How to choose the right IT outsourcing provider?
Handing over control to an unknown vendor can be troubling itself. If you’re not working with a team you trust, the value of outsourcing can quickly become a risk. This is why it is extremely important to hire the right team.
Finding professionals with the requisite technical skills, the ability to communicate effectively and build personal relationships with the in‑house team, is not an easy task. We’ll help you kick off your risk assessment by covering the top 5 factors to consider when offshoring or nearshoring IT services. This groundwork will help you source and select a company that you trust and that matches your needs.
What are the most important points you need to consider about a potential outsourcing provider?
Obviously, the quality of the work you are paying for is the most important.
There are three main aspects that you should take into account:
It is a good idea to gather information about the educational system provided for the skills you require in the country you are planning to offshore to. Nowadays, it is easy enough to scan through the statistics, surveys, and the public opinion on the topic.
The quality of education in the IT sector in Serbia is at an extremely high level. According to a survey conducted by Startit, 73% of developers in Serbia have a degree in third level education (higher education). Public universities are, for the most part, free and offer significant scholarships. Contrary to the situation in most countries, in Serbia, the standard of education offered by public schools is more stringent than that offered by private schools, which are a minority in the education system. Furthermore, most IT students have had internships, thus, have worked on real life projects during their studies.
Because the standards are set high due to the education system, even IT specialists who are self‑taught or have completed a course, are required to reach a high level of efficiency to be hired.
1.2. The company itself
Make sure there is a good hierarchy in the company you are considering. A well formed team with enough seniors, team leaders, and capable and experienced top management can assure you that the company has the best qualifications, relevant experience, and can solve problems from multiple angles. Yes, you are hiring a dedicated team or a specific specialist, but it is extremely important that the company as a whole has the best practices in recruiting and training their employees, as well as in customer relations. If a vendor has clear company values that resonate with you and provides a good support system for their team members, it is less likely that communication and performance compatibility will be an issue.
When choosing the right outsourcing provider, it is critical to pick someone who understands your industry, your business model, and the goals of your company. This doesn’t mean that you should exhaustively analyze every outsourcing provider on the market, but it does mean that it pays off to choose one with a proven track record - especially if you are just beginning the search process.
Apart from checking clients list, testimonials, and case studies, there is a more reliable way to check references. Search for a company’s profile on some of the popular platforms with direct reviews from previous customers, such as our WeDoQA profile on Upwork.
2. Language requirements
A good start is to learn about general knowledge of the desired language in the country the potential vendor is from. It is also quite easy to draw conclusions if you have an initial interview with them.
In Serbia, English is studied as a primary foreign language from day one of the educational journey. Through all the following stages, all students are required to have an excellent grasp of the language – both in writing and in speech – in order to graduate. Apart from the mandatory education, it is common for students to refine their knowledge of the English language in private language schools and get Cambridge certificates.
If you outsource to Serbia, the communication is guaranteed to be handled by professionals with decent‑to‑excellent command of the English language. At ALAS, we pay special attention to the fact that each member of our team is proficient in written and spoken English. In addition, our employees are provided language classes to further improve their knowledge.
3. Cultural similarity
National and organizational culture differences can play a role in the offshoring process. When outsourcing to a foreign country, especially one in a vastly different region from your own, you will inevitably have to contend with cultural differences that may or may not have a detrimental effect on the performance of the business process itself. These cultural differences can manifest in different ways, from excessive religious holidays to language barriers.
Determining the risk points can be as easy as checking which non‑working holidays are there in the country a managed service is from, or making sure the provider has a high level of multicultural competence and a positive attitude toward cultural differences by checking if they have multicultural clients or just a small region they deliver services for.
Whether you choose a company from your close surroundings or one overseas, consider the company culture, level of formality, and values you share, especially in terms of conducting business and communication.
4. Time difference
Overlapping time zones is the silver lining that helps companies recruit and work with people from different locations seamlessly, without hurting their communication. Poor communication can often result in project failures, which can be averted if you manage the overlapping work hours efficiently.
When offshoring based on overlapping time zones, the work culture in the respective countries must be kept in mind. Do they begin work earlier, maybe at 7 or 8 am? Do they follow a nine‑to‑five workday?
