The modern competitive business environment makes companies act fast so that they can get ahead of the game. It’s the time for quick decisions and the most efficient solutions. This need has significantly driven the popularity of software development outsourcing which turns out to be an opportunity for businesses to cut costs, boost productivity, and get a project completed timely and well.
Outsourcing certain development features is particularly beneficial for startups and small-to-medium businesses lacking internal expertise – they can get access to the required resources and skill set and therefore scale quicker. There’s no need to spend time and money on hiring and onboarding new employees – outsourcing talents allows for an immediate start.
According to the source, 70% of companies consider outsourcing cost-effective, as it reduces the costs of hiring in-house staff.
The IT industry seems to lead in outsourcing, with 37% of its operations being outsourced, and an average allocation of 13.6% of the IT department budget going towards outsourcing.
Due to the meaningful impact of outsourcing, the decision must be made with sufficient responsibility.
Shifting to an outsourcing model might be a win-win option for a business. This path, however, is not all straight and smooth. There are multiple considerations that must be contemplated thoroughly.
First issues might come up when choosing an IT vendor. The market is growing increasingly and so is the number of vendors. Sorting them out to find the one to match your expectations is challenging. You will have to navigate through tons of reassuring slogans and pretty pictures to find a company you will trust. As a project’s success relies heavily on the effective partnership, it must never be a matter of guessing or impulsive decisions – rather deep investigation and thorough consideration. This choice can change a business direction – either for better or for worse.
Surfing through available options and choosing the best outsourcing team takes time. It also takes weighing some critical factors in order to eliminate risks and eventually get the best result possible.
Following these tips will make the process structured and increase the chances of a positive outcome.
Understand your needs
First and foremost, define your requirements and constraints as well as set clear and realistic goals. Focus precisely on the aspects you’re going to outsource. Assess the scope of work and set criteria in terms of expertise level, budget, and timeline.
Formulating precise expectations will significantly streamline the process of vendor selection. What you should understand right from the start is that no one knows your business better than you. Even the most experienced IT vendor can fail to achieve the desired results if you cannot communicate your demands accurately but provide vague requirements only. Do not expect external specialists to have a vision similar to yours – be extra specific about what you’re looking for.
Research potential partners
Having all the essential project information summarized, you can move on to the next stage – the assessment of candidates. Get started with outsourcing destinations evaluation. Define the model of IT outsourcing that aligns with your company’s needs best. Pick up one of the following options:
- Onshore means an outsourcing team and a client are in the same country or region.
- Offshore outsourcing involves partnering with a team from another country in a different time zone.
- Nearshore refers to outsourcing development functions to a team from a neighboring country.
Whatever outsourcing model you prefer, the biggest advantage is the ability to tap into a global talent pool and access advanced expertise. This, however, comes with certain difficulties associated with long distances, different time zones, and cultural diversity. It’s important to set up working processes accordingly to avoid problematic situations.
Now you’re ready to kick off the research. You might have this question in mind: “Where to look for an outsourcing team?”. There are a few good places you can go:
- Online research. The first and the simplest thing to do is just to google using the keywords relevant to your industry or specific services.
- Networking. Reach out to professional communities in your industry and leverage the power of networking by attending conferences where you can connect with potential partners.
- Take recommendations. There must be people in your professional circle who have already outsourced development services. Ask about their experience and inquire about personal referrals.
- Go to business services marketplaces. Clutch is a leading platform with an extensive database of outsourcing companies.
- Utilize freelance platforms. Platforms like Upwork allow businesses to reach out to software development experts from all over the world. Ratings and reviews from previous clients are provided.
Next, gather information on potential partners and review portfolios and client testimonials – it’s just the beginning of your research. Making a decision that is based only on promising words is too risky, you have to dive much deeper into the investigation.
Check technical proficiency and expertise
After the initial research is done, you need to shortlist several potential partners and evaluate them according to the most vital criteria. Deep expertise in the required area is on the list of top aspects to assess first. The list also includes the following:
- Skill sets
- Access to the necessary technology and resources
- Experience with similar projects
Make a choice in favor of a vendor with profound domain knowledge and hands-on experience to get valuable insights and industry-specific skills. Besides, study the methods that vendors apply and the processes they follow and pay attention to their problem-solving procedures. This will give you a vision of how your project will be handled.
Ensure robust data security
Concerns related to data privacy and security are reasonable as an external vendor gets access to sensitive business information. Without proper protection, the risk of data leakage is rising. Before establishing a partnership, inquire about security protocols, data protection measures, and adherence to industry standards. It is also advisable to sign a nondisclosure agreement to ensure maximum confidentiality.
