In today’s dynamic business market, outsourcing software development is a great way to adapt to constant changes without lengthy recruitment hassles and extra costs while fulfilling operational needs and growing as a company. The key to success with outsourcing, though, is finding the ideal outsourcing provider to act as a partner.
The ever-growing number of outsourcing providers creates a highly competitive environment that makes it more difficult for companies to choose the right vendor for their needs. To simplify this process, business decision-makers should follow these steps and consider some helpful software development outsourcing tips before starting to search for the right outsourcing team.
Key Factors to Consider When Outsourcing Software Development
Before choosing a software outsourcing company to work with, businesses need to take some important steps to ensure success. In addition to comparing vendors, companies should define their own requirements for software development projects, conduct necessary research, and determine which points of evaluation are the most important to their own situation.
Following these steps in the outsourcing provider search helps better guarantee that companies find the right match with a vendor that not only understands their business needs but also offers high-quality services at affordable prices.
#1 Check Technical Expertise
There’s no substitute for experience, which means that technical knowledge is absolutely crucial for the success of any kind of outsourcing arrangement. After all, a software development outsourcing company is truly only as good as the talent of their team.
This is why it’s so important for companies to assess a vendor’s technical expertise extensively. Software development companies should already prepare for these kinds of requests from potential clients and have the ability to provide them with portfolio work, client testimonials, and the ability to speak with previous clients if so requested. Hiring companies should also assess the outsourcing company’s hiring and vetting practices. Providers with more demanding and intense vetting processes likely have a higher-quality talent pool.
Good software outsourcing companies typically have experience in a wide variety of technologies. While some providers specialize in only certain ones by choice, those with smaller technology stacks are sometimes less experienced and may not have the ability to adapt to the needs of their clients.
To further assess an outsourcing provider’s technical expertise, companies should inquire about any existing accreditation, case studies, and business continuity plans. Understanding how a vendor handles quality control, project management, problem solving, and so on is a great way for hiring companies to determine if the prospective software development team is the right fit for the job.
#2 Prioritize Communication and Collaboration
One of the biggest tips for companies looking for an outsourcing partner is to prioritize communication and collaboration. A good outsourcing software development company understands the client’s needs and communicates with their own teams as well as business leaders to make sure everyone remains on the same page.
Collaborative outsourcing providers keep their clients’ best interests in mind and make a point of proactively reaching out with ideas on how to implement initiatives or fixes for project improvement while trying to reduce or remain respectful of costs.
Effective communication doesn’t always naturally occur between in-house and outsourced teams so companies should work with the outsourcing provider to create a strategic communication plan. By establishing expectations and developing frameworks, employees on both teams gain clear insight and control over the software development project.
Business leaders and outsourced team managers should instead figure out the best communication channels that work for both parties and enforce those as company policy for regular communication.
#3 Find a Partner That Fits Culturally
A good cultural fit between companies and their outsourcing software development team involves sharing values, understanding motivations, and anticipating challenges under a united mission and vision. The best cultural fit with an outsourcing provider means that the outsourced team is as invested in the hiring company’s success as they are themselves, thus working as a true extension of the in-house team.
However, working with outsourcing software development companies often means working with international teams from around the world. Businesses will inevitably face cultural differences when working with these teams in various ways but should strive to understand and work with these differences.
The best way to assess the cultural fit of a vendor is by simply asking questions to better understand how the outsourced team works and establishing clear expectations across the board. While this isn’t exactly a foolproof method, companies and outsourcing providers must work together to avoid communication barriers. Hiring companies should also strive to not work with teams so far outside of their working hours that they never have the ability to communicate in real time as well.
To access the full range of benefits that come from software development outsourcing, companies need to also adapt to different work cultures. Doing so requires keeping an open mind, setting regular meetings, and defining new metrics for communication, for instance. Different work cultures bring new experiences and perspectives into the mix while helping companies solve problems by thinking in different ways.
#4 Source Project Managment Experts
Oftentimes, outsourced software development teams come with their own project managers that help oversee the entire development process while acting as the point of contact between the team and their clients. Good project managers possess the right mix of experience and work ethic. Their in-depth knowledge of equipment, teams, and processes along with their core competencies or specialized areas allow them to successfully guide teams, thus ensuring on-time completion of projects and effective cost management.
