Concerned about choosing the best outsourcing partner?
An offshore partnership is getting enormous traction today, and for a good reason — it gives you access to global tech talent and helps optimize your development costs without compromising on quality. However, choosing the right outsourcing partner is associated with some crucial concerns.
- How can I be sure of the expertise of our potential outsourcing partner?
- Will the location of the company, language, and cultural differences affect the quality of project delivery?
- Are there any risks of hidden costs or data leaks?
- And what if our teams misunderstand each other or the outsourcing vendor fails to meet our expectations?
These concerns are fair since bad outsourcing partnerships often result in financial losses and serious delays. Poor customer service, hidden costs, insufficient technical expertise, and management gaps from the vendor side are among the main reasons why outsourcing projects fail. Still, you can avoid these issues when you follow a strategic approach to choosing your outsourcing partner.
We’re here to save you from reading tons of identical guides on how to choose the right outsourcing provider. Instead, we provide a set of actionable steps to help you make a winning choice.
On the spot
Choosing an outsourcing partner may feel like a tall task. Many possible hidden challenges come with outsourcing including miscommunication, quality control, and data privacy.
To make sure you avoid them, follow these steps:
Step 1: Figure out your requirements
Step 2: Start looking for companies with relevant experiences
Step 3: Research your prospective vendors' reputation
Step 4: Ask about their development approach
Step 5: Talk about communication and culture in the company
Step 6: Choose the best pricing model
Step 7: Make sure your data and intellectual property will be protected
Step 8: Design the fail-proof contract
To go into the details of each step of the process, read the article!
Potential Outsourcing Challenges
Before we jump into the step-by-step process of choosing an outsourcing partner and all the factors to consider doing it, let's briefly discuss what exactly we aim to avoid when we utilize outsourcing services.
Undoubtedly, there are many benefits of outsourcing such as cost savings, access to a larger talent pool, and focus on core business activities. However, it can also come with certain risks associated with outsourcing industries.
Communication Barriers: It's common to consider outsourcing partners worldwide when looking for the best fit. However, without robust communication practices, differences in time, language, and cultural nuances can lead to miscommunication, delays, and misunderstandings. These, in turn, will affect the development process.
Quality Control: Ensuring the outsourced team delivers high-quality work can also be challenging, particularly if they are located in a different country. Without a proper quality control mechanism in place, the final product may not meet the expected standards. Again, communication on both sides is vital for the product to correspond to all your requirements and help your business.
Data Security and Privacy: When you outsource software development, you entrust sensitive information to an external party. There is always a risk of data breaches, so you need to ensure that your outsourcing partner has robust security protocols in place.
Dependency on External Teams: If not managed well, dependency on an external team for critical aspects of your business can be risky. A successful outsourcing relationship aims to help your company, not to make it slower or more vulnerable. In the worst-case scenario, disruptions to the partner's business could affect your project timelines or deliverables.
Intellectual Property Rights: There's a risk of intellectual property theft when sharing project details with an external team. To mitigate this risk, you need to establish a clear outsourcing contract outlining the ownership and usage rights of the intellectual property when you hire a vendor.
Vendor Viability and Stability: Outsourcing partners may face financial, management, or other operational issues that could impact the delivery of their services. It's important to conduct due diligence before signing a contract when you're looking for a new partner.
With robust practices to mitigate these risks, outsourcing is a great way to support your in-house team or fulfill your business objectives fully. An experienced partner will always have them in place because it’s their reputation that they cherish.
So, with these companies, such things as setting up clear communication channels, governance mechanisms, and contractual agreements are not your worry. And thus, the above-mentioned challenges weave off the agenda.
Now, how to choose such an outsourcing partner?
Want to Find Your Perfect Outsourcing Match?
We are here to help!
8 Steps to Choose an Outsourcing Partner that Won’t Let You Down
Based on those outsourcing-related risks, we’ve created a step-by-step plan of action to help you best address your concerns. Whether you’re only beginning to research the market for your potential vendor or have already shortlisted the offshore IT companies that look like a good match for your project, these steps will guide you toward determining your ideal outsourcing partner.