Cultural fit
Cultural compatibility is often underestimated though it can play a pivotal role in a successful project completion. Choosing an IT vendor doesn’t narrow down to technical expertise only. Finding people who have the same mindset as yours, grasp your values and objectives, and understand your business processes is equally important. Make sure an outsourcing team has the same vision of work ethics and corporate culture as you. This is a prerequisite for smooth integration and fruitful collaboration.
Communication
Transparent and continuous communication is a must-have. You have to establish strong contact with the vendor right from the start. For this, pick up communication channels convenient for both parties and set up regular communication protocols. Initiate video conferencing, regular updates, and progress reports to make sure you will be informed about every issue and risk throughout the project. It’s vital to stay in touch with a vendor permanently to respond to every inquiry quickly.
Different time zones and language barriers can be bottlenecks. These are not stop factors but they should be discussed at the very beginning. Even though English is the most popular language for business communication, you are free to choose any other language that is good for you and your partner.
Working hours must also be managed initially. It just takes to select a convenient time for video conferencing and stick to the schedule.
Scalability
You expect your business to grow so requirements will change over time as well. Your outsourcing team must be capable of scaling its services accordingly and meeting those evolving demands. Evaluate the possibility of future growth to see whether the vendor is flexible enough to adapt to your changes. Prefer a long-term partnership based on trust instead of one-time transactions. Enduring and effective collaboration will contribute greatly to your overall success.
Prefer Agile methodology
In the highly dynamic business environment requirements are changing in the blink of an eye. Adjusting to them fast is quite a challenge. The best thing to do is to apply Agile methodology to achieve enhanced collaboration, get high-quality results delivered timely, and minimize risks. According to recent statistics, 98% of companies that utilize Agile methodology have achieved bigger success.
This approach, however, is not a one-size-fits-all solution. Similar to any other type, Agile methodology comes with specific advantages and drawbacks. Conduct comprehensive research to figure out if agile practices are suitable for your particular case.
QA and Service Level Agreements (SLAs)
The services that you outsource directly impact your business reputation, customer engagement, loyalty, and revenue. That is why, this aspect requires close attention. Study the quality control measures that an outsourcing company has as well as Service Level Agreements (SLAs) which establish specific metrics, standards, and responsibilities to ensure that the service meets client expectations. SLAs make a solid foundation for building trust between service providers and customers and give a framework for continuous improvement and alignment with business objectives.
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Risks of choosing the wrong vendor
Any successful outsourcing project starts with selecting the right vendor. It’s not an exaggeration to say that this decision shapes your future journey. This is the most crucial yet complex task.
Going wrong with an outsourcing partner might have a detrimental effect on the project’s outcome.
There are multiple reasons why an outsourcing team might not be good for you. There can be cultural differences, communication issues, lack of essential technical expertise or domain experience, absence of the required resources, poor reviews, etc.
Partnering with the wrong outsourcing team can entail several risks, including:
- Unfulfilled project vision
- Low-quality product
- Security risks, including data breaches, leaks of confidential information, or intellectual property theft
- Legal and compliance risks
- Bad reflection on your business’s reputation
- Going out of business in the middle of development
If a development team for some reason isn’t capable of completing your project as per your requirements, there might be no other way out for you but to switch vendors in the middle of the process. The transition can be complex, costly, and time-consuming, disrupting your operations so it’s better to take proper actions ahead and avoid such issues. Risk mitigation is possible through due diligence, careful vendor selection, clear communication, and well-defined contracts.
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Endnotes
Outsourcing is a cost-effective way to get expert help, achieve objectives, and scale businesses fast. It takes many restrictions away and connects tech specialists from all over the world. The advantages are too meaningful to ignore them. But so are the challenges.
Finding a perfect outsourcing team is the biggest challenge that companies face right at the beginning. The wrong decision can cost you a lot and escalate into bigger problems.
Approach the selection process responsibly. Know exactly what you’re looking for and base your decision on the vital criteria.
With a seasoned and dedicated partner, you will set your project for long-term success.
At Pecode, we provide outsourcing services and focus on superior quality, well-structured processes, and effective communication. A strong skill set and extensive experience in software development allow us to deliver top-notch products that match customer requirements and user needs perfectly.
We come up with smart solutions to make ingenious ideas work!
Are you seeking a trusted partner? Then contact us right now and let’s start the cooperation.
