With emerging technologies constantly arising, companies must develop new software to stay ahead of the competition. The process of creating a new product typically requires a significant amount of time and resources, which is why businesses often opt for IT outsourcing services. Software outsourcing can help businesses fill skill gaps within their in-house teams, reduce costs, and accelerate time to market. However, selecting the right software outsourcing vendor can be a daunting challenge. With numerous options available, it is crucial to have a set of key criteria to evaluate each vendor. Don’t worry, we are here to guide you through the essential factors that should be considered before making an official agreement with a third-party provider.
Understanding your project needs
1. Identifying your project goals and requirements
Before evaluating software outsourcing vendors, you should identify the specific objectives and requirements you aim to achieve through the outsourcing partnership. Answering these questions may help you communicate expectations to potential vendors and ensure they have the expertise to fulfill them.
- Is it to develop a new software product or enhance an existing application?
- Who are the potential users of the product?
- What are the functionalities of the product?
- What are quantifiable metrics to review the results?
- What are the specific technologies that are essential for your project?
- What is the cost you are willing to pay for the services?
2. Assessing your critical tech stack
It is important to have a preliminary plan outlining the tech stacks that will be used for your software, helping you discover vendors with the necessary technical skills.
For a business mobile app, the vendor should have expertise in iOS, Android, and cross-platform languages such as Kotlin, Flutter, or Swift. On the other hand, for blockchain development, their understanding of various blockchain protocols and programming languages, as well as how to build innovative DApps on them, is essential.
Alternatively, if you intend to enhance existing features of a product, you must ensure that the vendor can smoothly integrate with your current tech stack. Developing an entirely new system can lead to complications and extend the time required to achieve value.
📌 Seamlessly migrate your outdated software systems over to the latest ones
3. Defining your budget and timeline
First, you need to determine the financial resources you are willing to allocate to the project, taking into account development, testing, and ongoing maintenance costs. You will also want to look at the pricing structures offered by potential vendors to ensure they align with your budget. But remember that the most cost-saving outsourcing vendor may not always be the most suitable one for your project, so it is important to strike a balance between your requirements and the pricing agreement.
Next, you have to establish a comprehensive timeline for your project, including specific periods of each milestone, such as the duration of the design stage and the estimated time for coding. It is recommended to discuss this timeline with prospective vendors to assess their ability to dedicate themselves to your project within the desired timeframe.
Main vendor selection criteria
1. Company information and reputation
You can gather detailed information about their company and assess their reputation in the industry by exploring vendors’ online presence, including their website, social media profiles, online reviews, and awards. A professional website with detailed information about their services, case studies, and client testimonials can indicate their credibility. Additionally, third-party review platforms such as GoodFirms, Clutch, and TechReviewer are other sources to see what previous clients have said about their experience working with the vendor. Those review platforms offer an overview of vendors’ services, average pricing, and number of employees. You should pay attention to both positive and negative feedback to get a balanced view. Furthermore, prestigious awards such as The Stevie® Awards for outstanding performance organizations or ISO 9001 for quality management systems can be relied upon to evaluate the vendor’s reputation and prestige. These certifications signify the vendor’s commitment to maintaining high standards in their operations.
📌 Read more: Guide on Software Outsourcing in Vietnam
2. Technical competency and expertise
As mentioned earlier, you should have a plan about particular tech stacks your software will be deployed to find a vendor with expertise in those tech stacks. Besides, you need to evaluate the skill set available within the vendor’s team. Do they have specialists in the required technologies, programming languages, or industry domains? The qualifications of the vendor’s employees should be taken into consideration to ensure that they match the specific requirements of the project.
🔎 For example Project managers play a crucial role in maintaining smooth communication, timely delivery, and overall project success. Do they possess the necessary project management skills to effectively plan, coordinate, and carry out projects? One way to gauge their expertise is by considering their possession of credible project management certifications, such as the Project Management Professional (PMP) or Scrum Master certifications. The PMP certification is widely recognized as the gold standard in the industry, demonstrating a project manager’s proficiency in project management methodologies. Meanwhile, a Scrum Master certification showcases their ability to lead a team using Agile development methods.
