How to Choose a Reliable Outsourcing Partner for Your IT Project

Even IT giants like Facebook and Google do it  — use outside help to develop their software. Endless opportunities offered by global outsourcing look really impressive, especially from afar. But at close range, the endlessness emerges as a challenge. Out of the millions of tech-savvy teams at your disposal, you need to select the one that best suits your business goals.

The right choice of software vendor once allowed WhatsApp, Basecamp, Slack, Github, and dozens of other startups to grow into superstar brands. On the downside, a vast number of unknown companies failed with their digital projects, having relied on the wrong external staff.

For over 5 years, DA-14 has constantly analyzed the factors of successful collaboration in the outsourcing market. Below, you'll find a list of key conclusions we’ve come to hand-in-hand with Dmitriy Sushko, CEO of DA-14 Software Development, as well as our partners and clients.

Main Reasons to Outsource Your Product Development

Business owners outline 4 situations when delegating your software development to a third party is not just an attractive option, but a strongly recommended strategy.

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#1 Money issues

Obviously, cost-effectiveness is the number one reason for small businesses and startups to hire an outsourcing development team. Cutting down operational expenditure by up to 60%, delegating software design allows tiny firms to survive, develop and grow. Large enterprises also seize the opportunity to decrease their expenses wherever possible.

#2 Lack of necessary skills within your company

Of course, you can hire additional in-house developers or upskill existing employees. But what if this new knowledge is needed just for a short-term or side project? Is the idea worth spending substantial amounts of money on?

Top IT professionals will expect hefty salaries, bonuses, medical and other benefits. Moreover, even seasoned experts need time to adapt to your company’s culture and get integrated into the team’s workflow. The average amount businesses spend on employee onboarding amounts to $1200 in the US or £1068 in the UK per hire. Add up the expenses on recruitment, office space and equipment  — and the financial burden will grow too heavy for most startups with a tight budget.

On the other hand, upskilling your in-house workforce can be quite time-consuming. The more complex the technology you need, the steeper the learning curve is. It goes without saying that you won’t be able to start your new project any time soon.

#3 Tech talent shortage in local job markets

Finding an IT pro is not that easy, regardless of the salary level you’re ready to offer. With the demand for tech workers growing and battles for software developers heating up, the pool of available local talents is getting more and more sparse. This skill gap is particularly noticeable in small cities.

Apparently, the situation will get worse. By 2020, there will be 1.3 million new software jobs and only 400,000 new computer science grads in the US. It’s worth mentioning that the problem is global. The ManpowerGroup Talent Shortage research claims that in 2018 almost 45% of employers report difficulty in finding people with the in-demand tech skills they need.

#4 Need to focus on core processes

Side projects  — however cool and promising they may be —  take time and distract attention from your main business tasks. So does mundane routine work. Both can be successfully subcontracted to other companies. Consequently, you’ll be able to shift your focus from supporting or peripheral activities to top-priority tasks. As one of our partners put it, “I outsource what I’d rather not be doing, due to either lack of competence or lack of interest”.

The idea of engaging external resources looks even more attractive considering that 40% of companies looking for tech expertise are not IT businesses. By delegating tech tasks to an IT outsourcing service provider, these firms kill two birds with one stone. They easily adopt new technologies and remain concentrated on what their companies usually do best.

Outsourcing Benefits and Pitfalls

Before making the final decision, you should consider pros and cons of distributed development. Let’s sum up the key advantages offered by remote teams along with possible risks they pose.

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Obvious pros

  • Wide pool of tech experts. You’re not limited to your local labor market and don’t need to steal professionals from competitors, offering unreasonable prices for targeted services. Outsourcing allows you to find the right talent in some other part of the world.
  • Cost-cutting. You avoid wasteful expenditure on recruiting, onboarding, upskilling and managing in-house staff for short-term work or side projects. All equipment and expertise are provided by an augmented team. Besides, you have a chance to get the same skill set at a lower price due to wage gaps across different countries.
  • Speed and effectiveness. When you delegate specific tasks to software vendors who have extensive experience in your target field you’ll get better results in less time, so your product will get to end-users faster.
  • More attention to your key area. By entrusting a distant partner with complex IT tasks or minor projects, you free up internal resources for strengthening your business and building your brand.

