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Top 5 Priorities of How to Choose an Outsourcing Vendor

How to choose the best software outsourcing vendor

Outsourcing IT, particularly software development, is a proven way for tech firms to boost productivity, decrease development time, and overall stay on top of the competition.

All of this without breaking the budget, perhaps the best advantage of all.

Just like any business strategy, though, preparation and execution are everything. Choosing a partner isn’t like choosing produce at the grocery store. It takes knowledge, time, and careful thought about the How’s and Why’s of outsourcing.

Investing that time into learning how to choose an outsourcing vendor yields great dividends, though, and it’s well worth the effort. Here, then, are some high-level issues to keep in mind.

Define Your Outsourcing Goals

This is the single most critical thing a company can do before entering an agreement with any outsourcing provider. Outsourcing is not a panacea, and it can only be as effective as the expectations one sets.

Too many great, productive, professional relationships are ruined by a failure to set proper goals from the beginning. Proper goals are concrete tasks like “Build this app to this spec” or “Increase this performance metric to that level.”

Vague expectations like “Improve our profits” or “Create something new that our customers will love” typically won’t yield the best results.

An outsourced development house isn’t a plug-and-play proposition. It’s a tool to be used to specific effect.

To that end, the provider needs guidance and direction in order to succeed. Nobody knows your business better than your in-house team, and expecting an outsider to instantly have that same familiarity isn’t fair to the outsourced personnel or to your employees.

Choose an Established Partner

At the same time, there is an onus on the partner to maintain a high standard of quality. Choosing an outsourcing vendor is a large investment in time and resources. Spending weeks or months bringing a development house up to speed, only to find that they don’t have the skills to deliver, represents a huge blow to productivity.

Even worse is an outsourced team that is too new or too unstable to last. Finding a partner that completely “gets” your company philosophy and design process means little if the partner is gone without a trace within a year.

Therefore, choose a provider that can provide concrete case studies and real client references. Check those references, and don’t be afraid to ask the “hard questions.” Contracting with an outsourcing partner should be the start of a long, productive business relationship. Don’t shoot the relationship in the foot by picking the wrong team.

Pick the Right Size Team

Many companies overlook this consideration when they’re first exploring outsourcing options, but it’s one of the most important factors in a successful partnership.

Although it’s tempting to find the largest outsourcing provider possible and jump right into a contract with them, that can be counterproductive.

A large vendor is unlikely to give each and every client their full attention. Instead, smaller clients will often be assigned to the “B-Team”, less experienced developers, or be treated as a less-important side project. At the same time, the vendor will still feel justified in charging higher rates than smaller teams, banking on their good record and the power of their brand.

This means that a large outsourcing partner makes sense for a large client that can command their attention, but can be detrimental for smaller firms.

On the other hand, a smaller partner will be more flexible, generally charge lower rates, and usually put in greater effort. The attention of senior management can make all the difference in the world for many projects, and that’s not an option at large vendors where senior management might be responsible for hundreds of clients.

Simply put, it’s better to be the big fish in a small pond than a small fish in a big one.

Understand the Contract

As with any contractor, it’s a good practice to obtain legal advice when signing on an outsourcing provider. Particularly with software development, it is crucial to clearly define the intellectual property ownership of any work done.

Generally, when contracting for the creation of new software, the client (you) should retain full IP ownership. If the outsourcing provider will provide general IT support, customer service, or other “commoditized work” that is not unique to your business, then they may retain ownership of any software tools or processes that they utilize.

Any outsourcing arrangement should also include a strong non-disclosure agreement, particularly if the vendor will have access to customer data or other sensitive information. Any reputable vendor with good references is unlikely to be the cause of a security breach, but there is no substitute for an airtight contract.

Ensure Good Communication

The day-to-day matters, too, and logistics are a large consideration in choosing the right outsourcing partner. A talented team is of little use if your local management is unable to communicate with them. This is especially important when considering an offshore or nearshore solution.

The modern workplace is built on collaboration and communication, as evidenced by the vast selection of messaging and file-sharing software suites like Slack and G Suite. No software can truly overcome a language barrier, though. And the inconvenience of a team that is asleep during the home office’s business hours can quickly outweigh any benefits gained through their expertise.

Therefore, consider the reality of working with a nearshore team. Certifications, case studies, and other “paper qualifications” are important, but not as important as your unique situation.

For Israeli clients, as an example, Ukrainian outsourcing providers are often a great fit. The two nations share a time zone, several commonly spoken languages, and compatible business cultures. The process to bring a Ukrainian team into the fold is nearly as smooth as hiring local contractors, and the time saved is priceless.

Recap – How to Choose an Outsource Provider?

Outsourcing is a surefire way to boost productivity and efficiency, if done correctly. Invest time up front learning how to choose the right outsourcing partner, and you can ensure that the decision produces real, measurable results.

  1. Know your clear, specific goals going in. Why do you need to outsource?
  2. Choose an outsourcing partner that is well-established in their industry.
  3. But stay away from the true giants in the field, unless you are one yourself.
  4. Negotiate and carefully review the contract before signing, to avoid productivity-killing misunderstandings.
  5. Select a partner that is easy to work with on a day-to-day basis. Language and time zone matter!

Above all, treat the selection process with the care and respect it deserves. The outsourcing vendor you choose can mean the difference between a long and profitable business relationship, or just another source of delays and wasted work.