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Published: 25/05/2021

Choosing an outsourcing company: 11 factors to pay attention to

Choosing an outsourcing company: 11 factors to pay attention to

Selecting a technology vendor to outsource to can be a challenge. A highly competitive environment and a growing number of outsourcing companies to choose from do not make your choice simpler.

These phenomenons are in response to the needs of entrepreneurs who are increasingly more often deciding to outsource some of their departments. In many cases, this enables them to minimize costs and increase efficiency.

The best outsourcing providers you can find on Pangea.ai. So, if you have decided to outsource some of your tasks, what guidelines should you follow when choosing the best company? You’re in the right place to find the answer. 

We will share a list of factors that you ought to look closely at, since they can help you with each step of the verification process and improve your decision-making.

Let’s get started.

1. Experience in the relevant technology area and domain knowledge

Experience is a necessity in outsourcing. Imagine that your chosen technology vendor has experience in a different industry to yours and doesn’t understand your sector of the market. It might be a problem and cause unnecessary risk.

The outsourcer that you pick should have relevant experience. Why? Professionals should be able to help you and advise you. It isn’t enough to make decisions based on “gut feelings”, they need to have strong knowledge of a specific topic. Aside from a general business background, they must also understand your target system’s environment, which is crucial in software development.

More than anything else, this experience will give you peace of mind. You will know your project is in good hands and that you do not have to worry about its backbone.

2. References

Market reputation is equally important to experience. There is no sense in working with an experienced partner who constantly misses deadlines and doesn’t put the good of your project first.

Nowadays, it is not difficult to find out what people are saying about a company online. However, you should not limit your research to forums or platforms with in-depth client reviews.

If you have any doubts or are considering several vendors, go one step further. Contact at least a few of their previous clients and find out about their outsourcing experiences. Contact them in person. The best way to choose a partner is to be confident that the company has many satisfied customers and is trustworthy.

3. Company culture

A collaboration between two companies works like a relationship. You both need to share the same values and understand each other easily. Partnerships in which these aspects are fulfilled are more likely to result in success.

Cross-cultural business can be tricky. Imagine a situation when a company from Western Europe works with a business from the South. Western societies tend to think about time as linear – deadlines are crucial to them, it’s the here and now that counts. Their decision-making tends to be quicker than Southern Europeans, who need a more personal approach in order to make business decisions.

Their perception of time is different. Southerners’ way of work is more relaxed, they have time for responding, and good vibes are more important. These differences might create friction and misunderstandings.

Nevertheless, it’s possible to merge these two worlds together. Whether you choose a company from your close surroundings or one overseas, you should establish communication standards and the terms of collaboration. Consider the level of formality and data transparency. Develop a win-win situation.

4. Method of communication

We need to highlight one more aspect of an outsourcing relationship – clear communication between the company and its partner. It’s essential to set up a communication strategy in order to obtain transparent feedback.

It would help to establish how your communication will look like before, during, and after the project. How much insight will you have into current activities? How much control will you have? You need to establish expectations and develop frameworks.

Face-to-face meetings are probably one of the most effective forms of communication. However, if you prepare correctly, long-distance communication can be just as effective. 

Select the communication channel, and make it part of your strategy to document everything pertinent to the project. To encourage active listening and feedback, create a handbook that outlines the organization’s culture. Remember that communicating effectively doesn’t always happen naturally but requires a plan.

Methods of communication within a company

5. Onboarding process for clients

What is the next thing to pay attention to? You should research the client onboarding process at a particular company. Before the kickoff, discuss with the vendor what their procedures are and what concrete steps they take.

It would be perfect if they have it carefully planned and tailored to your individual needs so that every step is clear and understandable for both parties.

How can you prepare for the onboarding process as a client? First, you can make a document containing all the information they need to get started, e.g. stating who the project’s stakeholders are.

Client onboarding is the best time to go through all of your questions. Introduce the business context and provide technical documentation. Building foundations early will allow both of you to create a solid framework and set mutual expectations.

6. Emergency plan and risk management

Managing risk effectively can be a determining factor in the overall success of the project. Your vendor needs to be prepared for the worst. Pay particular attention to whether they have emergency plans plus identify, assess, and control threats.

They need to be flexible if they will be able to work in time pressure and hostile environments. It will maximize your safety if they put together a robust risk management plan that considers all possible hazards and unexpected events before they occur. This will protect the future of your company and save your money.