Step 1: Before You Start Looking, Define Your Requirements
It’s important to understand that IT outsourcing is only as effective as the expectations you set. To choose the best IT outsourcing partner, you must clearly define your goals and requirements. This will help you narrow down your search with regard to the team’s tech stack and industry expertise.
Mind you, your requirements should address more than the project itself and the company's experience. While looking for an outsourcing partner, consider such factors as:
- Work culture;
- Legal conditions of your collaboration (does the law of their country influence your work);
- Engagement model;
- Subcontracting (do you accept it or not);
- and so on.
Think about all the details that can have an impact on the outsourcing project beyond just the product you want to develop.
For instance, SENLA is completely against any type of subcontracting and we make it clear in every outsourcing agreement we sign. Our goal is to establish long-term partnerships instead of just focusing on immediate gains. This strategy has resulted in an impressive 90+ percent of repeat business with us, which we value immensely.
Also, if you plan to go with staff augmentation services, assess your in-house staff's strengths and skills gap to focus on hiring the best outside IT resources that can perfectly complement your internal workforce. That way you can outsource the parts of the process you need.
Step 2: Start Looking Among Companies with Relevant Experience
When hiring an outsourcing vendor, track record plays a major role. Make sure that your outsourcing partner has experience in your industry and thus understands your market. This will ensure not only a hassle-free development process but also a high-quality solution and a perfect market fit.
Moreover, specialists with relevant experience can give you valuable advice and polish project requirements so that the solution best meets user needs.
It’s easy to find out — when doing your research, browse your prospective vendors’ websites for the industries they’re involved in.
Pay special attention to case studies as these can easily identify what provider best suits your project, their level of expertise, and the quality they deliver.
Typically, top outsourcing firms happily share the details about the projects they worked on. In SENLA, we have a dedicated section on the website where we constantly publish new case studies based on our projects.
You can also use B2B review platforms to find information about the industries served by the IT outsourcing firms you’re considering. LinkedIn, while not really thought of as the source for vendor recommendations, can be a valuable source as well.
Step 3: Research Your Prospective Vendors’ Reputation
Reputation is as important as experience. You don’t want to work with a partner who’s constantly missing deadlines and doesn’t answer your email for weeks, right? Even extensive domain experience won’t compensate for the risk of your solution being launched behind schedule.
Today, there are plenty of ways to research a vendor’s reputation online, such as forums and independent review platforms like Clutch or GoodFirms, where you can read detailed client testimonials.
However, you can go beyond that by contacting a potential partner’s previous clients and asking them about their outsourcing experiences. Without a doubt, this can go a long way toward helping you choose a trustworthy outsourcing partner.
Step 4. Ask Them About the Development Approach and Practices They Use
There are multiple software development methodologies that define the structure of the development process, significantly impacting the quality of your solution, communication between the teams, and project timeframe.
Due to the continuous feedback loop it offers, the Agile methodology is all the rage today, ensuring high quality, improved communication, and lower risks — a whopping 98% of companies that follow Agile said they were satisfied with their decision.
Of course, each methodology has its own benefits and drawbacks, so it would be wise to do some research on which one would be the best for you before interviewing your potential outsourcing partners.
Step 5. Talk to Your Potential Vendors About Communication and Culture
A prosperous outsourcing relationship is hardly possible without smooth and clear communication between teams. We can define three keys to successful communication:
For starters, make sure there’s no language barrier between you and the representatives of your offshore IT team. While it is common to communicate in English in a business environment, you and the outsourcing team can choose any other convenient language for exchanging information — the main thing is that you understand each other.
Of course, you don’t need to ask each team member to provide a certificate indicating their level of English. Talking with key stakeholders such as the project manager, team lead, and DevOps to check their language skills in real-time should suffice to make sure there are no barriers that may lead to serious misunderstandings.
We require at least an Upper- Intermediate level of English from all SENLA employees.
Communication Channels and Schedule
Next, talk to your shortlisted vendors about how you will keep in touch, including communication channels and frequency. It’s important to understand that effective outsourcing communication doesn’t happen naturally — it calls for a plan.
A trustworthy vendor will likely offer to hold a video conference every week or two and suggest allocating different channels for sending reports and daily communication. Also, a reliable tech outsourcing provider will mention a project management platform they use and offer you access to it so that you can monitor the project’s progress.
