How to Choose an Engagement Model While Hiring Offshore Development Team?

In today’s globalized business world, offshore development has become a popular choice for organizations seeking cost-effective and skilled talent. They hire this dedicated software development team to fulfill their software development needs. However, when you’re hiring an offshore development team, you have to be smart about choosing the right engagement model.

This article will give you the lowdown on offshore development, explaining what is an engagement model and which one to choose when hiring an offshore development team. So, without further ado, let’s get into it!

Offshore Development – An Overview

Offshore software development is all about outsourcing your software development needs to a bunch of professionals located in another country. It’s like taking a vacation from coding and letting someone else handle it. It allows you to go all out and get yourself an entire development team through a dedicated company.

Offshore software development has gained popularity due to the shortage of skilled professionals in developed Western nations. This scarcity of professionals has led to the search for offshore software development companies in countries abundant in talent and cost-effectiveness. This trend of offshore software development is spreading rapidly. Approximately 80% of major global companies opt for offshore software development business processes due to the significant advantages they offer.

Offshore software development brings various benefits, including cost savings, access to a wider pool of talented individuals, and faster time-to-market. However, it is important to note that offshore development also presents challenges, such as communication barriers, cultural differences, and disparities in time zones.

Different Types of Engagement Models for Offshore Development

There are various engagement models present for offshore development, including:

The Fixed-Price Model

The fixed-price model is a crowd favorite when it comes to hiring processes for offshore software development. The beauty of the fixed-price model is that the price is, well, fixed, and the scope of the project is crystal clear. It’s perfect for projects with a clearly defined scope that’s unlikely to change along the way.

The offshore development model has plenty of perks. For starters, it’s predictable as the client knows exactly how much the project will cost, so there are no surprises. It is cost-effective because you only pay for the work that actually gets done, and it reduces the client risk. Since they have locked in the price, they don’t have to worry about any unexpected cost overruns.

That being said, there are a few downsides too. The fixed-price model isn’t the best fit for projects full of uncertainty or likely to change as they go. Flexibility is not its strong suit, which can be a problem if the client needs to make changes to the project scope. And here’s the kicker: the dedicated development team may lack motivation since they don’t have any incentives.

The Time & Material Model

The Time & Material (T&M) model – a contract type that’s all about tracking actual time spent on the project. In this model, you pay for the hours put into the project, along with the costs of the materials used. T&M is gaining popularity in the software development world because it gives you more control over the progress and cost of your project.

The T&M model is perfect for those long-term projects with ever-evolving requirements – the ones where you’re still figuring things out as you go. It’s also great when you need maximum flexibility to adapt to the market situation. With T&M, you can tweak and fix things along the way, keeping up with the changing business needs.

The offshore model comes with its fair share of advantages. First off, it gives you that sweet flexibility and tight scheduling. You can deal with time in a more reasonable way, considering your project priorities.

It also lets you adjust the project scope and requirements along the way. With T&M, you only pay for the hours and expenses spent on the project, giving you more control over the development process.

Offshore Development Center (ODC)

An Offshore Development Center (ODC) refers to a dedicated team of developers and IT professionals situated in a different country. These developers are operating within a distinct time zone. Companies establish ODCs as a means to outsource their software development or IT operations – either partially or full-time. For hiring such a dedicated team, the chosen location offers cost-effectiveness or access to a larger talent pool.

An ODC essentially serves as a separate office housing a team of software engineers located in a foreign country. It operates as an extension of the company, possessing abundant talent and cost advantages. With cutting-edge infrastructure, an ODC acts as a modern facility providing comprehensive IT and engineering services to organizations.

The Service Level Agreement (SLA)/ Milestone-Based Model

The Service Level Agreement (SLA) or Milestone-Based Model is about setting specific milestones and performance targets in an SLA between you and the offshore development provider. This offshoring model lays out quality standards, project timelines, and penalties for any slip-ups. And get this—payments are tied to the successful completion of these milestones. It’s like a structured roadmap for your project, with continuous evaluation and room for adjustments.

This model provides transparency and accountability. Both parties know what’s expected and what needs to be achieved. You can keep a close eye on the progress and make sure things are on track. It’s like having a clear path to success and a solid agreement to keep everyone in check.

IT Staff Augmentation

IT staff augmentation is when you hire a software development team of offshore developers to join your existing team. It’s like adding some extra firepower to your crew. With IT staff augmentation, you can quickly scale up your workforce, tap into specialized skills, and fill those talent gaps.

The beauty of IT staff augmentation is its flexibility and cost-efficiency. You can add or reduce resources as needed for your project. This is the main reason why the IT staff augmentation market is booming! Post-pandemic, according to a survey, IT staff augmentation size has grown to $132.9 billion.

Hybrid (Onshore-Offshore) Model

The hybrid model is a mix of onshore and offshoring strategy frameworks that brings together the best of both worlds. In this model, your onshore dedicated teams take care of critical and strategic activities. The offshore team members handle the non-core tasks or development work that is outsourced. It’s like finding that perfect balance between local presence and cost savings.

The hybrid model is great for companies that want to have close collaboration and control over specific aspects of the project. You get to call the shots on the important stuff while leveraging the offshore team for scalability and cost-effectiveness.

Managed Services

In the world of managed services, managing offshore development teams take the reins and handle everything from start to finish. This includes project management, development, testing, deployment, and maintenance. You can sit back and focus on your core business activities while they take care of the nitty-gritty. With managed services, you get a higher level of expertise and reduced management overhead.

High-Touch Onboarding and Low-Touch Onboarding

With high-touch onboarding, you get the royal treatment. The offshore development provider invests significant time and resources in understanding your business, objectives, and requirements. It’s like having a deep dive into your world.

