How to choose the best offshore software development company in 2020

How to choose the best offshore software development company in 2020
N-iX
2020-06-16T21:50:39+00:00

To benefit from the offshore talent, mitigate risks, and reduce software development costs, many companies across the globe opt for partnering with a reliable offshore software development company. But how do you find the right one that has the tech and domain expertise you need, fits your budg...

How to choose the best offshore software development company in 2020
By Khrystyna Zabor June 16, 2020

To benefit from the offshore talent, mitigate risks, and reduce software development costs, many companies across the globe opt for partnering with a reliable offshore software development company. But how do you find the right one that has the tech and domain expertise you need, fits your budget, and which you can rely on amid the new reality?

What are the new selection criteria for a reliable provider in 2020? Where to find the best IT outsourcing company? And how to establish a secure and viable partnership? Let’s find out. 

Where to find the best offshore software development company?

Before the global lockdown, businesses choose outsourcing destinations taking into account the geographical location, the talent pool, billing rates, time zone difference, etc. According to these criteria, Eastern Europe and Asia were the hottest spots to find an offshore programming company. 

However, in 2020, a few critical offshore software development company selection criteria were added to the list (e.g. a well developed IT infrastructure, the Internet bandwidth, a level of digital adoption). And not all offshore software development destinations can meet them.

Offshore software development in Asia

The tech talent pool in Asia reached almost 4M in 2018. India (2.75M), China (590K), and the Philippines (190K) are the countries with the largest number of professional developers, thus popular outsourcing destinations. 

number of developers in Asia

However, the lockdown has affected the Asian IT outsourcing market. For instance, India has been almost paralyzed as an outsourcing destination because of the switch to remote: up to 50% of work is not being done on some projects

Although larger Indian IT suppliers are able to continue delivering services amid the lockdown BPO suppliers and smaller IT players face major hurdles. 

The president of the software association Nasscom stated that the country still struggles to catch up with the US and European countries in terms of digital adoption. To put it simply -  not all Indian developers have computers at home and can work remotely. Slow Internet speed in India is a challenge as well. All these factors affect businesses that outsource to India. 

Outsourcing customers surveyed by Everest Group had service problems even before the lockdown in India. ISG, leading global technology research, and advisory firm, has analyzed the current state of the Indian IT outsourcing market. The president of the ISG Steve Hall states that infrastructure across India is being stretched. What's more, mobile providers struggle to keep up with the grown demand that also hampers the quality of delivered services in this country.

IT market in Asia during COVID

Offshore software development in Eastern Europe

Ukraine, Poland, Belarus, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Moldova, and Romania are the top Eastern European outsourcing destinations.The region has a well-deserved reputation of a reliable IT outsourcing destination thanks to its growing talent pool, cost-effectiveness, and the constant growth of the IT industry. 

As we can see now, there is another important reason for choosing EE as an offshore software development destination - rapid and effective measures to ensure security and business continuity.

Extensive talent pool:

The number of software developers in the region surpasses 1,051,000 experts with over 50K ICT graduates entering the market every year. The two countries with the most significant number of professional developers are Ukraine and Poland. Whereas, Ukraine has the largest number of offshore development companies in the region (1,600 ), followed by Poland ( 500+), Bulgaria (500), and Belarus (500).

number of developers in Eastern Europe

Excellent STEM-based education:

International university rankings prove excellent STEM and computer science education in Eastern Europe. According to the Times Higher Education World University ranking, the region boasts 65 excellent universities that graduate skilled potential employees of an offshore software development company each year. At the same time, India, with twice as many professionals, is home to 25 computer science universities.  

Great price-to-value ratio:

Eastern Europe is known for its attractive price-to-value ratio and cost-efficient software development services. In 2020, local offshore software development companies started to offer even more attractive cooperation conditions to their existing and potential customers.

Cultural compatibility:

Cross-cultural communication is complicated, especially in outsourcing, when the teams in one offshore software development company are divided by different cultures and diverse business approaches. So, it is important to look for an outsourcing country that is a great cultural fit for your business. Eastern Europe shares much of Western culture and values. Although there are slight differences in mentality and some traditions, software developers from the region are culturally close to European and American partners. 

