The demand for cost-efficiency, high quality, and sustainability is among the key drivers, making outsourcing more and more critical and widespread. Today, businesses prefer saving time, resources, and effort rather than hiring extra in-house professionals.
According to the Boston Consulting Group survey, 62% of responding companies “are very likely to renegotiate outsourcing contracts.” Besides, Statista reports that the IT outsourcing market will exceed $1.3 trillion in 2023. These numbers prove the significance of the relevant approach. Still, at the same time, you should remember that choosing an outsourcing partner is often a challenging task, mainly because of a competitive environment and numerous emerging vendors to choose from.
So, if you plan to outsource several specific tasks, what will you consider when selecting the best partner? Below, we have created a list of ten crucial factors to pay attention to that can enhance your decision-making and help you choose the right vendor. Enjoy!
1. Domain Knowledge & Tech Expertise
Suppose your selected IT outsourcing partner has experience in different industries but not yours. In this case, they will not properly understand your market sector, which can lead to tremendous problems and unnecessary risks. Instead, your partner should have strong domain knowledge and technical expertise to be an influential advisor for your business.
So, you can evaluate your potential outsourcing vendor depending on the following criteria:
- Industry background with relevant success stories
- Expertise in specific technology areas
- Necessary skill sets
- Access to the newest tech solutions and trends
- Experience in addressing complicated tech challenges
Ultimately, all successful outsourcing contracts rely on technical competence, which you should never disregard. What does it mean? Although your potential outsourcing partner can be highly proficient with a limited tech stack, you should select the one with experience working with more tools and frameworks. That will guarantee higher project quality.
2. Market Reputation
Compromising on quality is inadmissible. After all, no company wants to cooperate with a vendor who often misses deadlines or has issues related to maintaining constant and polite communication. That makes it vital to analyze your future partner’s market reputation.
In the modern digital world, checking the history and reviews of different vendors is easy. For instance, you can find such testimonials from their previous clients on websites like Clutch or GoodFirms. But in most cases, this feedback puts outsourcing companies you explore in a good light, which can make you have doubts.
Thus, after picking some favorites, you should connect with their past customers to ask about the experience of cooperating with your chosen vendors and verify the quality of work. Such an approach allows you to hire a reliable outsourcing partner with a good market reputation and proven on-time delivery record who can suit your business goals properly.
3. Cultural Compatibility
Business cooperation is a peculiar relationship since both parties should have the same values. That helps them understand each other better and can result in the desired outcomes. Of course, cross-cultural collaboration may be tricky, mainly regarding personal communication, decision-making, perception of time, and, finally, time zone differences. So, the crucial thing is to merge the various worlds. Here, establishing communication standards and the degree of formality and providing data transparency are essential.
When discussing cultural compatibility, you must also ensure your potential partner understands your company structure, business processes, workflows, and other employees. A trusted vendor is the one who gives timely responses, maintains a healthy communication culture, and reacts to emerging issues quickly.
Therefore, during the selection process, you should analyze the vendor’s corporate culture, management approaches, and marketing strategies. Check how motivated their staff is, what moral principles they follow, and how adaptable they are to your goals and processes. After all, you can always ask for references to decide whether it will be your perfect match.
4. Communication Methods
Setting up a proper communication strategy is vital for getting transparent feedback from both sides. Thus, you should define how your communication with an outsourcing partner will work before, during, and after delivery. For example, you must understand how much you can control, influence, or manage development activities.
No doubt, face-to-face meetings still play a great role in maintaining efficient business communication. But, with the correct preparation, virtual communication through video calls, emails, or chatting can also be effective. You only need to choose the proper communication channels and project management tools, making them an inevitable part of your strategy. Such a method allows for documenting everything regarding project development and encourages constant feedback.
5. Service Rates
Unfortunately, the cost is among the most frequently forgotten aspects when negotiating contract terms with outsourcing partners. That may often result in ruined relationships between you and the chosen vendor and failed projects. So, before contacting a potential partner, you must determine the amount of money your business is ready to spend on a relevant project. And besides communicating it clearly to your vendor, you should also understand its pricing options appropriately.
The good news is that each reliable outsourcing company has completely transparent rates. Thus, you will know in advance how much your business must pay, for what services, and what awaits you if increased workloads are needed. Meanwhile, you should remember that if you expect top-notch services from your vendor, their price will be higher than the average on the market. But if you have a limited budget, you can always propose to divide your project into stages or discuss some other conditions.
6. Data Security & Privacy
Considering ongoing digital transformation across various industries and businesses, data security and privacy are among the most significant concerns. The reason is simple: the outsourcing approach predicts sharing sensitive data with your vendor. Thus, it will likely be mishandled if your outsourcing partner cannot manage such information correctly.
