Time and Materials contract in IT outsourcing
Our experience shows that it is essential to understand before contacting the outsourcing software development company “what billing model is the best for your project?” The most common IT outsourcing models are:
- Time-and-Materials
- Fixed Price
- Dedicated Teams
Time-and-materials is a more flexible approach to IT outsourcing, as the customer pays only for the work actually done (features delivered, milestones met) T&M services are useful when the exact extent of a project cannot be determined accurately, where the final requirements are not known in advance and can be changed on the go. As many advantages a time and materials contract can fetch for you, it has its drawbacks too. Here are the advantages and risks a time and materials contract involves:
Pros of T&M Contract
- Cost Transparency
- Flexibility
- Faster Pace
- Profit Measurements
- Easy to Handle Potential Roadblocks
Cons of T&M Contract
- Tracking Time and Material Costs is Difficult
- Cost Overboarding
- Disputes are Much More Likely
Today outsourcing is no longer a simple concept but a choice of various options for product development and the choice of a price model. The time and materials contract template that brought success for one vendor may not do the same for you. We hope that our article could help you to know more about the time and material model. Use the link below to receive more information.