It could be a warning sign if your interviewee is unclear about communication and doesn’t say a word about any project management tools.
Different Time Zones
Another thing to consider when you seek an outside IT outsourcing company is the time zone they live and work in. If your business hours don’t overlap, make sure to ask them if they will be available for regular video conferences during their non-working hours.
SENLA designed its own approach to communication to make sure it's impeccable. Find out more about our communication principles in this article.
Step 6: Focus on the Best Pricing Model
You likely have a more or less certain sum, allocated for your project needs. If you are new to outsourcing, do research on the pricing models before browsing for IT services. Outsourcing gives you an opportunity to find a partner that follows a suitable one to help you meet your budget.
Still, the choice of a pricing model is a bit more complicated than it looks. For example, a fixed-price model (where you pay a fixed amount for the completion of the project) may seem fairly straightforward; however, it calls for well-defined requirements because, in case of a misunderstanding, reworking the solution could cost you way more. The same can be said about other models — they all have their pros and cons depending on your specific needs.
So, make sure you think of all the costs associated with your project.
For example, SENLA contracts cover things like software licensing costs, taxes, stamp duties, and anything else that's important. We also encourage our Clients to tell us about any fixed and variable prices, including any re-negotiation of charges within a certain time frame.
You’ll know for sure if your potential outsourcing partner’s pricing model suits your needs only after you talk it through with them. And they will be able to define which model best matches your requirements only after you provide details about your project. This is where effective collaboration starts.
Otherwise, if the vendor encourages you to choose any model without looking into your project specifications, it would be better to move on to your next candidate.
Step 7: Make Sure Your Data and Intellectual Property Will Be Protected
Data security is one of the most serious concerns in today’s business environment. When deciding to partner with an offshore IT company, you must remember that they will have access to your customers' and sensitive business information. Thus, ensure that this data is entirely safe.
For this, don’t shy away from asking your prospective vendor about their data management policy. It’s also important that the company uses the latest security technology to prevent data breaches. Make sure the outsourcing partner is willing to sign a non-disclosure agreement (NDAs) — this will help you protect the confidential data that you’ll share with your contractors.
Step 8: Request a Proposal and Review the Outsourcing Contract
Before you embark on your outsourcing journey, it's essential to document every detail, even the smallest ones, to prevent ambiguity or unanticipated issues. A successful and resilient outsourcing partnership hinges on a contract that's crystal clear to both parties.
For your outsourcing contract, consider these crucial categories of clauses:
- Project Details and Management: These clauses outline the scope of the project, define service-level agreements, and detail governance and performance monitoring procedures.
- Financials: This category encompasses clauses for the transfer of assets and the structure of payment to ensure all monetary aspects are covered.
- Legal Rights and Obligations: Here, you'd stipulate warranties, liabilities, product ownership, intellectual property rights, indemnification, and any provisions related to subcontracting.
- Data and Security: For maintaining the integrity and safety of your data, include clauses that govern data protection and ensure GDPR and PCI DSS compliance.
- Dispute and Termination: To manage potential disagreements and contract termination, include dispute resolution and exit strategy clauses.
- Business Continuity: Clauses in this category assure continued service and document hierarchy in the face of unexpected events.
- Contractual Duration: This clause defines the length of the contract.
We recommend going with a contract tailored specifically to your project and business goals rather than a standard agreement. That is precisely how we approach the development of outsourcing contracts at SENLA. When somebody wants to hire us, we conduct multiple conversations to fully understand the specific requirements of our Clients. It is only when both parties confirm that they have clearly understood and agreed upon each other's intentions and terms that we proceed to sign an outsourcing agreement.
All these elements work together to form an outsourcing contract that promises quality collaboration and the best possible outcome. The more comprehensive your contract, the stronger and more efficient your partnership will be.
Work with the Best Outsourcing Company
No one likes taking shots in the dark, and this is especially true when you’re choosing your ideal IT outsourcing partner. Following the steps we’ve outlined here will help you narrow down your list to the companies with relevant experience, excellent reputations, effective approaches to development and communication, and robust data protection policies.
When looking for the best outsourcing provider for your project, get in touch with SENLA. We’ll gladly demonstrate our proven approach to ensuring the quality of outsourced projects and meeting your core business needs. Fill in the form below —let’s talk!