The global market size of outsourced services is over $85 billion. Hence one thing is for sure – it is a massive industry and software development is a major part of it.
Most of the businesses globally outsource to cut down costs and increase efficiencies. The results are rather disappointing, when one looks at it from a value addition angle - 80% of outsourcing relationships fail to deliver any collective value.
Would you really want to cut costs if they are more expensive than the capital you saved by outsourcing? The answer, obviously, is a resounding no.
So, how do you ensure you have the right software development company helping you get the product out of the door? Simple – here is a checklist of characteristics:1. They promise value beyond cutting costs. If you are looking at an offshore vendor in Asia, you know it for a fact that they will be able to bring down your development costs. This works out because talent and technology are available at cheaper rates in their market. That said, any software developer can promise the same costs – how do you then choose between different partners?
You have to look for expertise and not just competence. There are a ton of software outsourcing solutions providers who promise the bare minimum to get your project rolling. You will get the maximum value for your dollar when your prospective partner has expertise in the area and hence can be a better partner than even your local vendors.2. They have very strong referrals. In B2B markets, referrals play a very strong role. That said, these days, every single developer has a ton of referrals available.
Finding the right development partner based on the referrals they have can hence get tricky. So, focus on the following:
i. Look at the quality of referrals over the quantity: Which referral adds more credibility – one given by a vice president of a big commercial air carrier or one thousand given by unknown small businesses?
Usually, the bigger company’s referral has more value because it shows that the vendor can handle a project of huge scale and can satisfy multiple KPIs in one go.
ii. Look for referrals on employee level: Most of the software development companies focus on referrals for the companies. You can go to LinkedIn and check out a few profiles of the developers the company has. Here, you will get to see the industry expertise of the very people who will actually be working on your projects. This is where quantity of referrals coming from various sources can be of great value.
3. They focus on a niche of services. If you find a software development company in USA that is ready to take up any project you throw at it, there are very high chances that the company is outsourcing the project further to an offshore developer.
The most credible outsourcing partners have deep expertise in certain market segments like payment solutions, eCommerce or enterprise tech for a specific industry. This goes in line with the earlier given advice and helps you find developers who can add real value to your project above and beyond the mere cost cutting.
4. They are approachable at any time you reach out. More often than not, your implementation or project management team will find a bug in your software. They will try reaching out to your outsourcing partner and outline the problem very specifically.
In a reply, they will get an automated reply from the partner stating they will get back to you ‘soon’. Since you did not have any contracts defining ‘soon’ you are justify waiting.
For projects that have multiple levels of iterations, this can get very tedious and you might miss out on small but important feedback. Just because your outsourcing partner is in a different time-zone does not mean they take forever to revert.
If the outsourcing company does not put up a 24-hour business day revert in their response rate, it is a big red-flag. A potentially good outsourcing partner will be ready to promise you one day reverts and wouldn’t even be hesitant in the contract.
5. They are proactive in understanding your requirements. The ideal outsourcing partner will want the engagement to succeed – because that is the only way they will ever get more business. Hence, they will be ready to sit with you and define the exact deliverables of the outsourcing engagement.
That is the sign of a good outsourcing partner. A great outsourcing partner will go one level beyond that and ask you questions about your business to understand the real-life situations where the deliverables will be used. They will act more like technology consultants and less like software developers.
The ideal outsourcing partner will want to know more about the business case of the deliverables, have expertise in solving technological problems pertaining to your industry, would be approachable and have experience in dealing with big ticket clients. If your prospect shows these indicators, you can get started with the engagement.