How to Select a Perfect Software Outsourcing Company in 2019

According to CIO Survey 2018 by KPMG, last year, 49% of IT leaders worldwide got increased budgets to ensure further technological evolution of their enterprises. Since CIOs’ dispose of impressive funds, they will likely spend more on everything IT. Gartner predicts that the global investment in IT will exceed $3.8 trillion already in 2019 while the spending on IT services will reach $1 trillion.

Increased IT budgets also mean that organizations will invest more in IT outsourcing. CIO Survey 2018 highlights an important trend: the bigger IT budgets, the bigger the organization’s willingness to outsource.

Many reasons explain the growing popularity of IT outsourcing. By partnering with a software outsourcing company, enterprises can access professional technical knowledge and skills as well as get the needed IT solutions without the proprietary tech capacity. This allows them to cut IT project costs and focus more on core business activities.

Still, we should say that choosing a tech partner ten years ago was much simpler than today, because of thousands of IT outsourcing companies present on the market in 2019. In this article, we won’t navigate across IT outsourcing basics but will zero in on practical recommendations for you to dive confidently in the ocean of software development outsourcing companies and find a reliable partner for your IT projects.

While every company has their criteria for choosing business and technology partners, they still need to rely on a standardized list of must-haves that each IT outsourcing company should correspond to. Let’s enumerate these must-haves first, and then, find out what’s behind each of them.

• Geographical flexibility
• Communication agility
• Technological strength
• Industry understanding
• Established approach to project security
• Openness to innovations
• Maturity of knowledge management processes
• Scope and diversity of accomplished projects

Today, it’s impossible for a software outsourcing company to build a strong presence without relevant language and communication skills. A single IT outsourcing project can unite people from the U.S., Europe, the Middle East, and Asia. Even though they all can speak English, they will still have their own understanding of IT development, project management, etc. So today, communication agility isn’t just about speaking English; it’s about being able to adjust to a multicultural environment and build up a fruitful dialogue whoever the involved parties are.

How to define? You can only test your provider’s communication skills in real life. So start with a simple phone call. Typically, you will talk to a salesperson who will be good at communication. However, while discussing your possible cooperation in more details, you can invite other specialists, including developers, to assess their communication behavior. Sadly, even behind brilliant salespeople, you can discover development teams that are weak in communication terms. So, if communication barriers are critical, you will have to find a more competent team.

Technological Strength

When it comes to technology, it can be difficult to understand the level of an IT outsourcing company, especially if non-tech people try to select a partner. Technological diversity, freshness, skills of particular developers, and the overall technology strategy of the chosen IT outsourcer are among factors that define the future success of your cooperation. Fortunately, you can build up a preliminary technological portrait of a company while exploring their website.

How to define? The first thing you can do to assess the technology state of your potential vendor is to compare their offering as well as technologies mentioned in a portfolio with the on-demand programming languages.

Unlike service pages where IT outsourcing companies place commonly used technologies, case studies will help you discover the technological stack in more details, including used frameworks, development tools, APIs, testing methodologies and more.

Obviously, IT outsourcers can’t describe each technology they work with on their website. So if you are looking for a rare fish, it’s reasonable to appoint a call and ask about the tech stack you are interested in personally.

Below there are a few common questions that you can be curious about.

• Is it critical if a company has little experience in technologies that I need? It depends on your expectations and demands. If you aren’t pressed by time and you feel like experimenting, you can turn to a company that isn’t specialized in the technologies you need. There is a big chance for you to face such a situation if you look for a solution that requires using complex technologies such as AI, AR, or blockchain. At the same time, you have to understand that if you become a try-and-error project for your service provider, development timeframes can extend, while solutions can miss sophisticated functionality or contain mistakes even after the official release. That’s why it’s always better to collaborate with a partner that has already tested waters.
• How do I understand the knowledge level of developers that will handle my project? The best way of understanding that is through requesting the certificates that confirm developers’ qualification in specific technological areas. This will guarantee that you cooperate with real specialists that passed an official knowledge checkup. There is a ”But,” though: you can only discover the knowledge of each particular developer if you go for a dedicated team model.
• Do I have to request senior-level developers to handle my project? Not necessarily. Many projects don’t require any involvement of senior developers. Say, a team of junior and middle software developers can easily tailor a customized platform-based website. Moreover, remember that senior developers come at higher hourly rates, so if you don’t need them, use the chance to save some money.