They’ll transfer all the knowledge, provide training, and collaborate with your team. This ensures that everyone is on the same page, working seamlessly together.

On the flip side, we’ve got low-touch onboarding. This is for those who have been around the block and have their requirements and processes well-documented. The offshore development team can quickly grasp and adapt to your project. It’s like a streamlined and rapid setup for those who prefer to hit the ground running.

Factors to Consider When Choosing an Engagement Model

When choosing an engagement model for offshore development, several factors should be considered to ensure a successful collaboration. These factors include:

Project Requirements

First things first, you need to understand the nature, complexity, and scope of your project. This will help you determine which engagement model aligns best with your needs. If your requirements are well-defined and stable, fixed-price or milestone-based models might be the way to go. But if your project has evolving or uncertain requirements, a time and material model can give you the flexibility you need.

Cost Considerations

You’ve got to think about the budget. It’s a crucial factor in choosing the right engagement model. Fixed-price models can give you cost predictability, while time and material models offer more flexibility in managing expenses. Offshore development often brings cost advantages, but don’t forget to evaluate the overall expenses, including labor, infrastructure, and potential additional costs for changes or support.

Time Zone and Cultural Compatibility

The geographical location of your offshore development team matters. You want to make sure it aligns with your preferred time zone and operational requirements. Time zone differences can actually work in your favor, allowing for round-the-clock development and support. Also, don’t forget to consider cultural compatibility – effective communication and collaboration depend on it.

Communication and Collaboration Requirements

Clear and efficient communication is the key to success. You need to evaluate the communication channels, tools, and frequency required for seamless collaboration with your offshore team. Make sure to assess their language proficiency and cultural fluency. You want to minimize misunderstandings and ensure effective communication throughout the project.

Scalability and Flexibility Needs

Think about the scalability and flexibility you need for your project. Some engagement models, like staff augmentation or offshore development centers, can provide the scalability options you’re looking for. They allow you to quickly ramp up or down resources as needed. So, if your project requires you to hire a development team with a dynamic size or the ability to adapt to changing requirements, these models might be the perfect fit.

Security and Intellectual Property Protection

Protecting your sensitive data and intellectual property is crucial. Take the time to evaluate the security measures and policies of the offshore development provider. Look into the legal frameworks, non-disclosure agreements, and confidentiality clauses they have in place. You want to make sure your proprietary information is safe and that they comply with data privacy regulations.

Vendor Reputation and Experience

Do your research! Take a deep dive into the reputation, experience, and track record of the offshore development provider. Look for client testimonials, case studies, and references.

You want to gauge their expertise, delivery capabilities, and ability to meet your project requirements. Consider their technical skills, domain expertise, industry experience, and overall reliability.

Project Management and Quality Assurance

Last but not least, you need to assess their project management methodologies and quality assurance processes. Look for robust practices that will monitor progress, mitigate risks, and ensure high-quality results. Check for certifications or standards adherence that reflects their commitment to quality.

Choosing the Right Engagement Model

Choosing the right engagement model for offshore development isn’t an easy task. It takes some careful consideration and evaluation to make the best decision. Here’s a step-by-step guide on how to hire a dedicated development team for your business:

Conduct Thorough Research

First things first, you gotta do some serious research! Dive into different offshore development engagement models and get a good grasp of their pros, cons, and how they fit your specific project. Look into industry trends, and best practices, and dig up some case studies or success stories. This knowledge will steer you in the right direction based on your project needs and business objectives.

Verify the Expertise and Experience

When you’re considering offshore development providers, don’t forget to verify their expertise and experience in the technology or domain you need. Make sure they’ve got the chops to handle your project by assessing their technical capabilities, certifications, and qualifications. Get the lowdown on their team’s qualifications, experience levels, and ongoing training programs to know they’re up to snuff.

Evaluate Past Projects

Take a peek at the portfolio of past projects completed by these offshore development providers. Look for projects similar to yours in terms of complexity, industry relevance, and scope. How’d they fare? Did they deliver quality results on time? How did they handle challenges? This assessment will give you a good sense of their performance and reliability.

Communicate Expectations Clearly

Communication is key! Lay out your project requirements, goals, and expectations in crystal-clear terms. Make sure those offshore development providers understand the scope, deliverables, milestones, and any nitty-gritty technical stuff. Clear communication from the get-go helps everyone get on the same page and minimizes the risk of misunderstandings down the line.

Establish Effective Channels of Communication

You have to establish effective channels of communication. Set up regular project meetings, video conferences, emails, or whatever floats your boat. Lay out the frequency, format, and who needs to be in the loop for updates and progress reports. Open and transparent communication keeps things running smoothly and prevents any hiccups or delays.

Consider a Pilot Project

If it’s doable, consider starting with a small pilot project to test the waters. It’s like a trial run. This way, you can see if the engagement model and the offshore development team are a good fit.

Check how they communicate, how responsive they are, and if they can deliver top-notch results. It’s like a litmus test before diving into a bigger project.

Seek Client References

Don’t forget to ask for client references! Reach out to their previous or existing clients and have a chat. Get their take on working with the offshore development provider, their level of satisfaction, and any challenges they faced. These client references give you valuable insights into the provider’s reliability, responsiveness, and overall performance.


Picking the right engagement model for your dedicated software team is like selecting the right tool for the job. Consider your project requirements, cost factors, time zone compatibility, communication needs, and scalability requirements. Do your research, evaluate their skills and experience, and communicate your expectations clearly. By choosing the right engagement model, you can maximize the benefits of offshore development and make your project a roaring success!