Rapid response to the pandemic:

Thanks to the high level of digital adoption and massive preventive measures taken by countries of Eastern Europe to respond to the pandemic, the region kept the lights on and continued providing high-level outsourcing services.

Also, many IT vendors of the region, including N-iX, a leading Ukrainian offshore outsourcing software development company, took prompt measures to ensure the safety of the lives and livelihoods of their employees and clients. What’s more, they had business continuity plans in place that ensured a smooth and secure switch to remote work mode as well as implementing critical security controls.

How to choose the best offshore software development company?

  1. Compile a long list of offshore software development firms you will analyze according to their services quality, expertise, and security standards;
  2. Keep in mind the size of your potential offshore programming company, as mid-size and large providers are more likely to have enough recruitment capabilities and resources you need internally;
  3. Look for an offshore outsourcing software development company with a strong portfolio of software products similar to yours, preferably in your industry;
  4. Review the offshore programming company’s customer references and testimonials;
  5. Make sure your potential offshore software development partner complies with key international security regulations;
  6. Ask your potential offshore software development firm these questions to make sure that the vendor is trustworthy. 

However, some aspects have become of prime importance in 2020. What are they?

Key selection criteria for an offshore software development company in 2020

According to McKinsey, in a time of the lockdown, effective usage of collaboration tools, cybersecurity, and increased strain on financials are among the top concerns of the businesses, thus are important for an offshore software development company. Keeping that in mind, here are some aspects you should consider while choosing an offshore development company to cooperate with in 2020.

CTOs' concerns in the time of crisis

  1. Make sure that your potential provider has a solid Business Continuity Plan in place

Business Continuity and Disaster Recovery Plan (BCP) is of prime importance, as it enables quick recovery and a return to the normal as soon as possible. Thus, a reliable offshore development company needs to have it in place and take necessary measures preventively to ensure business continuity and secure delivery of services. 

A trustworthy offshore software development company needs BCP for recovery of business functions in case of force majeure situations, such as a pandemic or natural disasters. The information security team should also develop a risk management plan to reduce and minimize the identified perils. 

Here are some aspects of the Business Continuity and Disaster Recovery Plan:

  • Test scenarios for infrastructure, network, and physical security;
  • Load VPN tests, 
  • Network security attacks; 
  • Power failures; 
  • Server failures; 
  • Backup scenario;
  • Backup failure, etc.  
  1. Assess the agility and cost-effectiveness of your potential partner

Choose a flexible partner that offers different pricing models and helps you choose the one that fits your business needs. 

Look for an offshore development company that offers different types of contracts, such as fixed price, T&M, and dedicated development team. Each of these pricing models are suitable for different business requirements, so the task of your potential offshore software development firm is to help you choose the right one. 

For instance, fixed-price contracts work best for small or medium projects with clear requirements. If you have a certain budget but not enough capacity to do it in-house, you can trust the project to the offshore outsourcing software development company that takes all the responsibility for the project's success. However, this model offers the least flexibility, as any project plan changes require the complex change-approval process. 

The dedicated development team model means hiring offshore developers entirely focused on your project. You have the choice to either take part in management processes or entrust it to your offshore software development firm. This model provides high flexibility and leads to the most viable results.

The T&M model comes in handy when a customer needs an expert on a project temporarily. If you need the expertise of a DevOps engineer on demand, it doesn't make sense to employ a specialist full-time, as it will lead to unnecessary expenses. With the T&M model, you pay only for the work done. 

  1. Look for an offshore development company with established security policy

Infrastructure vulnerabilities, phishing attacks, data losses, and high loads on IT systems are cybersecurity risks that we face now.