In addition, it is essential to assess the vendor’s portfolio to determine whether they have prior experience working on similar projects to yours. Assess the complexity and scope of their previous projects to determine if they align with your project, including the challenges, tech stacks they used, and their solutions. You should also analyze the quality of the vendor’s deliverables, user interfaces, and overall project outcomes. Feel free to explore Ekoios’s portfolio as an example HERE
3. Company scalability
Scalability is especially important for long-term projects or those with uncertain scope. You will want to know if the vendor can scale up or down depending on your project’s changing needs. If your project requires additional resources or a sudden increase in workload, can the vendor accommodate these changes? This includes evaluating their team size, expertise, and the availability of skilled professionals. A scalable vendor will have the capacity to quickly onboard new team members or adjust the team composition to match the changing demands of your project.
A strong partnership indicates that the vendor is willing to collaborate and access additional resources as required. If the vendor has established relationships with technology providers, it is ready to stay up-to-date with industry trends and leverage external capabilities to improve scalability.
4. Engagement models
Identify your project requirements, team capabilities, and desired level of control to make an informed decision on which model best suits your needs:
- Staff augmentation: Adding skilled professionals to your existing team to fill specific skill gaps. It offers the advantage of flexibility, allowing you to expand your team in response to evolving project needs. You retain full control over the project and directly manage the augmented team. This approach can be cost-effective when compared to other models.
- Dedicated team: Hiring a team of professionals working exclusively on your project. This is well-suited for long-term projects requiring ongoing development. Both the client and vendor can share control over the team. It may entail higher costs due to the additional service charges and overheads associated with outsourcing vendors.
- Project-based model: Assigning complete projects to third-party service vendors, with the vendor assuming responsibility for project management and delivery. You can benefit from the vendor’s specialized expertise and experience in successfully executing similar projects. However, it comes with some limitations, such as limited control over project execution and resource allocation.
📌 Read more: Staff Augmentation and IT Outsourcing
The location of your software outsourcing vendor is another important consideration. There are three main outsourcing models options to choose from:
- Onshore: Partnering with a vendor within the same country or region. Due to minimal time zone differences, it offers proximity and easier communication. However, onshore outsourcing is typically more expensive due to higher labor costs.
- Offshore: Working with a dedicated team in a different country with lower labor costs. You can benefit from cost savings and access to a larger talent pool. It may entail challenges related to time zone differences, language barriers, and cultural differences.
- Nearshore: Delegating tasks to a vendor in a neighboring country. This model gives a balance between cost savings and proximity, allowing for easier collaboration and reduced time zone differences.
6. Communication channels
Effective communication is a key factor in the success of any software outsourcing partnership. It is vital to consider the communication channels they offer and which languages they are fluent in to guarantee they are compatible with your project’s needs and preferences.
For weekly reports, project management tools provide a centralized platform for collaboration, task management, and communication, such as Jira, Asana, and Matter Mode.
Internal communication apps like Slack, Microsoft Teams, and Google Chat create channels for team discussions, file sharing, and direct messaging.
Video conferencing tools bridge the gap between remote teams by enabling face-to-face communication with video calls, screen sharing, and virtual meeting features (Zoom, Microsoft Teams, and Google Meet)
Google Drive, Dropbox, and Microsoft SharePoint allow for file sharing, version control, and collaborative editing, enabling all team members to work together seamlessly.
7. Contractual obligations
The scope of work should be clearly outlined in the contract, including project objectives and specific tasks that the vendor is responsible for. A well-defined scope of work minimizes misunderstandings and establishes a common understanding of project expectations. Factors in the contract that you should thoroughly contemplate are:
- Intellectual property rights: The contract should state that all intellectual property rights related to the software developed by the outsourcing partner will be transferred to your company upon project completion.
- Confidentiality: Ensure that the outsourcing partner agrees to maintain strict confidentiality regarding your project details, proprietary information, and any other confidential data shared during the engagement.
- Service level agreements (SLAs): You should outline performance metrics and SLAs that the outsourcing partner must adhere to. These metrics can include project milestones, quality standards, response times, and support availability.
