Most companies nowadays use the service known as IT outsourcing to some extent. The partial or complete transfer of control over the software development process or the IT infrastructure of an organization to a third-party contractor is a popular practice for various businesses across many industries.
Turning to IT outsourcing, you can increase team efficiency, reduce project costs and bring your product to market faster. But, it is important to choose the right software development company in order to get the desired result and not be disappointed with the outsourcing model.
How to find the right contractor so that you feel comfortable working together? Read on to learn the strategy.
What to Know About Outsourcing Software Development
In 2021, the global software development market size was valued at $429.59 billion, and it is expected to grow at a CAGR of 11.7% from 2022 to 2030. The number of software developers worldwide is close to 27 million. At the same time, in its recent report, Statista estimated the global market size of IT outsourced services at $92.5 billion. Comparing these figures, we can confidently say that outsourcing is a highly popular practice in the software development industry.
The decision to outsource the IT aspects of a business is generally based on several practical considerations:
- You need a large pool of talent to choose from and quickly find specialists with relevant skills and experience for developing your software solution or supporting your digital infrastructure.
- You want your in-house team to focus on the company’s core competence and not to be distracted by software development tasks.
- You want to reduce project development time and enter the market with a successful software product.
- You want to avoid risks and expenses related to in-house software development.
From startups to growing businesses or large corporations, outsourcing can be useful for any company that needs to optimize IT processes.
To understand the essence of software development outsourcing, you should be aware of its main terms and models.
- Depending on the geographical location of a hired team, they distinguish onshore, nearshore and offshore software development.
- Regarding the type of development team, you can select a dedicated team, staff augmentation or full-process outsourcing.
- Concerning the pricing, you have three options: time and materials (T&M), fixed price, and dedicated team fee.
It should be noted that a fairly large proportion of IT outsourcing market participants are not sufficiently qualified and offer low-quality services. Therefore, you should seriously consider the choice of a software development firm.
Where to Look for a Software Development Partner?
There are four main sources of information you can use when searching for a custom software development company.
- Google search. The most obvious method is to use Google to search for outsourcing companies that provide information technology services you need. For example, if you want to create a solution based on Java, you should enter the top Java development companies search query. Or, if you work in the Internet of Things industry and need mobile app development, try the IoT development company query. On the first page of the search results, Google will show you companies that provide related services, have optimized websites, social media pages, references from other companies, agencies and clients.
- Ratings and reviews. There are multiple rankings of outsourcing development companies compiled by authoritative agencies such as DesignRush, Clutch, GoodFirms, TechReviewer, etc. Looking through them, you’ll be able to distinguish the top players in your niche and will have candidates for further research. You can also look for reviews on custom software developers on popular websites such as Medium or Reddit.
- LinkedIn. Being the global leading professional network, LinkedIn is a valuable resource for those who are in search of reliable software development partners. You can use filters to sort out companies by region, field, and size, which simplifies the search. The company’s page on LinkedIn contains the information on services they provide. Moreover, looking through the content they publish on the page, you can get insight into the company’s corporate culture and the experience of developers, so it can be easier to make up your mind.
- Recommendations. Finally, you can talk to your clients or colleagues from other companies who, as you know, turned to outsourcing providers for help, and ask for recommendations. Frequently, word of mouth comes out as the most trusted information source.
How to Pick the Right Partner?
For many companies, it may be a challenging decision to outsource some of their tasks, but you need to remember that delegation actively stimulates business growth. This is a boon for a company in a fast-moving market.
To take full advantage of outsourcing and find the right partner, it is important not to rush into a decision. Each outsourcing software development company should be considered from different angles before you make up your mind. It is also worth remembering that for each enterprise and for each project, the IT outsourcing model should be selected individually.
For this purpose, you need to follow a specific set of steps.
What Are the Steps of Choosing a Software Development Company?
- Decide on the project objectives, timelines, and budget
- Compile a list of software development companies that meet your requirements
- Check their portfolio and experience
- See if they specialize in what you need
- Check their development methodology
- Examine company structure and team dynamics
- Make sure they understand your business as a true partner
- Pay attention to the communication style
- Learn about their security practices
- Discuss testing and software maintenance
1. Decide on the project objectives, timelines, and budget
A clear understanding of your project goals, development timelines and the financial aspect is key to success. Without it, you risk losing time, effort, and money.
Start with a precise idea of what processes you want to outsource and why. Think about the functionality of your future product and determine the budget limits for this project. It may be helpful to consult with a marketing analyst or specialist in your market niche to better define project requirements.
It is important to understand that at this stage, you do not need to define absolutely all the details of the project — but you must have a specific plan with the main requirements and workflow for further actions.
If you complete this step, the contractor will be able to more accurately estimate the scope of work and avoid unnecessary expenses, unlike when you’ll try to explain an abstract idea to the development team. In addition, it will be easier for you to find out if a certain software development company can bring your ideas to life.
2. Compile a list of software development companies that meet your requirements
Once you clearly define what exactly you need, you can proceed directly to the search for the right provider. Above, we’ve already discussed the sources of information where you can find a software development partner: Google, ratings and reviews, LinkedIn, and private recommendations.
At this stage, your task is to compile the long-list of potential candidates that meet your basic project requirements.
While surfing the web or talking to someone, add every software development company you feel could be a good fit to your long-list for further consideration.