Potential cons

  • Less control. Monitoring remote personnel could be inconvenient, even if you use special apps. It's hard to keep steady control over the quality at every step. Until the job is done, there is no 100% guarantee that your project is getting enough attention.
  • Problems with communication. According to Gallup’s 2017 State of the American Workplace report, communication issues remain a major problem for millions of employees in the US. The situation can get even worse when moving a project offshore. The impacts of language barriers, cultural differences, and different time zones are often underestimated.
  • Security challenges. Sometimes you have to share sensitive corporate information including client data with far-off outsourcers – otherwise, they can’t do their job. At this point, you put your business data at a greater risk and need better security monitoring.
  • 4x Rule. This states that an outsourced team will work on your project 4 times longer than you initially estimate. Communication issues, misinterpretations and other factors substantially extend the implementation period. The good news is that the 4x rule won’t necessarily hold true if you choose the right partner.

Your Ideal Remote IT Partner: Things to Check

Suppose you’ve come to the conclusion that hiring remote staff will enhance your business. What's next? Define your expectations as clearly as possible: the preferred tech stack, specific requirements, number of employees in the team, deadlines, budget — every detail matters. A clear vision of what needs to be done will narrow down your choices, mitigate risks and prevent disappointments. Here are the primary considerations when choosing the best outsourcing software development team:

Experience and expertise

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It’s crucial to know whether app developers have the proper experience and tech competence for your project. Do your own research and pay special attention to:

  • the core area of competence; is it aligned with the industry you work in?
  • the technology stack; choose the team focused on certain technologies – if you want your frontend to be built with Angular, find a company specialized in this particular framework and avoid software vendors offering solutions in PHP, Ruby, JS, Python, and dozens of other languages and frameworks at the same time.
  • completed projects; has the overseas firm ever created software similar to your project?
  • references and first-hand feedback; contact current or previous clients to get more info.
  • personnel; ask for information about the backgrounds and skills of each team member – how long have they worked together and how many projects have they successfully completed? Note that balanced teams that consist of junior, mid-level and senior developers usually offer the ideal quality/price ratio.

Overall size of an outsourcing company

For startups, it’s irrational to apply to huge IT enterprises with over 5,000 employees. You’ll be a small fish in a big pond of business sharks who generate far more profit. Most likely, your tasks will be treated as a side project with low priority.

A tiny team capable of serving only a single client at a time is another doubtful solution. Of course, you’ll be in the spotlight. But what if your project gets larger? Can this company provide you with extra developers? Can it grow with you?

To be on the safe side, find an outsourcing development company that satisfies the so-called 5% rule. Your project should engage at least 5% but no more than 20% of a development company’s staff.

Ease of collaboration

A brilliant devopment team will be of no use if you can’t build an effective relationship. Poor language skills, slow feedback, delays and misunderstandings often overweigh the benefits of low costs. So, before signing a contract, you should clear up the following questions:

  • do you get prompt and understandable feedback?
  • do you deal with good communicators who listen to you and offer solutions that meet your goals?
  • is your offshore/nearshore partner ready to use your local time when scheduling meetings and deadlines? Are team members easily reachable during specified business hours? Working across multiple time zones is a common thing nowadays. But it still needs some additional attention and planning.

Rates

Though cost-cutting is considered to be the largest benefit of outsourcing, experts warn against rates that are too low. Choose a software outsourcing partner that offers average prices for its region. Regardless of the location, it’s better to avoid developers willing to work for less than $25 per hour. Predatory pricing can signal lack of qualifications or some hidden costs.

The 2018 Guide to Global Software Outsourcing Rates gives the following price ranges, based on reports of 700 outsourcing companies:

Title
United States
Latin America
Eastern Europe
Asia
Project Manager
$133 — $233$55 — $66$45 — $70$35 — $48
Junior Developer
$105 — $111$35 — $44$25 — $42$18 — $24
Mid-level Developer
$132 — $140$30 — $52$35 — $56$24 — $35
Senior Developer
$154 — $163$45 — $55$45 — $70$30 — $42
Lead Developer
$176 — $187$50 — $61$45 — $70$30 — $42
Junior QA
$77 — $81$30 — $39$25 — $42$15 — $24
Mid-level QA
$99 — $105$35 — $44$30 — $49$20 — $30
Senior QA
$143 — $169$40 — $50$40 — $63$25 — $36

