IT outsource cooperation: which pricing model should be chosen
It’s already a well-known fact that Ukraine is rich in IT specialists. Their present estimated number is 185 000, the fact that allows the advocates of the new economy to expect that Ukraine will soon be transformed into a leading European country for IT development. Many of the Ukrainian companies, Stfalcon, among them, top the lists of the best Web and App developing companies for 2019.
Already today Ukraine takes the first place in the scope of IT services export according to AVentures capital and Ukraine Digital News.
For about 5 past years Ukraine has already been the most recommended country for software development issues. It naturally resulted in the growth of outsourcing in IT industry exports which amounts in billions of dollars.
Let’s find out the main reasons which make the country so attractive for foreign entrepreneurs looking for IT specialists.
So, why outsource IT to Ukraine?
The first key reason is obviously the number of IT experts within the industry; by 2020 it will exceed 200000 already.
The other factors in favor of Ukrainian developers are the following:
Skills and Expertise
The increasing amount of IT companies and individual entrepreneurs has resulted in massive competition, which in its turn outcomes in high quality of the IT outsourcing services provided to the foreign customers. Nowadays the developers from Ukraine do not fall behind their colleagues from Europe and the USA. It's quite natural due to the talents, skills, and experience Ukrainian specialists possess.
Ways of cooperation
The IT companies are represented in various ways – from freelance individual entrepreneurs, through small and middle-sized companies, like Stfalcon, to great corporations. So the clients from abroad have a manifold choice of service providers. They can choose any contractor according to the scope, difficulty, and budget of the work they want to outsource in the IT sphere.
The budget of the project is often a tricky thing and in Ukraine, you can get perfect quality at a relatively small price. The same work will cost you on average 5 times more in America and 2 times more in Europe. At the same time, the comparatively low project cost in no way compromises the quality of the work performed by the Ukrainian IT specialists.
Which of the project pricing models?
Speaking about affordable price, it’s essential to investigate which of the IT pricing models works better for the outsourced projects. The customer commonly has a choice of the 2 most popular options: Fixed Price Model or Time and Materials based cooperation, with a dedicated team or milestone pricing variations.
Fixed price model – who is it for?
As it’s clear from the name, the model presupposes fixed payment for the project delivery. So, it works best for the companies, giving priority to cost planning against flexibility. The key features of the FP approach are the fixed budget, deadline and work scope along with higher rates and potential quality compromises.
As a client, you’d better consider such a pricing model if your project for outsourcing has really crystal clear requirements that are sure not to change over time and a definite milestone to be achieved by a certain deadline.
Time and Materials - who benefits?
The time and materials model is reasonable for the large projects with unclear or evolving requirements. The payment is then realized for the result accomplished and for the real time spent. Time estimations in the project performed under such a pricing model are more realistic and consequently, the client benefits more from such an approach. Besides, the customer bears more responsibility for running the project. He is in charge of adding or removing certain features in the course of project performance. The overall process is more transparent and flexible under the T&M types of pricing strategies.
Besides, - IT specialists in such a case are better motivated to deliver state-of-art products in a reasonable period of time.
The payments can be agreed on stage by stage basis. Thus, the customer can pay only for the visible result when he is sure that the quality of the product is beyond reproach.
The long-term experience in the sphere of IT projects fulfillment prompts that the customers are rarely aware of the product required functionality to the fullest. Thus, the step by step project development allows the client as well as the IT expert team to delve deeper into the project’s actual features, and generate new ideas and improvements to the product under development. At the same time, such an approach is convenient due to its flexibility, allowing the team to implement changes during the process of the work.
It’s a no brainer that the Time and Material pricing model seems more advantageous in many ways, it’s simply inevitable for the large and complex long-term projects to minimize risks. Stfalcone has been operating in the market of the customized solutions development for almost a decade already and in the course of this long term, experience came to the conclusion that T&M model is most beneficial both to the customer and to the contractor. To get the solution that really meets your anticipation choose the Time and Materials strategy and outsource your task to the expert IT service providers. Your ideas are worth the highest quality implementation!
Alla Kostrubska, Head of Marketing at Stfalcon.com, a software development company specializing in medium and large web projects, mobile applications, and portals with rich functionality. Stfalcon team has strong expertise in the development of complex custom solutions for startups, SMB sector, and enterprises.
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