When it comes to software development outsourcing, there are numerous factors that you need to consider before making the decision of whether to outsource or not – including technical expertise, relevant experience, and cost. This is particularly important when developing software applications that require highly specialized knowledge and strong technical skills (e.g. enterprise software), along with other key prerequisites.
While outsourcing offers several advantages—such as lower costs, access to world-class IT professionals, and technical expertise—there’s more to evaluate. The nature of software outsourcing means you’re often obtaining the services or products provided by vendors in different countries, making in-person meetings difficult.
With so many factors at play and a wide range of outsourcing providers to choose from, how can you determine what’s best for your company? How do you identify a reliable partner? To help guide your decision, take a look at the following list of key factors for evaluation.
#1 Technical Expertise
The first priority on your list should be knowledge and experience. You need a software outsourcing provider with the right skills, expertise, and knowledge to meet your goals and successfully complete your project. While this isn’t the only factor to consider, it’s one of the most critical when considering software outsourcing services.
Skills, Technologies, and Tools Stacks
A key part of the software development process involves using a variety of programming languages, tools, and techniques. Different languages are suited to different tasks, so it’s essential that you understand the specific tools and technologies your vendors will need to use.
For example, machine learning engineers should be proficient in languages like Python and R, while iOS developers need expertise in Swift and Objective-C. Similarly, JavaScript is essential for web app development and requires a specific skill set. Most development teams are familiar with multiple programming languages because they often work on diverse projects. In addition, there are many useful tools that allow developers to expand their capabilities across various areas of software development.
To assess your outsourcing partner’s skills, you can conduct tests and interviews. Professional software development outsourcing providers like Trustify Technology can assist you in evaluating potential partners. For instance, we conduct thousands of interviews each year to identify top software talents in Vietnam and streamline the hiring process, ensuring you connect with the best candidates.
Experience in Similar Projects
Not only outsourcing service providers should possess the required technical skills but also have experience working on projects in your specific industry or field. This is because if they’ve been involved in similar projects, they understand the complexity of the work, potential challenges, and the essential features the product needs.
To evaluate potential partners, review their portfolios, previous case studies, and testimonials from past clients. Additionally, you may ask them to describe the types of projects they’ve worked on, the challenges they encountered, and how they successfully addressed those issues.
Methods of Development
Software development vendors often specialize in a certain particular software development methodology, such as Agile or others like Waterfall, V&V models. It’s important that the strategies of your outsourcing partner align with yours. Ask about their best practices and how flexible they are. For example, if your preferred development methods differ from theirs, can they adapt to your needs? Are they open to working with you in the way you prefer?
#2 Compliance & Data Protection
What privacy practices and policies does your software outsourcing provider implement to protect your data? Here’s what to consider:
Data Security Practices
What cybersecurity protocols and measures does the software outsourcing vendor use to ensure your data protection? To gain a better understanding, request detailed information of their methods. This should include any relevant certifications, as well as the best practices and security standards they adhere to.
Legal and Regulatory Compliance
Digital services and technologies are subject to various laws and regulations, which differ by region or country. When selecting a vendor, it’s crucial to consider their location and expertise in legal compliance.
For example, if your business operates in the EU region, you must adhere to the General Data Protection Regulation (GDPR). As part of your vendor evaluation process, assess their ability to comply with the necessary laws, regulations, and industry standards in your operating environment and technology landscape. It’s also advisable to consult with your legal or compliance team to ensure you are aware of the regulations you need to follow.
#2 Cultural Compatibility
Another key factor to consider is cultural compatibility. Shared languages and work styles can greatly help in achieving your goals. Here’s what to focus on:
English & Communication Skills
Effective communication is the foundation of successful collaboration, especially in software development outsourcing, which can be complex. Clear and consistent communication helps overcome challenges and keeps you informed throughout the project.
When outsourcing, you may be working with teams located in different parts of the world. Language barriers can pose a problem, so it’s important to ensure that the team you’re working with can communicate well in your language. This will help minimize communication issues that could negatively affect your project. Take the time to speak with the team or sales representatives to evaluate their communication abilities.
Also, ask about the communication channels they use (e.g. Slack, MS-Team, Google Meet, etc.) and confirm that they meet your expectations.
Time Zone Differences
Time zone differences can introduce challenges in project management.
If you’re operating in completely different time zones, it’s important to establish in advance how you will handle communication and address urgent issues. You should also define what qualifies as an emergency to ensure clarity.
Culture Fit
Cultural flexibility is essential for meeting business needs and adapting to the specific context of the project. This can be particularly challenging when outsourcing to a team in a different part of the world.