- Support for incurring change: It is crucial to clarify the vendor’s policy regarding any associated charges for revision requests or changing requirements. Do they give you a breakdown of how much it’ll cost to do extra work, or do they charge a set amount for change requests? This aspect should be carefully addressed and agreed upon before finalizing and signing the contract.
If you want to make sure you are following local laws and protecting your company’s interests, it is important to get legal help to go over and make sure everything is done right.
8. Security measures and compliance standards
To avoid any leakage in your project, the vendor shall also promote the safeguarding of your confidential information and compliance with industry standards.
Businesses should inquire about the vendor’s data security policies and procedures before engaging with them. An important step is to thoroughly assess their approach to data protection, such as data encryption, access controls, and regular data backups. Ensuring the vendor has robust security protocols in place to protect your confidential information is a critical part of the assessment. To further validate the vendor’s commitment to data security, you can look for credible certifications such as the Certified Information Privacy Professional (CIPP) and ISO 27001. CIPP demonstrates expertise in jurisdictional laws and legal requirements for handling and transferring data. ISO 27001 is a widely recognized information security standard that holds significant global prominence.
The discussion of a vendor’s policies and procedures for data retention and disposal will help confirm they have suitable mechanisms to securely hold and dispose of data once unnecessary. Data containing personal, confidential, or proprietary information possibly necessitates more frequent and secure disposal than generic data. This can help reduce risks of data leakage or unauthorized access to sensitive information.
A comprehensive checklist for vendor evaluation
To facilitate the evaluation process, we created a software vendor evaluation template covering essential criteria. The template contains pre-set formulas and questions to score each vendor in a streamlined manner. Businesses may answer the questions in a True/False format or assign a rating score. The pre-set formulas will then automatically calculate the total score for each vendor, making comparisons effortless
⭐️ You can download the checklist for vendor evaluation HERE
If you need support, you can contact us for a project budget estimate.
Finding the most fit software outsourcing vendor
1. Exploring how Ekoios can meet your outsourcing needs
At Ekoios, we pride ourselves on being a trusted software outsourcing partner awarded by Clutch, GoodFirm, and TechReviewer. We are also a member of the Blockchain Game Alliance (BGA), highlighting our substantial resources and expertise in developing blockchain solutions and game development.
With a team based in Vietnam, Ekoios ensures cost competitiveness without compromising quality. We boast a pool of over 180 tech specialists with extensive experience in mobile and web app development, blockchain solutions, and emerging technologies such as AI, Cloud, and AR/VR. This diverse expertise empowers Ekoios to handle a wide range of projects effectively. Following an agile development method and customer-centric approach, we successfully delivered over 250 projects for clients across various industries in half the time and cost.
📌 Read more: Software development outsourcing in Vietnam
2. Case studies: Successful partnerships with Ekoios
Ekoios has a proven track record of successful partnerships in creating innovative solutions, delivering outstanding results across various industries through our expertise in next-gen technology. Partnering with Ekoios allows businesses to tap into a pool of talents and leverage advanced technologies to drive innovation, enhance operational efficiency, and achieve tangible business outcomes.
- NFTify: We played a pivotal role in the full-cycle development of NFTify, a leading NFT marketplace solution. Our expertise in blockchain tech stacks such as Binance, Cardano, React and NodeJS ensured a high-quality no-coding platform for the seamless buying and selling of NFTs.
- Viewty: In a successful partnership with Viewty, we developed a beauty AI application within a concise timeframe of just 2 months. By integrating AI into the beauty industry, we created a skin evaluation mobile app that allowed users to self-check and improve skin problems.
- Travala: Our proficiency in cross-platform development including web-based and mobile applications, was instrumental in the creation of Travala, a transparent and user-friendly travel booking platform. With the adoption of blockchain technology, Ekoios brought crypto payment to this decentralized platform that transformed the way people book accommodations and travel services.
Choosing the right software outsourcing vendor is a critical decision that can significantly impact the success of your project. By considering the key criteria outlined in this blog and utilizing the vendor evaluation checklist, you can effectively evaluate potential vendors and find the perfect partner that aligns with your project goals and requirements.
Begin your outsourcing process by speaking to an Ekoios expert. We would be delighted to provide our perspective on your project and assist you in formulating the most appropriate technology or development plan.