3. Check their portfolio and experience
Now it’s time to start the detailed exploration and comparison of your candidates. Collect as much information as possible on their experience in your domain and with similar projects.
Start with the website of each software development company:
- Check its overall look, performance, and content. Does it load fast? Is it comfortable to navigate? Is there enough information? Of course, it may happen that a company is an excellent service provider but doesn’t have an appealing website, as they say, “the cobbler’s children have no shoes.” Nevertheless, a good website is an indicator of the company’s business values and high expertise.
- Look through the technologies and services they offer to make sure they have mastered the tools needed for your development project.
- Investigate their use case portfolio to find out if they have already implemented projects similar to yours.
Then, get in touch with the company representatives and request portfolio, tech profiles, brochures and other information relevant to your needs.
Note! Quite often, companies can’t share the details of their previous projects due to non-disclosure agreements. However, they can provide anonymous project descriptions with a general idea on the workflow and the output.
At this point, you’ll be able to see companies that don’t satisfy your tech requirements and remove them from the list.
4. See if they specialize in what you need
A software development company may offer a wide range of services and technologies, but it doesn’t mean it has equally strong teams for all of them. You should select the company that has the strong specialization in the domain and tools you need.
5. Check their development methodology
Using Agile methodology in software development is the current best practice. Hence, you should look for a company that builds its development process on the basis of Agile practices such as Scrum, Kanban, Extreme Programming (XP), Lean Software Development, and some others. They make the process transparent and allow you to constantly monitor the progress and make changes when needed.
However, every software development company can adjust the development methodology to its reality and add something new to the generally accepted workflow. Therefore, ask about the company’s workflow in advance. Find out if you will have access to the project and what role you will play.
6. Examine company structure and team dynamics
Pay attention to the structural organization of the company, its board of management and departments. This point is important because only a well-organized company with a distinct hierarchy and distribution of roles can arrange a seamless development process and achieve project goals within the timeframe.
Team dynamics are no less essential. Take an interest about relationships between team members and their ability to meet software development challenges together. It is also significant whether the team is familiar with outsourcing, i.e., its members have experience working in different time zones, understand cultural differences and have the skills necessary for productive collaboration at a distance.
7. Make sure they understand your business as a true partner
It’s wonderful when the team has expertise in your industry and is proficient with the development tools you need. But equally valuable is the ability to listen to you and ask questions. Because every business is unique, it’s impossible to create two equal products for two different companies. So try to avoid providers who say that they know everything better than you just because that they’ve already implemented a similar project.
A software development company should cooperate with the client as a partner, discussing business ideas, diving into peculiarities and carefully studying all proposals and preferences. The process can take from several hours to several weeks, but it’s worth it.
Understanding your business needs at the initial stage is as important as the code quality in the final product.
8. Pay attention to the communication style
Communication transparency is the most important aspect of IT outsourcing that is often overlooked when choosing a software development company. If the communication process is not initially established, you will not understand at what stage your project is and whether the team is moving in the right direction. It’s like drifting in the open sea without a compass.
Therefore, a company should provide a distinct communication plan with outlined means of communication, the frequency of calls, written reports or video chats, and contact information of responsible persons on both sides. It should also include items such as availability, when both parties should be in touch, and the time allotted for responding to emails or messages.
You can assess the partner communication style from the very first contact with the company, whether by email, phone, or video call. If something confuses you, don’t ignore this aspect.
9. Learn about their security practices
Outsourcing implies the transfer of sensitive data to a third-party contractor, that’s why data protection should come first.
Make sure the software development company you are going to deal with utilizes the latest security methods, including:
- confidential data storage
- traffic encryption to protect against data interception
- encryption of employee directories in case the hardware is seized
- compliance with generally accepted rules, such as GDPR (General Data Protection Regulation)
- intellectual property protection, etc.
To reduce development security risks, signing a non-disclosure agreement should be a must.
10. Discuss testing and software maintenance
Testing is extremely important. It saves you from small and big troubles that may appear after launching your software application. The more attention a software development company pays to testing, the more confident you can be in its reliability.
Before the release, a software development company must test and debug your solution. But remember that QA is not only about technical aspects. It should be based on the desire to predict a variety of user behavior scenarios and make sure that the product will work for the final goal in any case. Also ask if the company provides post-production support and maintenance, and don’t forget to include these points in the contract.
The final point for discussion is risk management strategies used by the IT provider. Imagine the problems that may arise on the project, and ask the supplier about strategies they are going to apply to deal with similar issues.
Now you know a comprehensive algorithm on choosing the best suited outsourcing provider for your software development project. In a nutshell, you should do the following:
- Clearly define your expectations for the project.
- Build a list of potential partners using Google search, LinkedIn, various ratings and reviews, and personal recommendations.
- Check company websites to see their experience and services they provided, then sort out unsuitable companies and request detailed information from those who remain.
- Define companies that have strong specialization in your domain.
- Check their development methodology, giving preference to Agile practices.
- Examine the structural organization of companies and how their employees interact with each other within teams.
- Single out outsourcing companies that are ready to delve into the specifics of your business.
- Ensure the transparency of communication style.
- Check if they strictly follow security procedures.
- Discuss quality assurance issues, technical support and post-release maintenance in advance.