Software outsourcing has a number of advantages: for example, it allows you to save money and to get expert help in certain areas. Nevertheless, there are problems, risks that are difficult to avoid. But if you know about them, you can significantly reduce their impact. How? See in the article below.
Threat 1. A software partner does not have enough capability or expertise to finish your project
If an outsourcing company or specialist is involved in the work on the project, and the development is almost entirely outsourced, the question arises: “Are these people able to complete the project?” Most software developers say about their capabilities, knowledge and experience, but this may often cause some problems at the same time.
How can you be sure that you attracted a really strong team or a specialist, rather than the braggarts, to work?
Potential partner needs to be explored. Here’s what you need to consider first:
- Maturity of the company or a specialist: how long they work in their field, what projects they implemented, how many employees in the company.
- The number of large projects and significant customers in relation to their total number of employees.
- The website of the company. Often companies indicate the main facts about themselves on the website, and it is not difficult to verify them.
- Social activity. Leaders in their field often share experience and knowledge in articles for various media.
- The level of specialists in the company, as well as the “balance of power”: does the company have enough people and capabilities to fulfill your order (for example, to create an ERP system)?
- Reviews about the company in the network.
- If there is an opportunity, it is necessary to communicate with the current or former clients of this company.
- If possible, talk to the responsible specialists in person: so you will understand if you can establish good communication, which is extremely important when outsourcing projects.
- Ask to write a test piece of code to implement your project.
Threat 2. Lose of control
There is no doubt that in some cases companies lose control over their projects when they go for outsourcing. Lack of communication and visible results are the first signs of the problem.
- Even before the start, discuss how you will interact, as well as the methods that will be used to implement the project.
- Find out what methods of work were used by the partner before. What are their pros and cons, what have they achieved?
- Make sure that your partner can offer the right (for you) solutions in different situations.
- If you prefer other methods of solving work tasks, but you, for example, have less experience – let the partner do the work: intervening in this case means disrupting the normal course of the project.
- Demand complete transparency of the process, including following the plan items and adherence to deadlines.
Threat 3. Vendor lock-in
It’s about the fact that your partner uses some proprietary tools to implement the project, which can not be replaced in the future.
- Check the possibility of maintaining the project on your own or with another partner after it is completed. Most “white” companies will not build any proprietary solutions based on Python, Ruby, .Net or Java – they work with popular systems, frameworks, applications. Conduct a market research: is there an alternative to the current partner?
- Make sure that the code written by the partner’s specialists will be ready for processing by other specialists.
- Preserve the ownership of all the results of the work, make sure that any piece of the project is available to you at any time.
- Document all processes, ask your partner to do the same.
Threat 4. Hidden costs
Sometimes it happens that the cost of work, described in the contract, ultimately exceeds the originally planned amount. This happens if you have not provided all the important points.
- Pay attention at how the company evaluates the various stages of project implementation and, most importantly, the cost of individual works, as well as the project as a whole.
- What types of contracts does an outsourcing company offer: time & materials, fixed cost, fixed cost with a subscription for further project support or something else?
- Check if VAT is applied and other “hidden” payments. It is better to do this with a professional accountant / economist.
- Identify your own requirements for the project, make them as clear as possible for the partner. This will allow you to calculate the budget without having a threat to receive additional expenses after it is completed.
Threat 5. Information security
It is critical to keep the rights to the results of the company’s work when outsourcing. This is your intellectual property, and it must remain so.
- Do you sign NDA with partners?
- Does the partner company have experience with important customer data?
- The presence of successfully completed projects implemented for large companies or the public sector is a big plus.
Threat 6. Where is the office of your partner?
Outsourcing is good when you are with a partner in a single time zone. Otherwise, dealing with another company can be a challenge.
- Your working hours and working schedule of your partner should be crossed in order you have enough time for collaboration.
- Distance and availability: can you visit the partner’s office if necessary and without any problems?
- Which bank does your partner use to work, where is it registered?
- What payment methods does the partner use?
- Where is the company you are working with registered?
- Is the political and economic situation in the country of the partner stable?
In fact, there are many important moments when working with a company or individual specialists on outsourcing. The key are listed above, so if you stick to the plan and work, taking into account everything said above, there should not be any problems.