To mitigate them, you need to partner with an offshore software development company with an established security policy 

You should make sure that your offshore outsourcing software development company follows the corresponding procedures and policies to meet your cybersecurity demands. For instance:

  • The company complies with international security standards such as ISO 27001:2013, PCI DSS, ISO 9001:2015, HIPAA. These compliances ensure the safety and security of your confidential information; 
  • The offshore programming company has a solid Business Continuity Management Plan it adheres to. We will dwell on that more later in this article;
  • The offshore software development company undertakes recurrent internal and external  audits of its compliance with the security standards and policies;
  • The company has a strict password security policy (demands for strong passwords, quarterly password resetting); 
  • The IT company you want to cooperate with has to indicate what networks it will use to store, access, and transfer your data;
  • There is a contract clause that states what happens to the data when the agreement is terminated: if it has been deleted or transferred back to its owner;

security comploances of an offshore software development company

To learn more how to ensure secure software development in the time of remote - read the article

  1. Make sure that the offshore programming company has streamlined Agile development processes

Agile software development brings benefits that are critical in the time of lockdown. Here are some of them:

  • Accelerated product delivery

Thanks to constant planning and fixed sprints, your team is able to deliver new features quickly, regularly, and with a high level of predictability. 

  • Enhanced ability to manage changing priorities

One of the crucial benefits of Agile software development is the ability to adapt and introduce changes on the fly. 

An Agile software development team can stay focused on delivering the product’s features, but it is also possible to refine and reprioritize the overall product backlog. So, your team can introduce changes and new features in a few weeks.

  • Improved Quality

Agile software development requires splitting the project into smaller, manageable units. That helps to conduct testing and reviews at each iteration. So, it is easier to detect and fix defects at an early stage of development. Constant testing brings us to the next crucial benefit:

  • Reduced costs 

The cost of a bug depends on the software development life cycle (SDLC) phase. According to the IBM study, the cost of fixing can differ 100 times between the phases. So, due to the constant quality monitoring the project cost can go down significantly. 

  • Better cost and time predictability 

Also, before each sprint, the team estimates how much time it will take to develop a feature. Because there is a fixed number of working hours in each sprint, it is easier to predict the cost of the features. 

  1. Go for a partner with a powerful employer brand

An offshore development company with a strong employer brand can promptly and efficiently find experts for the project. So, before partnering with an offshore software development company, check if it provides developers with comfortable working conditions, professional growth, training opportunities, fair compensation, etc.

  1. Assess clients’ reviews and testimonials of the potential vendor

While looking for the best offshore development company, pay close attention to client reviews and testimonials. Take into account the references, success stories, video testimonials of the providers you consider as potential partners. You can find this information on vendors’ websites, LinkedIn profiles, ranking platforms such as Clutch, Manifest, Goodfirms, and others.

That will help you understand what the cooperation with this offshore outsourcing software development company was like for other companies, what challenges other clients were facing, etc. 

offshore  software development company clutch profile

  1. Make sure that the vendor has an advanced level of communication culture, enthusiasm, and transparency

Assess how efficient communication with your provider-to-be is: if the company understands your business needs clearly, whether it sets up extra calls and sends follow-ups to clarify all the details and nuances with you, etc. This will help you understand if the provider can minimize miscommunications and make cooperation more efficient.

  1. Choose an offshore software development firm with solid DevOps expertise

Leveraging DevOps best practices is an efficient way to optimize and reduce IT costs, so pay attention to this expertise of your potential offshore software development company.

Ensure your potential offshore development company can undertake the infrastructure audit and planning to understand the needs, potential risks, and opportunities, and draw the most suitable road map.

A company with long-standing DevOps expertise can help you with infrastructure and CI/CD process automation.

This way, developers won’t need to manually manage servers, operating systems, database connections, storage, and other infrastructure elements every time they want to develop, test, or deploy a software application. And they will focus on high-value tasks instead. Fully automated CI/CD allows developers to focus more on features than the way they are integrated and deployed. So, your offshore developers work even more efficiently, and the cost of the project becomes lower

Also, an offshore software development company with DevOps expertise will help you with infrastructure usage optimization and resource cost optimization.

offshore software development company with DevOps expertise

  1. Choose a vendor with a robust knowledge transfer plan

McKinsey recommends to diversify your vendors and have several offshore software development partners in different countries.

Hence, a robust knowledge transfer plan is of utmost importance. 

It is possible to transfer knowledge either from a client to a vendor or from a previous vendor to a new vendor. The second option gets especially challenging without proper planning. A robust knowledge transfer plan helps the offshore programming company understand what the product does, how it operates, and what people are responsible for specific tasks.

