8 most important questions to ask IT outsourcing providers before choosing a partner

Top 8 Questions To Ask Software Outsourcing Providers When Assessing

Are you looking to scale up your engineering team? Does finding a good IT outsourcing partner sound like a viable option? You are not the only one – the global market size of the IT outsourcing industry reached 92.5 billion USD in 2019. 

The larger the outsourcing industry gets, the more challenging it can get to pick a high-quality service provider. So, asking the right questions is essential to qualifying any potential providers.

We gathered some of the most important questions you should ask software outsourcing companies to assess their fit to your needs – those will evaluate cultural and operational aspects that may play into the success of your partnership.

 

Here are the most important 8 questions to ask outsourcing providers:

 

Business Model

1. What outsourcing model do they use and does it fit me?

There are three main outsourcing models to consider when thinking about the geography of outsourcing: nearshoring, offshoring, and onshoring

Nearshoring Definition: Nearshore outsourcing is a software product development model where some or all of the work is delegated to remote teams based in a nearby country and in a similar time zone. This approach combines cost-effectiveness and shorter travel time with the additional benefits of cultural and geographic proximity.

Offshoring Definition: Offshore outsourcing is very similar to nearshoring — with the exception that the offshore team is typically located on another continent. Traditional offshoring locations include India, Ukraine, and various Latin American countries such as Argentina, Colombia, and Brazil.

Onshoring Definition: Onshoring is “domestic” outsourcing. It involves the transfer of your company’s software development to non-metropolitan — and therefore more affordable — locations within your own country. 

If you already know the countries or areas you would like to outsource your development to – look for the best providers in those countries.

Another distinction you will want to make in regards to the outsourcing model is whether you plan to work closely with the outsourced team (under an extended development team model) or you are planning to outsource a project completely. 

Extended development model: Under the extended development model, a band of remote engineers work in close collaboration with your in-house team. The two teams work side-by-side and have common goals.

Project Outsourcing: If you opt-in for project outsourcing, it means you would like to have a software or product built and delivered by an external team entirely. It is a good option for companies with limited development resources to build products in-house, however it leaves little to no room for intervention through the development process.

 

2. Are they issuing fixed fee contracts or using the time-and-materials model? 

Although this is not set in stone, usually project outsourcing comes at a fixed price as you are outsourcing the whole project according to the quote you got from the provider. Whereas time and materials model make sense for teams who work integrated and address changing needs on an ongoing basis.

The time and materials (T&M) model foresees billing clients for actual work scope based on hourly/daily/monthly rates of labor. Customers are charged according to the time frame worked on a software project, plus costs of materials.

Fixed-price agreements, on the other hand, are single-sum contracts where a service provider is accountable for completing the project within the agreed sum set out in the bond.

It goes without saying you should ask for their fees, and as we’re writing this, we doubt anyone will forget this question. What often eludes companies to dive deeper into is what that cost actually covers. This goes in two ways: 

  1. What does the cost mean for you? Is everything included or do you need to take additional costs into consideration? 
  2. What is the value behind the costs? If you’re seeing a higher price-point, does that come with higher quality engineers? Many companies prefer to get support not only in development but also with onboarding, and ongoing management of the team. So, if a higher cost comes with such benefits, it may still be more favorable. 

 

3. Can they tailor their services (collaboration model, team size and structure etc.) to meet my requirements? 

Software project development often needs change all the time, especially in today’s highly competitive and innovative market. 

A good outsourcing partner is flexible, cooperative, and eager to find a solution that makes you — the client — happy. As long as your request is within reach, it is always a good sign that your future partners show eagerness to provide you what you need. That is why you are out there searching for partners, isn’t it?

You should consider it a red flag if the service provider’s internal processes seem too rigid and if there isn’t much room for introducing change quickly.

 

Developer Expertise

Finding a good outsourcing partner should mean making sure the software engineers within their organization are up to par and they can provide the specific technical expertise you need. They are the ones who will be working on your product hands-on on a daily basis and the success of this partnership relies largely on their work. 

Finding a good outsourcing partner should mean making sure the team members within their organization are up to par.

 

4. Do their software developers have the expertise you need and are they experts on the tech stack you’re using? 

A good tip is to look for specific topics that you need help with, such as modernizing legacy software or mobile applications development. Then, narrow down your search to companies that have the specific industry expertise. 

 

5. Have they worked on similar projects in the past? 

It is a great sign if the service providers have already developed software or worked on projects similar to yours. You can eliminate the downtime of getting acquainted with the needs and specifications of different industries or technologies. So, you should always check if they have a history of successful collaborations with companies similar to yours.

In the discovery meetings, you can ask the providers to share case studies or success stories, client testimonials, or references with you.

 

6. What’s the outsourcing company’s approach to recruitment and continuous education of engineers?  

A good question to ask is how they’re recruiting new team members. What is the process they go through, is it rigorous enough? Do candidates perform a test or peer coding challenge that can testify to their coding skills in practice?

Will you have the final say in who joins your team specifically?

The speed of innovation in the tech sector is second to none compared to other industries. Therefore, a team that stays on top of new technologies, and new versions of existing software will be able to develop sustainable and modern products that serve well beyond today. Having learning opportunities and training tools in place means they have a culture of continuous learning.

Most companies resort to outsourcing to fill a skill gap in their team which has proven hard to recruit internally. Your outsourcing partner should not only answer those needs, they should also be able to answer your needs that may come up in the future.

 

7. What are the mechanisms to ensure the success of the collaboration?

Building great software is one part of the challenge. The other is to make sure you have system checks and fallback plans in place to ensure you can keep building great software without interruptions. 

When it comes to ensuring success, a good place to start is to enable knowledge sharing across both companies. What are the communication structures in place for technical and business queries? 

More importantly, on the off chance that something goes wrong, how are issues addressed and handled? There should be a clear process for solving problems. 

If the employee retention rates of the provider in question are low, this could affect the efficiency of the collaboration as well. You should investigate how they would ensure the stability of the team, so that engineers are not joining and leaving your project on a frequent basis. Additionally, checking Glassdoor will give you a good overview of the overall satisfaction of the employees within the company, which can be a solid indicator of retention rates.

The right software outsourcing provider will have the right processes in place to ensure the collaboration runs smoothly, but also to keep the engineers happy

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Security & Privacy

8. What are the service provider’s security and privacy policies?

One of the most important factors when it comes to choosing a good outsourcing provider is their security posture. Does the provider have security certifications such as ISO27001? Are there necessary data protection policies in place?

You do not want to find yourself in a situation where you are breaching laws and facing the consequences due to your outsourcing partner dropping the ball. 

Most companies fail to investigate deeply when it comes to security measures as we naturally assume this to be covered when we are paying for a service. Nonetheless, you may find yourself on crossroads for not having demanded certain security measures upfront.

 

Bonus Questions:

What is the service provider’s estimated timeline for project kick-off? 

What equipment will the extended development team be using?

Last but not least, don’t forget to also keep an eye out for the cultural fit. Be sure to ask about the company’s vision, values, and what policies it has in place to keep its software engineers happy and engaged.

If outsourcing is a new concept for you, be sure to check out our related articles for insights and more tips:

 

At Zartis, we specialize in providing tailor-made technology solutions and IT staffing services. Whether you need assistance with designing the best outsourcing solution for your company or assembling an extended development or scrum team, we’d be happy to help. Feel free to reach out now!

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