If a company’s business model requires the employer to be active 24/7, companies can hire talent from opposite time zones to ensure 24-hour workdays. Also, if there is no significant communication needed, working from opposite time zones is an option.
We work in CET with slight adaptations to our work hours (9 am - 5 pm, 8 am - 4 pm or 10 am - 6 pm), to make it easier to arrange meetings with our clients from all over the world. We have tried‑and‑true methods and practices that enable us to successfully conduct business with our most remote clients.
These are examples of how we schedule communication with clients in North America (CT) and Singapore (SGT):
CT and CET: The best time to schedule a conference call or plan a meeting would be between 9:00 and 10:00 am in North America. That is between 4:00 and 5:00 pm in CET.
SGT and CET: The best time for communication would be between 2:00 and 4:00 pm in SGT, which would be between 7:00 and 9:00 am in CET.
Overlapping time zones means always having a few hours during the workday where all the team members are available for a meeting. They won’t need to make drastic adjustments to their schedules, and you can conduct meetings seamlessly.
You can simplify cross‑time zone collaborations and team syncs with tools like Time Zone Wizard that use zone overlap calculators.
5. Service costs
The cost of labor, specifically in the IT industry, can be exceedingly high in countries like the USA or the UK. Thus, you can maximize your return on investment through offshore outsourcing to countries where labor is generally cheaper but still of the same caliber in terms of qualifications and skills.
It is best to look for an outsource contractor that lets you choose the best delivery model according to your own needs and who considers the project’s complexity and amount of resources needed when forming a price. They should have different pricing options for different cases and be transparent and upfront about it. If this is the case, it is very likely that the partnership between both companies will grow stronger over time.
A thing to remember, while price might be a factor, deciding on price alone could be a mistake. Instead, focus on the overall value the company will provide. Finally, keep in mind that an outsourcing service model requires time to grow and evolve through mutual collaboration between both parties involved.
How can you prevent common pitfalls?
The primary concern with outsourcing IT is often related to communication. Poorly established communication channels or a lack of in‑person interactions can result in misunderstandings and disagreements, which can quickly escalate into frustration if not handled appropriately.
A recent survey indicated that almost 90% of companies considered communication to be a major issue in outsourcing.
By acknowledging and managing the risks, you’ll be well on your way to protecting your project and ensuring successful software delivery.
Establish transparency between parties
Open communication is the foundation of a successful collaboration. It is important to be clear and transparent about your goals, hopes, and needs when assigning certain functions of your business to a third party. On their part, the provider should ask the right questions and guide you, showing interest in the whole picture and the business goals behind it.
Trustworthy vendors show a “human touch” and do their best to understand your concerns and expectations. They should also be upfront about possible dilemmas on their part. Creating a well‑defined project plan and timeline with agreed‑upon key milestones is essential.
You will inevitably have to lose some control, but the risk is lowered when you can trust the team to bring up concerns or issues early, without sugarcoating them.
Determine a communication cadence
Regular check‑ins can help alleviate worries about a lack of control. Vendor reports will give you an overview of their workflow and overall project progress. Regular status meetings should be a standard feature of any engagement.
Good communication practice also means being ultra‑responsive, meaning that the outsourcing provider is able to meet at very short notice should an issue arise.
Being proactive is another part of the trust and reliability equation. Whether you are outsourcing the whole process or just augmenting new team members this way, you will benefit from an outsourcing provider that really listens to you and is constantly looking for ways to streamline your processes. In the ever growing competition in this digital age, companies look for every possible means of boosting their cost‑efficiency and accelerating time‑to‑market. They are increasingly relying on their suppliers, including their outsourcing providers, to help them design better business processes.
The ongoing relationship management is vital for the collaboration to survive and become a long‑lasting partnership. That is why senior management must always remain involved during the implementation of the contract to ensure everything runs smoothly and every issue is properly addressed.
It’s important to develop a long‑term relationship by identifying the right outsourcing partner that truly understands your business. This isn’t just about finding an agency that can provide services that meet your current needs, but someone who can grow with you and support you no matter what happens.
At ALAS, we assist corporations, as well as mid‑size companies and startups, with software development and software quality assurance, challenging the processes and integrating the most efficient methods. Our contribution lies not only in our expertise but also in the sense of ownership and responsibility we bring to every task. Contact us and check if we are a good match to help you achieve your business goals.