To minimize the impact of cultural differences, address these concerns early on. It’s a good idea to have a video or phone call with potential vendors to understand how they conduct business. Discuss any cultural differences and how you can collaborate effectively to overcome them.
#4 Pricing and Contract Terms
Overall, software outsourcing is an excellent way to reduce labor costs, especially when compared to hiring full-time employees. When selecting a vendor, cost is an important factor. Many software vendors offer flexible or standard pricing structures.
However, price shouldn’t be the only consideration. While lower costs can benefit your development projects, it’s essential to balance cost with quality. Remember to set a clear budget for your project, but also carefully evaluate what you’re paying for to ensure value.
Pricing Models
There are several pricing models commonly used for software outsourcing. Here, we will explain some of the most common ones:
Fixed Price:
This model involves a predetermined cost for the entire project. Regardless of the time your outsourcing team spent or resources they used, the price remains fixed. This model is best suited for projects with well-defined requirements and no expected changes during development.
Time & Material:
In this model, you pay for the actual time and resources used during the project. Payments are based on the hours worked and the materials or expertise consumed. This approach is more flexible and is ideal when your project requirements may change or evolve over time.
Revenue Sharing Model:
Common among startups and small businesses, this model involves the outsourcing partner receiving a percentage of the revenue generated by the product or service they helped develop. This model is often chosen when there’s a shared risk or reward.
Outcome-Based Model:
This is often a more expensive option but can be effective in certain situations. In this model, all parties agree on specific outcomes and goals in advance. Payment is made only when the vendor successfully delivers the project and meets the agreed-upon objectives.
As a business leader, you should carefully evaluate which model best fits your company’s needs by considering the advantages and disadvantages of each.
Software Outsourcing Contract
The contract must be in writing, with clear terms that are mutually agreed upon. This often requires negotiations between the customer company and the outsourcing provider.
In addition to pricing, a contract should cover several important aspects, such as:
- Intellectual property rights
- Confidentiality agreements
- Conflict resolution strategies
- Existing NDAs (Non-Disclosure Agreements)
- Service Level Agreements (SLAs) or Outsourcing Agreements
It’s crucial to ensure that the contract addresses the specific needs and requirements of your business, which can vary from one organization or client to another.
How To Find A Reliable Software Outsourcing Partner?
Now let’s take a look at how to evaluate and choose the right software development company for your project.
1. Identify your project goals.
The first step in outsourcing a software development project is to clearly define your goals and objectives. Determine the key components of the product and outline the specific tasks that need to be completed. Be sure to describe the desired outcomes in detail.
2. Identify the tech stacks required for the projects.
Once you have defined your goals, identify the skills and expertise needed to achieve them. What technical knowledge and abilities are essential for completing the project? Make a list of the core competencies required.
3. Create a budget.
Keeping your project goals in mind, establish a budget. It’s important to understand the market and its constraints so that you can accurately estimate the cost of your project.
When setting your budget, remember that the lowest-cost vendor isn’t always the best option. Balance quality expectations with cost to avoid risks that could lead to undesirable outcomes.
4. Choose the right engagement model.
There are various engagement models to consider when selecting a vendor. At Trustify Technology, we offer:
- IT staff augmentation
- Dedicated teams
- Full software development outsourcing
Each model has its advantages. For instance, IT staff augmentation involves hiring specialized expertise to work closely with your team, while full outsourcing allows the vendor to work remotely with minimal involvement from your internal staff. Choose the model that best suits your organization and project needs.
5. Shortlist potential outsourcing partners.
Like any business partnership, choosing the right software vendor requires thorough research. Beyond reviewing the vendor’s website, check their reputation by reading client reviews on platforms like Clutch, and evaluate their past projects.
Ensure the vendor uses the same technologies and processes that align with your strategies and standards. Effective communication is as important as technical knowledge for a successful partnership.
6. Verify and Interview Vendors
When evaluating potential vendors, carefully vet them. Read their reviews, examine their portfolio, and ask detailed questions to assess their skills and expertise.
You may need to go through this process with several vendors before selecting the one that’s the best fit for your project and organization.
7. Plan and execute your project.
Once you’ve chosen your vendor, collaborate on a detailed project plan. This plan should address key issues such as monitoring, compliance, and security measures. It’s important to define key roles and responsibilities, from the project manager to developers and QA testers, ensuring everyone is aligned before execution begins.
Software outsourcing offers many advantages, including access to specialized skills, increased productivity, and improved efficiency. However, to fully realize these benefits, it’s crucial that you conduct thorough research before choosing an outsourcing partner. If you need any assistance, feel free to contact our team today.