Newsflash for any company with tech job openings: there are three (!!) opportunities for every candidate, which creates negative unemployment for software developers in North America. For procurement teams, this means it’s time to find software development service providers. You may have “been there done that,” or you might be facing this issue now. The big question is…how do you find the perfect-fit provider that will set your team up for success?
Your choices for an outsourcing partner are LITERALLY across the globe. The challenge is to understand what traits a potential software development partner must possess to be right for you.
Warning: You Shouldn’t Hire 97% of Software Development Vendors
My company has reviewed more than 8,000 software firms around the world to assess their ability to serve Western clients and here’s a scary fact: most software development teams aren’t good enough. Our findings reveal that 97% of global software teams should not be hired. So, how do you find the 3% of the software development outsourcing vendors with perfect-fit alignment for your needs…or, better yet, top 1%? And what criteria are the most important?
Here are 4 critical traits to look for when hiring a custom software development partner.
1 . Size
Is your software outsourcing partner too big? Too small?
Look at your list of potential software outsourcing companies. What is their company size in terms of dollars and staff? What is the impact your engagement as a percentage of revenue and personnel commitment? You cannot get good results from a software outsourcing company that’s too large if your project is small potatoes in their portfolio of work. The top-tier, large IT outsourcing companies have thousands of developers, so, unless you're hiring hundreds of developers, you’ll get better attention from software development companies where your business matters more.
Conversely, you don't want to be the only client your outsourcing partner serves. The right size outsourcing company will have bench strength to cover for unexpected absences and breadth so that your assigned team never misses a beat with your software. There’s no reason to accept days of down-time if a team member is absent.
The 5% Rule
Unless your outsourcing engagement uses a team of developers greater than 5% of the total number of developers at your outsourcing partner company then you’re not likely to get the attention you need to be successful. We call this guideline our 5% rule. Make sure your engagement represents at least 5% and no more than 20% of your outsourcing company’s business base.
Does your partner have the right experience across multiple dimensions?
“Experience” as a software development outsourcing company is more than just skills in the most popular programming languages. Technical skills are important - I’d even say, essential. But even more important are skills PLUS relevant experience. When we do post-mortems with clients on previously failed attempts at outsourced software development, we often find our clients aligned with a vendor who possessed the right technical skills but lacked important relevant experience in the industry, application or other team and business maturity aspects.
Your industry vertical may have very distinctive considerations. Some of those considerations are the regulations which provide guardrails in which you conduct business. Most verticals have generally accepted “best practices.” Does this sound familiar? Then a software development partner with experience in your industry is a better fit than a vendor who isn’t.
Some application categories have their own best practices that transcend industries, such as:
- Accounting (GAAP)
- Payables (3-way matching)
- HRMS (SHRM Standards, ISO 30408, 30409, etc.)
- Blockchain (Hyperledger)
A suitable software outsourcing partner for your needs will demonstrate a strong capability in the application space you need filled. The vendor should know and proactively counsel you on standard processes, tools, common issues and so on for the type of application you want developed.
Experienced Team Members and Team Composition
A software development company with a proven outsourcing track record will also know how to staff your project team with the right mix of senior-level and junior-level developers, as well as specialists versus generalists.
- Generalists are valuable on development teams because of their broad knowledge base, but
- Specialists increase the value of your software and your outsourcing investment.
Teams with a mix of junior, mid-level and senior developers perform best. A team comprising all junior-level developers will be less expensive, but will also lack the experience to be productive. In contrast, hiring only senior-level developers will cost you more. In our experience, balanced teams are your best option.
Finally, we find that many companies seeking software vendors fail to look deeply enough at the MATURITY of a candidate firm. A mature software outsourcing company will have certain characteristics:
- Years in existence. A mature software development partner with years in operation is indicative of a healthy management team that offers services that companies are willing to pay for.
- Recruiting processes. Software outsourcing is a people-centric business. A mature vendor will have robust processes to keep a steady pipeline of new talent flowing into their company: locating top talent, vetting the candidates and onboarding them effectively.
- Company size. A mature software development company will have a healthy critical mass of talent, and evidence of growth year-over-year.
- Proven ability to deliver. A mature company will be able to proudly point to award-winning solutions they delivered and referenceable clients.
Seek a software vendor with attributes of innovation, great leadership and the highest hiring standards.
Does your partner have the right tool set to communicate and collaborate effectively with Western businesses?
Look for the ability to learn, work collaboratively, maintain clear communication and integrate with your company’s culture and core values. These are characteristics of a best practice software development partner.
Ability to Collaborate with Agile Methodology
No one is going to argue that collaboration is important. Yet, collaboration is sometimes under-valued in an outsourcing relationship. If, like most companies, you are planning to exploit Agile development methods with your vendor-partner, then collaboration is not just important - it’s ESSENTIAL.
An Agile software development project is a series of iterative work sets (Sprints). Each Sprint is intended to capture the best known design and quickly deploy it in usable code. In Agile software development “speed is king” and without great collaboration (a perfect marriage of great processes and good tools) - “the king is dead!” A software development company that lacks proven processes and tools to ensure effective collaboration is a BAD FIT for you.
English (say what?)
It may seem obvious, but you’d be surprised how many of our clients are shy about insisting on strong English language fluency from an offshore vendor, until we coach them differently. If language barriers exist, you’ll lose real project time, incur unnecessary costs, compromise the quality of your software solution and frustrate your employees and the vendor team. INSIST on good verbal and written English language skills from a prospective software development outsourcing partner.
Cost is not the only thing in making a purchase decision, but cost is never irrelevant.
Of course - everyone looks to outsourcing for cost savings. But, never limit your assessment of a candidate partner to price alone; always examine an outsourcing opportunity from a value perspective.
Strike a balance between talent and cost
Never hire the “least-cost provider.” Shop for a software development partner like you would shop for a good family car. You aren’t looking for a high-speed Ferrari or a cheapo rust-bucket; you want a Honda. Solid, stable, low maintenance, cost effective with years of experience and tens of thousands of hours of engineering on its résumé to back it up.
Offshore, nearshore, dual-shore?
Hourly rates vary depending on location. Do you want to work offshore, nearshore or dual-shore? Historically, the lowest cost provider has been, literally, halfway across the globe from the U.S. and multiple time-zones away. Many of our clients have found exceptional value in software outsourcing partners that:
- Leverage U.S. based experts who provide management and technical guidance to an offshore team of developers.
- Partner with nearshore companies who provide good economics plus the benefits of U.S. culture familiarity and overlapping workdays with the U.S.
Yes, there’s a podcast for that. To hear more on how to select the right software development outsourcing partner, check out Episode 10 of the Software Outsourcing Show - Searching Online for Software Outsourcing. (Available everywhere you listen to podcasts.)