooperate with an outsourcing development team it is not only important to select the right partner for the cooperation, but it is very important as well to select the model of work, which will suit the development strategy of your product.
Working for 9 years in B2B segment I have been a part of the company which hired a dedicated team in order to develop their in-house software. Today I am working as a Chief Business Development Officer at Code Inspiration, a full-cycle custom development agency. For more than 3 years I consult companies. At the stage of the formation of a development strategy it is extremely important to select a right model of work. My diploma of international lawyer and lots of negotiations regarding points of contracts with our clients, gave me experience which I am happy to share, providing some useful tips to add to the contract before signing it.
Models of work
It is always important to select a working model which will be applicable to your business and will serve your needs.
Traditionally, models of work are divided into 3 types:
- Fixed price
- Time and material
- Dedicated team
Fixed Price is advised for the projects with already defined scope of work. The budget of such project is known in advance.
Time and material is usually applied to dynamic projects where the scope of work is supposed to be modified and reprioritization of tasks will take place. The budget is not defined in this type of project and invoices are made on the basis of the amount of actual hours spent on the project’s iterations.
According to the dedicated model a group of developers is formed to work on the project on a long-time basis. The budget in this case is defined per month.
Usually, there are no doubts when to select a fixed price model. If you have an already defined and approved by stockholders list of tasks — move on with fixed price option. It is for sure a benefit to plan in advance your date of release and plan the budget according to the sum indicted in the contract which in not going to be changed. In most cases business owners doubt whether to go with a time and material option or to select a dedicated team for their business. In this case, if you are not sure how long you will need your development team, if amount of work will depend on a third-party, don’t risk, apply time and material and pay only for hours spent on the project. If you feel stability in the full load of team participants, check the conditions when your business is ready for a dedicated team.
Conditions when your business needs to switch to a dedicated team model
Of course, each business is unique, each product is different, however, there are 5 general conditions which will help you to understand, that dedicated team is for you:
- If your project is going to be long-term and you need to develop a full product, not an MVP;
- If you are confident there will be full time load for the development team;
- If your business is already live;
- If your product requires not only development but ongoing maintenance;
- If the project is complex and the logic has lots of dependencies.
If you have at least three “yes” out of five “if” — the dedicated team model is considered to be a good choice for your business.
Benefits hiring a dedicated team
Why would I hire a dedicated team rather than going with Time and Material? This is one of the frequently asked questions by clients.
Main reasons to select a dedicated team instead of TM are:
- Selecting a dedicated team instead of time and material option will provide you with economy from 10 to 30% per month. Booking a team will always be cheaper than paying for each team participant separately according to the hourly rate.
- You can plan your budget. The budget for a dedicated team is known in advance.
- You will have a team working exclusively on your project and the risk of critical issues will be low as the team already knows all the specialties of the project.
- Selecting a dedicated team means you will have same developers for a long term. If there will be a necessity to change team participants, it is easy to arrange the transfer of knowledge on the project within one same company.
The main plus moving on with a dedicated team is the fact that you get like an “all-inclusive package”. A classic dedicated team composition consists of a project manager, team lead, usually a full stack developer, a back-end and a front-end developer and 2 QA engineers.
In case your software needs maintenance and ongoing development, applying time and material option, usually means that you will sign an SLA agreement for maintenance and additionally will pay for up development works (development of additional functionality).
Dedicated team, working exclusively on your project will assist you maintaining the project with no additional fee and will do development of additional features as well. If there would be an urgent issue they will easily prioritize the tasks and resolve the urgent issue first and then will get back to initially assigned tasks.
If your business one day becomes booming and you need to scale the team, it is always possible to do. Just send a request to the outsourcing company. Easy communication will help new developers to get quickly into the project. Developers who are already working on the project will help to avoid issues, as they already know the specialties and the architectural structure of the project itself.
Tips to the contract
Important! Make a test iteration with the team and make sure you are on the same wave. If you feel like you are good to proceed, here are some useful tips to be added to your contract:
- Write names of the developers selected to the contract. It should be written “John Smith, Java back-end developer” and not just a Java developer or a Front-end developer. This will help you to keep same people on your project as long as possible;
- Add a notice to tell you in advance of 2 months regarding the expected change of the team participants;
- Add necessity to show you actually tracked hours spent on your project by each team participant. Request access to the management tool. Outsourcing teams usually use Jira as a main tool. Ask to send you an invitation, so you can monitor daily work and add comments to participate in the process;
- Transfer of the source code to your server;
- Weekly calls with your PM with updates;
- The most recommended term for the contract is 1 year;
- Fix the price you have agreed on per month for the next year;
Finally, you will have a dedicated team which performed successfully your test iteration. You will be confident that people, with who you worked on the test iteration, will proceed working on your project. 2 month notice will help you to get prepared to any changes. You will review the daily work in a management tool and get updates from the project manager you will be working with. Source code on your server and fixed price for next year will provide you with stability and possibility to concentrate on business strategy.
Hiring a dedicated team is a serious decision
Hiring a dedicated team is a serious decision. When this development model of work is applied rationally it provides the business with two main benefits: economy and stability in product’s development and maintenance.
Working with companies from more than 15 countries, I noticed a great number of clients, who did not understand the difference and even didn’t know about the possibility to request their vendors to proceed with a dedicated team model. I got so many “thanks” from company representatives, with whom we spent hours discussing benefits of working models, making decision which one would be best for their business goals. So, I decided to share this information with public, who knows, maybe it will help companies to economize, to prevent some possible issues on their not an easy way of project development.
So, you have a full-time load for the team selected for the next year, you have checked the contract and filled in full names of team participants, terms of contract, and fixed the monthly price for the next year. You are sure that the team is on the same wave with your goals. They have passed test iteration and they met your expectations? — My congratulations, you have successfully formed a dedicated team for your business.