If you take a look at the goals that organizations have for IT, you will see that cybersecurity showed the most impressive growth in importance over the past years.

Logically, companies not only require their IT departments to prioritize cybersecurity but also raise their security demands for IT outsourcers. To minimize security risks, IT outsourcing companies have to implement a clear security strategy ensuring secure development process and safety of all sensitive data involved in the development. It can start with general standards of information security management. For example, we at Iflexion stick to ISO/IEC 27001 standard to ensure the highest security level during all the projects that we handle.

At the same time, to stay compliant while developing industry-specific solutions, IT outsourcers have to act in line with industry regulations. Each industry comes up with specific rules, stipulated in the relevant laws and regulations, such as HIPAA, SOA, PCI DSS, and FISMA, to name a few.

GDPR compliance is another critical requirement to IT outsourcers that work with solutions that process sensitive data of EU citizens. Any leaks can result in huge penalties up to €20 million and can be a hard blow for the reputation and reliability of the involved parties.

How to define? IT outsourcing companies often describe their security methodologies right on their website, backing it up with relevant certificates. If you don’t find any documents on the website, you can ask about them as well as about the company’s approach to compliance via a contact us form or in a personal talk.

Another critical, yet often ignored, aspect of any software outsourcing project is an IT outsourcer’s maturity in knowledge management (KM). Why does it matter? Because the entire project cycle depends on the knowledge flow between team members and between a team and an end customer.

Let’s take a rough, but possible scenario. An IT team develops a CRM system for your enterprise. Suddenly, a senior business analyst leaves the project, which creates a gap between developers and you. In the absence of KM, such a gap can ruin the project, as there won’t be anyone with the equivalent knowledge to close the gap and replace the missing team member.

On the contrary, if KM works well, there is always a backup for any team role at any stage of the project. Knowledge is never lost but is shared equally between team members, which reduces the risks of critical gaps causing unexpected project interruption.

How to define? To understand the maturity level of KM at a particular IT outsourcer, discuss it during the negotiations. Ask about implemented and used KM systems, their approach to KM processes during different stages of an IT project and find out if there are people responsible for KM throughout the development cycle.

Do you know what you should pay for when you sign a contract with one of the software development outsourcing companies?

Five major factors define the rates offered by a particular IT outsourcing company.

As we’ve already mentioned, you can find a provider's rates for development on dedicated directories. However, to count a precise cost for a specific project, you will have to send an official request for proposal describing all the aspects of your future project. The overall project cost will include a variety of categories, including engaged workforce, used software and hardware, IT services as well as contingency costs. The final bill can vary substantially, depending on the IT outsourcing type that you choose, as rates vary across regions.

Now let’s answer a few common IT outsourcing budgeting questions.

I plan to cooperate with an IT outsourcing company that offers their senior developers at a rate of $60 per hour. How did they form this price?

Traditionally, companies establish average rates based on the prices across their industry in a given region. The $60 you pay for a developer aren’t the money that the developer puts in his/her pocket. This price includes not only salary expenses but also related costs, such as the used infrastructure, workplace, or developer tools and subscriptions needed to make the job done.

Will a Fixed Price project cost more than a Time & Material project due to the hidden risks?

Not necessarily. There is a chance for you to accomplish a fixed price project with a lower budget than a T&M project. However, it will work this way only if your vision and requirements to the developed solution are crystal clear and you don’t plan to bring in any changes to the initial specification.

When a project goes through troubles (the delivered solution works inappropriately, there are code errors, UI and UX issues), should I pay twice to fix the issues?

Each IT outsourcing company has its established approach to handling post-deployment issues. We at Iflexion, provide our customers with a month-long period during which a product owner on the customer's side and a project coordinator on our side discuss technical issues, if there are any. If an issue is identified as a bug, our developers fix it for no additional cost. If it is qualified as a new requirement or feature, we keep cooperating with the customer according to the established pricing model to deliver necessary improvements.