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  • Jim Kinlan, Partner Success Director

A Guide to Selecting an Outsourcing Partner

Navigating the world of outsourcing can be complex, but one thing is certain, pretty much everyone already knows how to do it because we personally outsource many of our personal tasks such as cooking, landscaping, handyman tasks, and more. When we don’t have the time to complete these tasks, we look for someone who can accomplish them skillfully at a cost that we are willing to pay. As these tasks are completed by someone that is more skilled at them, we have more time to spend with our family and pursue our dreams.

Companies also outsource a range of activities and tasks. Just like individuals who reap time advantage when they utilize outside help, companies gain the strategic advantage of choosing which areas are critical to their business, allowing them to be more effective and efficient in their areas of core competency.

So when a business chooses to outsource those less critical tasks, it’s much like an individual who has a landscaper mow their lawn, and the landscaper will do a better job at a time when it needs to get done (not when you have the time). Unlike personal tasks, companies can reap significant cost and strategic advantages as well.

Two of the world’s biggest Fortune 500 companies, Apple and Nike, don’t even manufacture their own products. They have highly crafted long-term partnerships with a select group of businesses and factories. Even major software companies like Oracle, Microsoft, and Google strategically outsource many of their software processes. For many small and medium-sized businesses, the advantages of outsourcing have been a little more challenging to achieve. It all starts with finding the right partner and a willingness to try.

Find a partner that shares your values and has low turnover

My advice – don’t outsource your software work, partner with your external software developer! To do this, you need to find a partner that shares similar work values and culture. This is exemplified by a company that embraces team spirit and has low turnover.

Capitalize the time difference to your advantage

Use what might be considered a negative – the time zone of your partner to your extreme advantage. You first need to make sure that your partner can accommodate your schedule. While it may not be imperative that physical communications occur every day, there should be specific days when this virtual communication occurs. For emergencies, you need to be able to have a point of contact 24 hours a day and seven days a week.

The time zone difference can be compared to the analogy of a cobbler – in that you could prepare the leather for the cobbler in the evening. In this case, the leather could be a defined work module or piece of code. When the shoes are crafted overnight by the cobbler (the code is completed), you can verify that the project has been successfully completed and/or what parts need to be improved or modified. The cobbler analogy continues the next evening – making adjustments that affect the fit and overall suitability of their work. With this time zone difference, you reap the advantage of a 24-hour work schedule.

Coders are easy to find – find a partner with great program managers

To ensure the success of your project, find a partner that has the best project/program managers. You can find development partners that manage every bit as good as you do – maybe even better. However, you should make sure that you have a competent project/program manager at your site to oversee the progress of the project and to regularly inspect the work quality.

You might even find a partner with excellent design skills

Some development partners also specialize in design graphics, UI interface, and everything in between. Because we all know how important user design and aesthetics can be to the success of any project, this can be a huge factor in your selection decision. While this design capability is unusual to find when seeking a partner, you can find them.

Find skills in specific areas that where you lack and get them immediately

Outsourcing can be highly efficient – you can immediately find talented developers in areas where you have specific needs. You can get access to the skills of hundreds of developers with skills that your budget simply couldn’t afford and you can continue to concentrate on your core competencies. Moreover, you get access to these skills immediately without the extra fixed cost burden of hiring, training, and supplying offices and equipment.

With effective outsourcing, you can better focus your staff on what truly matters. Take your business to the next level. When you collaborate with a trusted partner, your internal resources can be freed up for the specific strategic projects for which they are skilled. When you work with an outside company, these freed up internal resources can be allocated to processes that can expand your business. Moreover, the IT staff that remains is more motivated to work on these types of development activities. Now you can rely on the defined expertise of the organization that you hired since they specialize in the project that you have identified.

Your costs are significantly reduced

With all the potential advantages above, probably the most important advantage is that your costs will be lower. Know that your costs are all in – there are no additional costs for health care, vacation, sick days, social security, computers, space, recruiting, and the myriad of other potential personnel costs. Moreover, you can reduce your onsite software licensing as your developer will have licensed many of these required tools.

Increase your flexibility to match project peaks and valleys

By partnering, you have much more flexibility and the opportunity to scale (up or down) to match your project peaks and demands. This new flexibility that is based on actual project cycles can help your business reduce fixed costs. Your costs are now variable rather than fixed.

Some additional checklist items

Here are some additional items for your checklist in your partner selection:

  • Communication – your partner needs to be able to communicate well (written and spoken language) with all levels – the managers as well as the actual developers. Ask them for an example project plan.

  • The employee churn rate for outsource partners can run as high as 50% or higher. Ask your prospective partner what their employee churn rate is and their practices to keeping the churn rate down.

  • Make sure that your organization has carefully outlined the requirements and what you expect from your development partner. Only then can you begin discussions with development partners.

  • Do a thorough background check of your possible development partners. Winnow this list down to a small handful of potential partners.

  • Request a detailed proposal with price quotation with a summary of the partner’s business background, references, and their terms and conditions. Ask the partner to send a sample contract to review in advance.

  • Evaluate the proposal(s) for completeness, professionalism, and price.

  • Be sure that your partner contract details ownership of code and the inability by the developer to utilize the same code in other projects. Make sure that your project plans are protected by an NDA (non-disclosure agreement) if your work or discussions involve sensitive company plans or information. Timelines are another major sticking point; detail what tasks are to be completed and in what timeframe.

  • Make sure that key members of your team are available when you need to contact them.

  • Detail a payment method and plan that meets your requirements and efficiently compensates the partner.

If you keep and manage this checklist when you select your outsourcing partner, you will be more confident in your decision-making process.

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