Is the age of T&M projects finally over?

With the advent of generative AI, hybrid cloud and the metaverse, is there really still a place for the old-school time and materials (T&M) model for tech? Once the go-to approach for executing IT projects, T&M sourcing has fallen in and out of favor with the emergence of newer sourcing models like fixed price and managed services.

In this blog, we will explore whether T&M is still relevant to modern businesses — and if so, why? Let’s go deeper.

How do T&M professional services work?

A T&M engagement typically involves an enterprise working with a service provider to source and supply staff to execute technology projects. These individuals are provisioned on-demand on a flexible basis, and can include skill profiles such as software development, consulting, project management or niche technologies.

The T&M model works particularly well for projects without a clearly-defined scope, or ones that are expected to evolve over time. These sorts of initiatives require a degree of flexibility that other contract models may not provide. T&M allows you to adjust your requirements, add new features, or adapt your strategy as the project progresses, paying only for the services you use.

Are T&M technology services still relevant?

As explained above, one of the major advantages of T&M has aways been its flexibility — including how the services are structured and delivered. Whether you require staff augmentation or want to build a dedicated team of specialists, if you need skills delivered across the organization or for one specific project, the advantages of T&M are a high level of control, flexibility and scalability.

That’s why, despite many evolutionary shifts in the marketplace, the T&M model has endured since the early days of technology outsourcing. Clearly, this tried-and-true model still has a place in today’s IT world. However, flexibility, control and scalability are not the only reasons to choose T&M. Here are three more:

Reason #1: There will always be talent shortages

Gartner Analyst John-David Lovelock recently highlighted the ongoing technology talent crunch, writing that “enterprises are quickly falling behind IT service firms in terms of attracting talent with key IT skill sets.”

According to Lovelock, this is driving a spending shift away from hiring internal staff and towards sourcing and consulting engagements. Financial pressures are forcing enterprises to run leaner and make tough choices about where to invest their technology budget. As companies look to harness new technologies like generative AI and address evolving cybersecurity threats, the competition for talent will only heat up.

Let’s face it, hiring and training IT professionals is not your core business, so finding and onboarding dozens or hundreds of experts with the latest skills is slow, cumbersome and expensive. Which leads us to…

Reason #2: Speed is king

In today’s fast-paced business environment, a delay of just days or weeks in rolling out a new product can be the difference between being first-to-market or just another imitator. To keep up, you need the right skills, at the right time, in the right place.

Because T&M engagements are inherently agile, a capable service provider can quickly assess your requirements, find a professional with the right profile, and deploy them to your project in a matter of days. There are no complicated change requests to be filed, no need to update the project scope, and no hidden costs. You pay only for the services rendered, with transparent pricing.

In fact, you may not even need to wait for your new expert to travel to your facility. The largest professional services firms offer the flexibility of locating your added resources onsite, nearshore or even offshore — accelerating delivery of the critical skills you need. Speaking of skills…

Reason #3: Niche skills are hard to find

Modern enterprises are built on technology, and your team’s skillsets can quickly go out of date as that tech evolves. New cybersecurity threats emerge every day, and advances in AI, hyperpersonalization and UX design make it difficult for any company to keep up.

On top of that, enterprise-wide training and certification programs are expensive and difficult to manage, which makes a T&M approach all the more attractive. You can quickly assemble teams with the skills you need, including project managers, data scientists, system architects, business analysts, QA engineers and more — all without the major investment in training and upskilling.