Where to Fish for Remote Staff

These days recommendations from friends, relatives and partners are the #1 method of choosing the right outsourcing partner. However, this strategy will not work if:

  • nobody around you has relevant experience with outsourcing
  • you’re deciding which of several outsourcing proposals to choose – which is why you want to collect more opinions and information from different sources
  • you’re looking for niche expertise or specific industry knowledge

We’ve asked our clients and partners to share their best practices and methods of finding experienced software developers, other than referrals:

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Google search

Google will provide you with an endless list of websites of software development outsourcing companies from all over the world. ‘About us’ pages, portfolios and case studies usually give plenty of information to assess companies’ values, preferred technologies, and areas of expertise. The downside of such self-presentation is a lack of unbiased feedback. Another problem is too many results –  44,400,000 for the query ‘software development outsourcing company’!

Freelance job websites

Online job boards such as Upwork, Freelancer and Guru give you access to a huge global talent pool along with reviews from previous clients. But given that these sites were initially built for freelancers, sometimes it’s not easy to find a software development company with a project manager and more developers on the bench in case your project grows bigger.

Research and review portals

ClutchGoodFirmsTOPagency, and similar websites gather detailed data about top software development companies across the globe. You can use filters to specify your requirements, e.g. average hourly rate, location, number of employees and portal rank. Extensive and thorough reviews left by customers make these platforms especially useful and informative.

Social media platforms

Take advantage of Facebook, Linkedin, Twitter, Google+ and other social networks. Many software development companies maintain their presence on several platforms. Using different channels, you can take an inside look at the office life and activities of potential partners, learn something about their values, read reviews, and ask for more opinions from clients.

What Made Our Customers Choose DA-14

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“We found them on Upwork. We received different proposals and interviewed the top three companies. DA-14 seemed to have a great team and we were able to negotiate the price. Also, we liked the fact that they were very professional and assigned us a project manager, who made sure everything was going according to the plan. They're great communicators. That was one of the biggest things we were looking for, especially when working with an offshore provider”

Saad Malik, founder at  Investroo (New York, USA)

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“I looked for collaborators on Upwork and received word from many companies. DA-14 was enthusiastic in doing a 2 to 3 day test session, free of cost, just to demonstrate their skills. This test showed me that they were up for the task I had and their services would fit in my pocket. DA-14 is very well organized. Their project manager considered all the requests and kept track of hours. The communication is very frequent and we can get someone on the phone whenever we want”

Arthur Darde, CTO at Parkopoly (Paris, France)

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“We scoured the internet for outsourcing development agencies, and we selected DA-14 with some other companies. We conducted simple interviews with these candidates, asking them to share their experience about the kind of projects they have worked on and how they work with clients. At the end of it all, we went with DA-14”

Bruce Greig, co-founder at Fixington (London, UK)

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“I interviewed them through Skype, walking them through my requirements, and they asked thoughtful questions about the project and timeline expectations. I gave them my mockups and they responded with a detailed outline within a week. I liked their communication and management style, so we decided to move forward”

Stephen Chang, owner at Mochi Group LLC (Seattle, USA)

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“Over the summer we interviewed 40 different development teams to see who could handle the contract in the timeframe that we needed and who had a good working style. We… finally selected DA-14 because they understood what was at stake and could handle it. We were confident that they would be timely and would listen to us”

Sky Kelley, CEO at Avisare (Los Angeles, USA)

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“We don’t usually work with agencies because we haven’t had good experiences, but they are a small agency that has been able to provide us with really good freelancers. With DA-14, we can hire people and develop our culture on our own terms... They really try to align their strategy with the needs of their customers”

Fabrice Marchal, CTO at Invigos (Stockholm, Sweden)

All these comments were left by our clients using clutch.co and topagency.co, independent web catalogs that focus on in-depth analysis of software vendors. There you can find more feedback on each stage of partnership with the DA-14 team.

Searching for the right remote partner is a complex multistage process, but the result is usually worth the time and effort spent. If you want to propel your business with the help of a dedicated software development team, you’re always welcome to contact us for further professional consultation and evaluation of your project.

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