Because project managers act as the bridge between the client and the outsourced talent, they should have excellent communication skills, especially when it comes to communicating technical issues to non-technical business leaders. Assessing the project management capabilities of a vendor is as easy as setting up an interview with them and inquiring about their past experience, methodologies, and understanding how they solve problems.
The best software development outsourcing partners also have access to the best project management tools to ensure improved team collaboration, efficient task delegation, and process standardization. Some of the most popular tools for software projects today include Asana, Notion, and Clickup.
#5 Clear Pricing and Contract Terms
One of the most important tips for a successful software development outsourcing partnership is for hiring companies to take the time to understand the vendors’ pricing and contract terms before making a decision. There are a wide variety of pricing models in outsourcing that work well with different types of projects and requirements. The most common options include:
- Fixed Price – The outsourcing provider and the client agree on a fixed price for the entire service.
- Time and Materials – The client pays the hourly rate of the outsourced developers and any materials they may use.
- Target Cost – The outsourcing provider and client agree on an expected value for the service. If the final cost is actually lower than the projected one, both parties split the savings. However, if the cost exceeds the expected value, then both parties cover the extra payment.
Good outsourcing providers typically offer various types of pricing and contract terms to fit the needs of their different clients. Another aspect of pricing to consider when choosing the perfect vendor is the transparency into their pricing.
In advance, the client should know how much they’ll need to pay, the distributions of costs, and what to expect in case of an increased workload or change of project requirements. Choosing an outsourcing partner that’s not up-front about these issues might result in unexpected or hidden costs.
It’s also important for companies to aim for a good price-to-quality ratio. While one of the main goals of outsourcing is cost reduction, going for the cheapest vendor could result in a low-quality end product and sometimes costs more in the long-run. Communication is absolutely vital at this stage as companies need to communicate their budgets and inquire about their unique pricing needs while outsourcing partners must explain how they price things and what to expect.
Understanding Software Development Outsourcing Models
Now, let’s take a closer look at the software outsourcing services available.
IT Staff Augmentation
IT staff augmentation is an outsourcing model that allows companies to fill temporary technical gaps in their teams. The outsourced talent briefly joins the in-house team to handle specific tasks in development, adapting to the client’s work culture and methodologies to streamline the relationship.
The client maintains full control over the project and the outsourced developers act as if they’re a part of the in-house team. The client also has the flexibility to increase or reduce the number of augmented team members needed, depending on the project’s scaling requirements.
IT staff augmentation helps companies fill the gaps in their workforce while only paying for what they need at the time. This model saves companies time in recruiting and still gives them full control over their staff.
Companies should choose IT staff augmentation services when they need to reinforce their in-house team, bridge any skills gaps, quickly expand a team, or meet tight deadlines.
Dedicated Teams
The dedicated teams outsourcing model involves companies hiring an entire team of software developers and other professionals solely dedicated to completing the hiring company’s project. Upon receiving the client’s requirements, the outsourcing vendor puts together a highly-skilled team that best fits the project.
This outsourcing model often translates into predictable and defined budgets, which means significant cost savings for the client. The client also has full managerial control over the outsourced team and the ability to quickly scale team sizes up or down depending on the project’s changing requirements. The outsourcing provider also handles any administrative issues or costs.
Companies with little to no technical expertise or experience when it comes to managing IT projects greatly benefit from working with outsourced dedicated development teams. The teams often have an outsourced project manager even to act as the responsible party for the overseeing of every step of development and guaranteeing that everything goes as planned. Apart from this, a dedicated team approach to outsourcing works best for companies with long-term projects without the time or means to put together an entire in-house dev team.
Outsourced Development Services
Also known as project-based or end-to-end development models, fully outsourced development services entail leaving all of the work required in the hands of the outsourcing provider. Once the client delivers the project requirements, the outsourced vendor handles every development stage from conceptualization to implementation and post-launch support.
There aren’t any third parties involved in this outsourcing model, which guarantees productivity, increased efficiency, and great savings for the hiring company when it comes to time and money. Allowing a single dev team to take care of an entire project in this method also helps avoid organizational and communication issues. This ultimately reflects in higher-quality products and a reduced time to market that gives companies a competitive edge. This outsourcing model is more affordable than putting together an in-house dev team entirely.
