The 7 Keys to Successful Software Outsourcing

Securing the ideal software development service provider is no easy task. There are various variables that need to be observed to make a successful selection.

In this series of articles, we are presenting a set of best practices and benchmarks that will help you analyze and choose the best supplier for your context. You can access the previous posts at this link and understand why outsourcing can be a great option for your software development strategy, and also have a comparative view of in-house vs outsourcing costs.

Now that we have understood a cost reference, it is essential to evaluate the main points of the potential partner's value proposition and mitigate risks that can increase costs and risks of hiring.

1) Partner's Skills and Experience

The skill set evaluation can be done in three aspects: technological, methodological, and organizational. Let's analyze each of them below.

Technological competence. It's important to evaluate whether the potential supplier has experience in your project's technology stack. If it's a new project, assess whether the proposed technologies are current and have widespread adoption in the market. There are different ways to evaluate this competence, we will make an exclusive post about this topic soon. But, more superficially, a technological evaluation can be done via showcases with demonstration and technical discussions about projects already executed, customer feedback, discussions and case study about the target project of the contract, alignment on the project team's maturity and experience, certifications, among others. The important thing here is to have confidence that the supplier knows and has experience in the technologies to be used.

Methodological competence. Having a working method is essential for a successful project. These are the processes, rites, and ceremonies that ensure quality, fluidity, and alignment about the objectives. In this sense, it is important to understand if your potential supplier has a work model adherent to yours, or if the proposed approach meets your expectations. It is important to note that the working methodology can vary depending on the engagement model, we will talk about these models below. However, there are some base processes that are important and should be analyzed, for example:

• How does the project kick-off take place?

• What is the process throughout and at the end of the project?

• Is there a responsible person who is the main point of contact?

• Is there a facilitator responsible for dealing with potential project issues?

• What is the team composition?

• How does the exit, exchange or onboarding of new team members work?

• How does team communication take place?

• What are the channels and timezones to be used?

Organizational competence. Beyond the project issues itself, it is important that your partner is able to demonstrate solidity and trust as an organization. It is important to check how the company attracts and retains talents and what the employees' feedback about the company is. Novatics, for example, has nine years of operation in segments of innovation and high competitiveness such as AITech, CyberTech, InsurTech, Fintech, among others. With extensive experience in complex and international projects, the company collects several positive feedbacks from its clients obtaining an NPS of 9.2. Regarding culture and employee experience, Novatics stands out as first place in GPTW, offers a program of continuous evaluation and development to employees, in addition to a turnover below the market average. These are some of the characteristics that demonstrate competence and maturity in a supplier.

2) Engagement Models

There are different types of engagement and contract, the best choice depends a lot on your context and objectives. Novatics offers the following engagement models:

• Staff augmentation - the supplier's team comes into play to expand or complement your team's capacity. In this case, the tendency is for this supplier to follow your work process. However, he can also have a consultative approach, helping to increase the team's maturity level. This model works well when you already have a team and a mature development process.

• Squad as a service - a squad is a team that has all the necessary skills to achieve an objective. In this case, the supplier's team comes into play to meet the objectives and demands of a product or business person. In some cases, these squads can be hybrid, that is, composed with some members of your technical team along with your supplier's team. In the case of Novatics, this squad follows its own development framework, based on service design methods, lean thinking, and agile methods. But, depending on the context, we have the flexibility to follow your development process.

• Outsource solution - in this case, our team is completely responsible for managing and developing the solution for you. We can receive the requirements as input or we raise the requirements and design the solution together with your business team. Our team has expertise in meeting your development needs from start to finish.

Choosing the ideal engagement model, according to your context and objectives, will make a difference in the project management.

3) Reputation and References

Reputation and References One of the important points to consider when evaluating a potential supplier is their reputation. What do your supplier's clients say about their work? How do they rate their experience and delivery? Do clients recommend your supplier? This information can give a good indication of the experience and quality of delivery in previous projects.

Another interesting point to consider are the brands and characteristics of the companies and projects they have already served. Projects with global and innovative companies tend to be very demanding in their supplier selection processes and delivery quality. Therefore, if the supplier was able to successfully serve this type of project, they probably have a good level of maturity.

Novatics is a design and software development consultancy that often serves innovative companies, see here some of the feedback from our clients.

4) Ability to Attract and Retain Talent

Digital experiences are made by people, for people, therefore, attracting and retaining good talent is an essential resource and capability that your supplier needs to present. Try to understand how the company operates in relation to attracting and developing people, and what the organizational culture is like. If possible, talk to HR and employees to understand their perspective on these actions.

Here are some examples of good practices related to this theme:

• Understand the average length of stay and the company's turnover - high turnover is a sign of low retention capacity, so it's good to find out why employees are leaving the company;

• Investment in continuous training and career plan - companies that invest in the education of their employees and offer them a vision of growth have higher success rates in deliveries, higher technical quality and higher retention;

• Competitive remuneration and benefits - make sure that the remuneration and benefits offered are competitive in relation to the market, to attract and retain talent.

• Evaluation and reward programs - companies that have regular evaluation programs are usually more concerned with monitoring and ensuring performance.

• Organizational culture - Evaluate the company's culture to understand if it promotes an environment where employees feel valued and engaged.

• Diversity and inclusion - diversity is an important ingredient for evaluation. Check how the company encourages diversity and how it creates an environment where everyone feels respected.

• Employee satisfaction - Try to assess how satisfied employees are with the work environment, organizational culture, benefits and development opportunities. A good way to check this is through GPTW and mentions on social networks.

5) Intellectual Property and Knowledge Transfer

The protection of intellectual property is fundamental, especially when we talk about technology, competitive advantages and strategic projects for the business. Therefore, it is essential to ensure that intellectual property is protected from the start of the project. This can be done through clear and well-described contractual agreements, which establish intellectual property rights and the responsibilities of both parties involved. In addition to legal protection, there are adjustments in processes and tools that can be made to ensure greater care in this regard.

Another important detail to be evaluated is what the relationship will be like at the end of the project, is there a knowledge transfer stage and/or a maintenance contract? Aligning these expectations can save you time and free you from unexpected problems.

Companies like Novatics have a well-structured framework for each of the project phases. These processes end up facilitating interactions between all participants and establishing a high standard of quality for all deliveries.

6) Flexibility and Scalability Capacity

It's common for there to be changes in scope or the need for demand for new projects. Therefore, when choosing a software development partner, it's important to evaluate whether this partner can grow with you and scale with quality to maintain service to your demands. In this sense, it's interesting to observe the following points:

• Contract. Does your agreement provide or allow for the team size to be easily changed? In the case of team reduction, are there criteria or penalties?

• Company experience. How long has the company been in the market and what is its size? Companies with more market time are more experienced and usually handle team increases and reductions better.

• Talent pool. What are the characteristics of the region where the company seeks its employees, are there universities, startups, innovative and technology companies?

• Quality of the professional. What are the general characteristics of the team members? What is their experience, training, ability to communicate in English?

• Selection process and allocation time. How is the selection and onboarding process for new members? What is the average time for allocation.

7) Cost-Benefit

Of course, price is an important factor for your decision. Knowing this, we wrote an exclusive post on this topic. In the text you will find a cost benchmarking that will give you an idea about values.

After going through all these aspects that can impact the quality and choice of the ideal supplier, it is clear that price is not the only necessary metric to choose the best partner. Various aspects can be analyzed for a safer and more assertive choice. In the end, good relationships are made of trust and a mutually beneficial environment.

Did you find this piece enlightening? Explore the initial stages of our software outsourcing guide here for more insights. See you in the next post!