The outsourcing company should carry out a report on how to ensure that the project keeps running smoothly and succeeds in the event of an unexpected issue occurring during the project’s development.

7. Data management

Security and privacy of data are two of the biggest concerns nowadays, especially for businesses. When choosing the right technology vendor, you need to keep in mind that information about your customers and company will be in their hands. What does this mean?

When you outsource a project, you often have to share sensitive information with people outside the company. You must ensure that this data is completely safe. Find out what data management at the company looks like, and ask for it to be explained.

You need to ensure that they use the latest security technology and that all activities comply with GDPR. You must consider hiring a vendor who regularly checks out their network and security systems. Make sure you take every necessary precaution to prevent any data leak.

8. Issue of rates

The issue of rates is an often forgotten aspect when determining the terms with an outsourcing company. Understand their pricing before making any decisions. The way in which fees will be charged must be established from the outset.

You can recognize a professional company by the fact that their prices are completely transparent. It will be apparent to you in advance how much you will pay, what for, and what to expect in the case of, e.g., an increased workload.

Don’t get trapped. Remember that a cheap and fast, yet great company doesn’t exist, and that these three aspects don’t usually fit together. If you’re going only for the lowest price, you might regret your decision. 

It’s very likely that either the company is inexperienced and will literally learn on your project or the solution will have so many bugs that you will pay more money to fix them. Aim for a good balance between price and quality. Is it easier said than done?

Usually, yes. You must clearly communicate your budget and how much money you are willing to invest in the project. Otherwise, you and your vendor may not be able to meet halfway. Do you have a limited budget? Talk about it with the vendor. You might be able to split the project into stages or negotiate different conditions.

9. Project development

When selecting a vendor, you must also consider how the project is going to be developed. Does the company have a so-called project implementation manual? If so, you can see all the details of the project’s development and guidelines there.

With such an adequately prepared plan, you can avoid making hasty decisions. Moreover, you will understand the reporting process clearly and stay updated on all aspects of your project. Regular reporting is essential to keep your company informed about the status of the development.

The structure of the reporting should be defined before the project starts. If the company doesn’t want to compile it, that’s a red flag for your cooperation – they probably want to limit your insight into the project’s progress. If you cannot monitor obstacles (and milestones), you will not be able to react quickly once the project deviates from the terms of the contract.

Project development

10. Financial stability of the service provider

There’s nothing worse than hiring a service provider with financial issues that will cease operations before completing your project. It’s a significant risk you must avoid. An external problem such as a pandemic or third-party bankruptcy should not cause any friction to your project.

That is why it’s essential to assess the financial stability of your potential vendor. Check the company’s insurance policy and make sure that it’s sufficient to handle any risks and unexpected issues.

Are there any other steps you can take to minimize the risk of hiring a company with some financial difficulties? Make a background check – research the company’s credit history. It’ll give you insight into the company and enable you to ask relevant questions if you do have any concerns.

In addition, you may ask the vendor for a financial statement. However, in most cases private companies do not release such information. Take a close look at the provider’s growth plan. It’ll also tell you a lot about the situation in which the company finds itself.

11. High-quality product

That brings us to the final point of vendor evaluation and selection. Even though all of the aspects above contribute to high-quality service, there is one more crucial aspect for choosing a vendor. You need to make sure that they will create high-quality code that meets specific standards.

How does the company take care of its code quality? Look for vendors who make mock-ups before writing the final code and improve it based on user feedback and opinions. Only then can you be sure that they are striving for the best possible product quality.

Before you decide to turn to a particular company, check to see if they perform code reviews and functional testing. Find a software vendor that tests for regression and manages backlogs. These precautions ensure that you will receive a robust product that has been thoroughly tested.

The implementation process is the starting point for them, not the end. The code needs to be well-tested and follow the best practices if it is to achieve long-term success and allow your software to work without any bugs.

How to choose the right outsourcing company

Choosing the right outsourcing company that meets your expectations requires a lot of work, just like with all critical decisions. You have to check many factors and compare the alternatives to be able to make a well-thought-out decision.

You can add significant value to your ongoing projects by selecting your outsourcing partners wisely. Our list of factors will work as your roadmap in the market. You will be able to notice warnings and more easily rule out companies that aren’t “sure things”.

Although it will take a certain amount of time and effort, this selection process will pay off. Choosing a vendor that becomes your partner can bring great results, so are you ready to outsource?

Be sure to check why DAC.digital is the best option for outsourcing services.

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