7 best practices for outsourcing software partners

7 best practices for outsourcing software partners

This post was originally published on July 11, 2019, and updated most recently on April 10, 2021.

More and more companies are outsourcing their software development needs nowadays. With perks like reduced costs, easier access to talent, and potentially faster time-to-market, it’s no wonder that outsourcing is gaining traction.

However, it’s not all smooth-sailing: Working with outsourced software partners still requires finesse in communication and project management

If you’re not careful, you might overlook the risks of outsourcing or fail to enact the proper best practices.  

The risks of outsourcing

Communication delays

Outsourced developers often work in a different time zone or country, so it’s inconvenient to have real-time work discussions. Different schedules coupled with a lack of experience with asynchronous communication can delay feedback. Over time, this can lead to slipping milestones and even delays in overall project completion.

The product doesn’t match the vision

Outsourced software development projects can sometimes seem like they take place in a “black box” where clients only get to view the product when it’s complete. This lack of transparency in the development process can yield unpredictable results. All it takes is a vague user story or cultural differences to cause a misunderstanding. Cue the shock and dismay when the finished product and original vision don’t match at all.

Security risks

Software partners have access to potentially critical backend systems and sensitive user data. Whether it’s malicious intent or human error, security oversights can have an adverse impact on a business and its reputation.

To avoid these potential problems, it’s best to understand the risks and put in place best practices to prevent them. 

Best practices for collaborating when outsourcing

1. Practice due diligence

Like any relationship, it’s harder to extricate yourself once you’re in it. So, make an informed choice before committing. This means doing your due diligence: Get recommendations from trusted sources, read reviews from previous customers, and assess their portfolio for technical competency and experience to see whether they can adequately suit your project needs. 

If possible, you can check out their hiring process or ask about the staff assigned to your project. Akin to hiring your own employees, you want to be sure that you’re getting capable people working for you.

2. Keep security in mind

Ask about their in-house policies regarding client projects: How do they guarantee the safety of client data and intellectual property? You want to be sure that they will protect your data and IP from theft, but security measures only work when everyone adheres to them

To get a sense of a company’s cyber-vigilance, look at how they are safeguarding their work environment and IT networks. Do they use anti-virus software, firewalls, and active network monitoring tools? It’s prudent to have a conversation with your software partners about code testing, penetration tests, and security management.

3. Communicate often and make it two-way

Active communication helps solve problems, align everyone’s efforts, and build a strong alliance with your software partners. Share your vision with them so they understand your business goals and feel motivated to back you up.

Effective communication happens frequently and reciprocally; encourage all parties to ask questions or seek clarification if things are unclear. Besides using email or chat apps, open up the use of phone or video calls for important or urgent issues that need tackling in a timely manner.

For more on addressing communication issues, check out our Typetalk series on The Seven Barriers of Communication.

4. Stay involved and committed to the process

Outsourcing a project doesn’t mean that it’s out of your hands while your software partner does the work. The development process requires involvement from stakeholders to give input and make timely decisions. 

A known but not-oft-spoken fact: Delays at the client-side are usually the main obstacles to project advancement. So, be proactive as a client, appoint a key person to handle questions from your software partner, remove obstacles that prevent developers from moving tasks forward, and streamline decision-making at your end. 

5. Define a clear project scope

A clear project scope (or statement of work) is comprehensive and detailed, covering as much information as possible for project execution. For example: What are the project’s goals? What problems should it solve? What are the features or functions of the website/software? Are there any design, safety, or legal guidelines necessary to follow? Are there any constraints on costs or timelines? 

Getting this document ready at an early stage of planning will enable your software partners to better understand your needs so that they can draft proposals with realistic projections of cost and timelines. This way, you can avoid misunderstandings that will cost further down the project lifecycle. The saying, “if you fail to plan, you plan to fail,” is apt here. 

6. Choose an engagement model that fits your needs.

There are three main models or contract types: Fixed Price, Time & Material, and Dedicated Team model. They represent different ways of charging for software development work.

Generally speaking, if a project is short-term and has clear requirements, you can opt for the Fixed Price model, where fees are fixed and negotiated at the start of the project. However, if you end up needing additional work outside of the contract, the charges may end up being more costly.

For a more flexible arrangement, consider the Time & Material model where work is charged by hourly rates. When clients request more features, they pay accordingly for the additional work hours. Have a good estimate of the total number of hours needed for the project, and you can negotiate a better hourly rate.

For long-term projects with unclear requirements and changing scope, the Dedicated Team model might be suitable. Because the software partner has a dedicated team that works solely on the project, you can have their full commitment and leverage on the team’s familiarity and experience on the project over time. For this model, the project cost is determined by the agreed workload and contract period, among other factors.

7. Organize work effectively with project management tools

Project management tools are getting more visibility nowadays because they are extremely effective at enhancing collaboration and streamlining software projects. They provide a platform where clients and software partners can communicate and share files with each other, keep track of various tasks, and stay on top of project deadlines.

A rise in outsourcing

Outsourcing may have been on the rise for the past decade, but it’s absolutely spiked since the start of the coronavirus pandemic. According to Forbes, there are several reasons why IT outsourcing has made such a bounceback.

  • Since people who traditionally work in-office had to start working from home, companies starting adopting remote working technology faster. You’ve heard of Zoom fatigue?
  • Employers are less likely to worry about remote work. If there’s anything that’s changed since working from home became the norm, it’s the expectations of how productive workers are when not physically being managed.
  • Outsourcing IT work to countries with a lower living rate has allowed companies to offset some of their lost income from cut projects and business

If there’s one thing we can extrapolate from all of this, it’s that outsourcing and remote working are here to stay.

Soo Hian Soo Hian is a Community Manager at Nulab — the creators of Backlog, Cacoo, and Typetalk. He likes technology and learning new things.