How to Choose an IT Company for Outsourcing: How to Determine the Ratio of Price and Competencies

The concept of outsourcing in IT has existed for more than 30 years and is becoming increasingly popular due to the accelerated digitalization of traditional industries. According to expert estimates, the market for such services (and you can give everything to partners – from custom development to technical support of systems) will reach more than $ 400 billion by the end of 2022. We will talk about when and why it is sometimes necessary to outsource and how to choose the right contractor.

Why outsourcing?

There may be several reasons for switching to outsourcing. Firstly, there is a lack of competencies: an existing team may not have the necessary skills, and it is long and expensive to develop them independently for the sake of a one-time project. However, even if the project is not a one-time one, it makes sense to shift non-core risks to the remote dev center, which as a rule, has been working in its niche for many years and has accumulated significant competencies.

This is relevant not only for IT. For example, an automaker will not develop engine oils but will attract an outsourcing partner so that the equipment is filled with a quality product.

The second reason is the lack of resources to scale or accelerate the launch of the product to the market. Solely by increasing the staff, this problem cannot be solved – it requires the creation of a workable team with distributed roles, and proven competencies. Otherwise, we will get 30 people who do not know how to interact with each other. Since outsourcing is possible not only in the form of a regular subcontracting agreement but also in the format of body shopping – renting specialists, this can be a good way out of the situation.

How to choose a partner?

The main thing at the start is to soberly assess the partner’s ability to implement the project. Obviously, for tasks related to the development of mobile applications on Android, it is hardly worth hiring a team that specializes in IOS. There is nothing wrong with exploring new areas, but a novice company will have less experience than those who have not been on the market for many years.

Another critical point: those to whom you want to entrust software development or system maintenance should understand the stack of technologies that you have to work with. In other words, it is important to evaluate the capabilities of the maturity assessment model – the technical maturity of a potential outsourcer, and for this to talk about how the performers will learn about the customer’s problems, what they will do when these problems arise, and how service level agreements are maintained.

Unfortunately, in most companies, the processes are not structured but are based on two or three enthusiasts, and the retirement of any of them is a disaster for the project.

However, it should be remembered that in the first case, the partner is responsible for the entire project, and in the situation with body shopping, the responsibility for the result lies with the customer, who acts as an employer for someone else’s team.

Price is the main factor

When the first stages are passed, and you understand that the company is not a beginner in this business, it has expertise and experience working with the necessary technological stacks, a discussion of the cost begins. At this stage, a below-market price offer will be suspicious: dumping may indicate that the potential outsourcer is doing poorly and there are no other customers, which may be a consequence of the poor quality of work.

Evaluating the quality of project management when choosing a partner is of exceptional importance. The customer should know how project managers determine the scope of work, build a calendar plan, and monitor compliance with deadlines. In any project, there should be control points and an understanding of the performers when they need to be achieved, and what it will take.

Otherwise, under the talk about agile technologies and scrum, the illusion of project management is created, but the deadlines begin to float, the budget grows, the development team changes (sometimes several times), and there is no result.

Final thoughts

In addition to checking the quality of management, it is necessary to periodically monitor the quality of the software product itself and document actions at each stage of development, including at the stage of forming business requirements and system analysis. Otherwise, the consequences of poor-quality study at each stage will accumulate like a snowball and eventually lead to the fact that the solution either does not work or does not perform the functions that are required.