Before choosing the right vendor, you should learn more about its privacy policy and data handling. Since the development process, testing, and other project stages require providing sensitive information, you must feel confident in its appropriate usage and maintenance. For instance, your company can sign a non-disclosure agreement (NDA) with the chosen partner before sharing sensitive business data.
Finally, you should consider vendors who comply with regulations like GDPR, CCPA, or HIPAA and ensure regular conduction of network and security audits with specific tech tools. That will protect your sensitive information effectively and eliminate data breaches and leaks.
7. Agile Development
Those who aim to survive in the modern competitive market with numerous rivals emerging daily must adjust to clients’ always-changing requirements. To do that efficiently, your future outsourcing partner should utilize Agile methodologies proficiently.
The relevant methodologies provide a collaborative environment that enables quick results without compromising quality. So, if becoming an industry leader is among your key business goals, you must cooperate with a vendor who follows the Agile approach to software development and project management. Then, you will know that your partner can seamlessly adapt to your changing requirements.
8. Risk Management Practices
Effective risk management may sometimes become a crucial factor driving the overall project success. Therefore, your potential outsourcing partner must always be prepared for situations when things go down. An experienced and reliable vendor has well-detailed emergency plans, allowing for adequately identifying, assessing, and controlling threats.
Moreover, creating a thorough risk management plan that contains steps to address each potential hazard or unexpected event is crucial for maximizing data security. That helps prevent critical failures and saves your business money and time. You can ask an outsourcing company to provide you with a relevant plan that shows how they maintain smooth project execution and react to unexpected problems during project development.
9. Onboarding Process
Before the kick-off meeting, you should explore the client onboarding process provided by your future outsourcing partner. That involves discussing the specific procedures and steps the vendor takes during this process. And the perfect scenario is when they can plan and tailor it to your specific requirements, ensuring that all steps are clear for both.
At the same time, you can also prepare for onboarding by creating the documentation containing all the valuable and helpful data your vendor requires to get started. It is the time when you can ask different questions, represent your business context, and discuss various technical aspects of your project. All in all, establishing a solid foundation from the very beginning empowers both parties to set mutual expectations and collaborate effectively.
10. Service Quality
Although all the above factors promote reliable services, your business should also consider one more aspect when choosing an outsourcing partner. You must have confidence that your vendor will provide high-quality code, meeting all specific standards. For instance, you need to explore vendors who create mock-ups before delivering the final code and enhance it depending on user feedback and expectations.
Moreover, before cooperating with a certain partner, you should know whether they conduct code reviews and perform functional testing. The best option is to find an outsourcing vendor who ensures testing for regression and backlog management. That helps ensure your company will obtain a robust product tested adequately by the vendor’s team.
After all, code implementation is not the finish for your outsourcing partner. It must serve as a starting point as the code requires continuous testing, which is essential for the bug-free work of your software and its long-term success.
Bonus Factor: Flexibility
Sufficient flexibility is a must-have feature for your potential vendor since they must be ready to address different urgent requirements or issues when they arise. Besides, this feature is mainly essential when your outsourcing partner lives in another time zone. So, you should remember about flexibility regarding urgent support when negotiating the agreement’s terms.
Where Can You Find the Right Outsourcing Vendor?
After understanding crucial factors, the following question arises: Where should your business find an experienced outsourcing partner to satisfy your project requirements? Here are several helpful platforms to check:
- B2B network websites. Apart from the mentioned above (Clutch and GoodFirms), you can also explore IT Firms. These websites offer ratings and reviews of numerous outsourcing vendors in different domains worldwide, so you can thoroughly assess the available information.
- Industry-specific reports and publications. You can read relevant research papers published by well-known consulting and analytics companies like Gartner, Forrester, PWC, etc. Often, such materials mention various market leaders in specific domains.
- LinkedIn. Nowadays, many outsourcing vendors promote their services and show their expertise on LinkedIn. Therefore, you can look at their profiles, analyze experiences, learn about the number of staff, and read content pieces.
However, you may also benefit from some valuable offline resources, including:
- Industry conferences. Dedicated to certain industries, tech areas, or issues, these live events are often an ideal method to connect with a potential outsourcing partner.
- Network referrals. Lastly, you can ask technical professionals within your network for the necessary advice. Such referrals are still one of the most efficient and reliable ways to hire a trusted outsourcing partner.
Final Thoughts
To conclude, selecting the right outsourcing vendor who will meet all your expectations is often challenging. Moreover, like with other critical decisions, this process requires some work. Your company must analyze many factors to compare different options properly and make a well-informed decision.
With AgileVision as your trusted outsourcing partner, your business can add great value to software development projects. We have many years of experience as well as success stories to prove our expertise in various domains. You can get in touch with our clients to learn more about the services and quality of work we provide and then arrange the first meeting. Although it may take some time and effort, the outcomes will pay off.