Evaluating Outsource Software Development Vendors
Request for Proposal (RFP)
Once a company finds a suitable outsourcing provider, with a good vendor profile and past work experience, they can submit a Request for Proposal (RFP). An RFP is a business document that outlines the requirements of a project and invites the outsourcing provider to offer relevant solutions.
An RFP is a way for clients to request a price and time frame for a project. They want to know how much the vendor will charge, when they’re able to finish the project, and if they have the right experience and qualifications to do it.
The RFP serves as an outline for potential outsourcing providers to review. It should include key elements such as a company introduction, background information on the project, the project’s goals and required services, a deadline, and an estimated budget range for the project.
The RFP response is another formal document in which outsourcing providers state how they can help the client reach their project goals through their provided services. It is a great way to show they understand the client’s needs and that they’re the right vendor to fulfill them.
A good RFP response addresses the key issues, values, and goals of the client and should include a cover letter, an executive summary, the response to the main proposal request, pricing, and any other content that might support the proposal (charts, marketing material, or case studies, for example).
Conducting Interviews
To find a software development outsourcing partner equipped with the talent, attitude, and dedication a business leader wants on their team, they need to interview them the same way they would any new potential employee.
Only by conducting interviews can the company determine if the outsourcing provider shares the same work ethic and corporate values and whether they’re truly honest and transparent. Business leaders should take some time to prepare for the interview before making an appointment with the outsourcing vendor. They should then ask questions about the vendor’s background, the ability to meet clients’ needs, their stability, and their recruitment processes.
Conducting interviews is another way to understand whether there might be any language or communication barriers between the company and the outsourcing provider. Asking direct questions is the best way to determine whether a vendor is the right fit for a project.
Reference Checks
It’s one thing to assess technical expertise, but it’s another to conduct reference checks. Even the most experienced outsourcing provider might not be the right fit for a project if they constantly miss deadlines and don’t put their client’s best interests first.
Nowadays, it’s easy to check the market reputation of any outsourcing provider online. Business leaders can look for testimonials on the vendor’s website or even go through platforms like Clutch and GoodFirms to read past clients’ reviews. They may also directly contact previous clients regarding their experience with a particular outsourcing provider. This way, they can get an honest review and determine if the vendor is trustworthy.
Conclusion
By doing your necessary due diligence and taking the time to not only understand the different types of outsourcing but also the needs of their specific teams, companies save themselves time, money, and headaches in the long-run. Keeping these helpful tips in mind helps companies stay on track with their outsourcing goals by creating successful relationships.
If you enjoyed this article, be sure to check out some more outsourcing articles.
- Why Outsourcing Is Perfect for Periods of Economic Uncertainty
- Top 7 Industries That Benefit from Software Outsourcing
- Understanding and Selecting the Best Software Outsourcing Payment Model
- Streamlining Communication for Successful Software Outsourcing Projects
FAQs
What are the key factors when selecting an outsourced software development company?
The key factors when selecting an outsourced software development company include technical expertise, communication and collaboration, cultural fit, project management, and pricing and contract terms.
Assessing a company’s technical expertise by looking at portfolios, reviews, and testimonials allows companies to determine whether a vendor has the right skills and experience to handle a project at hand.
Communication, collaboration, and cultural fit are also very important factors. They determine whether the outsourcing provider truly understands the needs of the client and if they can help them reach their project goals with transparency and efficiency. Good project management is crucial, acting as a bridge between non-technical business leaders and tech talent.
How can I evaluate the technical expertise of a software outsourcing vendor?
To evaluate the technical expertise of a software outsourcing vendor, business leaders should look for vendors with a proven track record, rich portfolios, and glowing reviews and testimonials.
Outsourcing providers with expert teams have rigorous vetting and hiring processes, ensuring clients have access to the most talented, global developers. They also cover a wide range of technological stacks.
To further evaluate the technical expertise of an outsourcing provider, clients can ask for case studies, look for reviews on third-party websites, and even directly contact previous clients for more honest opinions.
What are the benefits of choosing a dedicated team model for software outsourcing?
The benefits of choosing a dedicated team model for software outsourcing include having a predictable and defined budget, saving time and money, and having increased control over the entire team without having to deal with any administrative issues. This model is highly scalable and flexible and helps companies reduce their time to market by having a team solely focused on the project’s requirements.
