You have standards for developers you hire for your internal software team and also for how they should work together. Likewise, when you outsource software development your vendor should also meet your high standards. But, what exactly are the standards? Hiring an employee is very different from vetting an offshore or nearshore software company
Most business and tech leaders don’t have deep experience searching the world for the best software outsourcing company. Many simply ask a friend or work with a team they’ve previously worked with - but that doesn’t mean you’ve found the best vendor.
Beware. Research indicates that 97% of the software outsourcing companies out there don’t have the experience you need.
Chances are high that the vendors you’re considering have warning flags that indicate high risk for the software you’re about to outsource. You just have to know what those flags look like.
You might not investigate software outsourcing every day, but we do. Our research team studies the global landscape, who’s who, who’s where, what they do and what they charge to do it. And guess what? 97% of the companies we review do not pass our first round of reviews. We wouldn’t hire them - and neither should you.
Here’s a few tips from the Accelerance Research Team on what to look out for.
It’s laudable that many software outsourcing companies provide career opportunities to new graduates from local universities. Although they cost less (more about pricing below), you don’t want a team of inexperienced newbies or “freshers”. It’s fine to recruit recent graduates, however, they should only make up a small percentage of new hires.
Every software outsourcing company wants to break into the North American (and other Western) markets. Early stage software outsourcing companies often break into the business with small projects on freelance sites like UpWork and with projects for clients with whom they already have a personal connection. But you should only hire a team with an established track record before you hire them for your business-critical app development.
You don’t want to be any company’s first outsourcing client. Communication will be awkward and they will not understand Western business practices.
Your software outsourcing company should be the right size - which depends on how many developers you need over the life of your software development engagement. The idea of “the bigger, the better” doesn’t apply to selecting a software outsourcing partner. Here’s an example.
One of our clients (you’d definitely recognize their name) had several development teams totaling 80 developers - but they weren’t getting the attention and quality they needed because the large software vendor they selected had over 8,000 developers. Even though they’re a marquee client, they were only 1% of the large software outsourcing company’s business.
This led us to derive the Accelerance 5% Rule.
Your development team size should be > 5% of the total number of developers employed by your software outsourcing partner:
If you need a 10 developer team, then the rule computes: 10 developers / 5% = 200, which means you should select a software outsourcing partner with < 200 developers.
A corollary to the 5% Rule is that your team shouldn’t be much more than 20% of the outsourcing company’s total developers. You’ll certainly get lots of attention, but you’ll benefit more from a larger, more diverse and innovative developer pool.
Accelerance uses size and growth to identify the best software outsourcing companies for our clients. Generally, Accelerance Partners have between 50 and 5,000 developers, a wide range to satisfy a variety of clients with different software development needs.
Technical expertise is important, but so is emotional intelligence, teamwork and ability to communicate. Make sure the individual developer candidates hired by your software outsourcing company are evaluated for these skills too.
You’re looking for the ability to speak and converse, with a good understanding of written English. Websites that aren’t in English (translation buttons don’t count) are a warning flag that your potential outsourcing company doesn’t have the ability to work effectively with English-speaking clients.
The ability to speak English isn’t enough for software outsourcing. Communication styles and collaborate with your team is a completely different skill. For example, most Asian cultures are notoriously polite and individuals will defer to you as the client rather than challenge an incomplete or poorly defined feature. And many East Europeans speak so directly and emphatically they can come across as insensitive and lacking in empathy.
Most projects that fail, suffer from poor communication about system requirements and which features are the most important to implement.
Everyone wants a good deal and our annual global software outsourcing rates guide continues to be the most popular download from our website. Because of our continual research in the worldwide market, we know if an offshore or nearshore vendor quote is competitive for the region or if they’re a low-cost or high-cost outlier in their pricing.
Cost savings is often the primary motivator for software outsourcing by executives and is a common cause of project failure. The perceived “savings” of a low rate are outweighed by the delays and additional costs caused by a failed project.
We encourage every business and tech leader, like yourself, to watch for the warning signs that create risk and low performance outsourcing. You might not have the budget, resources or even the time to vet and verify every single software vendor you come across, but we do.
Accelerance is a consulting firm that helps technology leaders create effective strategies for global software outsourcing through better planning, better partner selection, and better ongoing management. Talk to an Accelerance Advisor today to mitigate risk and outsource with confidence.