Regardless of the case, the knowledge transfer plan starts with a demo and the investigation phase and ends with setting up the environments, taking over business-as-usual (BAU), and the first release.

Within the knowledge transfer process, a reliable vendor performs the following activities:

  1. Defines what knowledge to collect

Determining what information you need to gather is the basis for the robust knowledge transfer plan. Here are examples of essential knowledge items your vendor has to collect on an organizational level, team level, and individual level. 

Organizational level (between vendors or between a client and a vendor)

Documents, concerning sensitive data transition, information on source code ownership, and others.

Team level (team members - to - team members)

Source code (Repository URLs with access details, description of key algorithms, specification of classes and app’s layers. etc.)

Internal processes and workflows (Deployment guidelines, system’s configuration and installation, operating instructions, troubleshooting, changelog, and bug tracker data, software development workflow, software development tools and techniques, CI/CD best practices, and more)

Access to the used team-wide systems - access to the existing development environment.

Documents: (Description of business requirements, project roadmap, software architecture documentation, database structure design, user stories, test cases, etc.) 

Individual level (expert - to - expert)

Lion’s share of the knowledge is the code itself. Thus, one-on-one meetings, tech talks between software engineers, DevOps, architects are necessary to understand the logic of the code.

  1.  Defines people who transfer and receive knowledge

As soon as the vendor knows what knowledge to collect, they need to determine the go-to persons who could provide the necessary information on each level.  

For instance, on the organizational level, it is necessary to speak to a Delivery Manager and representatives from the engagement, legal, and finance departments. On the team level, it is vital to contact a CTO, a project manager, or a Scrum Master. And when it comes to a knowledge transfer from an expert to an expert, these are usually meetings between QA engineers, UX/UI specialists, software developers, DevOps, business analysts, software architects, etc. 

  1.  Collects knowledge items

Important knowledge should be captured and properly stored. Here we’ve outlined some knowledge transfer methods that prove to be the most effective for knowledge transfer in IT outsourcing. 

  • Technical documentation: spreadsheets, how-to guides, presentations, etc.
  • On-site training for a focus team
  • Live training for a focus team
  • Q&A sessions
  • Tech talks 
  • Live demos
  • One-on-one meetings
  1.  Measures the results against success criteria

First of all, the vendor can analyze how quickly the team of your offshore software development company has managed to get started with the project: set up the Development, QA, Staging, and Production environments and get access to the systems used by a team to be able to deploy releases and debug. 

The next criterion is your team velocity. The main source of inefficiency in the knowledge transfer in IT outsourcing comes when a new software development team duplicates the previous team’s work. Panopto claims that over 70% of employees duplicate existing work either because they can’t reach people responsible for it or they have no idea that someone else has already done it. 

how to find the best offshore software development company

Why choose N-iX as your offshore software development company?

  1. N-iX Information security management system is certified to meet ISO 27001:2013, PCI DSS, ISO 9001:2015, GDPR, and HIPAA. The company undergoes annual external security audits and internal audits two times a year to ensure maximum security;
  2. N-iX, as an offshore software development company, pays close attention to security: access to the N-iX network and resources is monitored and logged, including access via VPN. Secured remote access to the office infrastructure is provided via SSL-based VPN and two-factor authentication;
  3. N-iX is experienced in using Agile methodologies and practices, which are perfect for managing remote teams. Moreover, the vendor has offices in Ukraine, Poland, Sweden, the USA, Bulgaria, and Malta, thus you get access to vast talent pool;
  4. Our software development teams are skilled at working with various collaboration and communication tools to integrate smoothly with the clients' processes. Also, N-iX treasures its long-term partnerships with industry leaders such as Lebara, Gogo, Currencycloud, and others;
  5. The company is well-recognized in the global IT market and is listed in GSA UK 2019, Global Outsourcing 100 by IAOP, and many others. 

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By Khrystyna Zabor June 16, 2020

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About N-iX

N-iX is an Eastern European provider of software development services with 1000+ expert software engineers onboard that power innovative technology businesses. Since 2002 we have formed strategic partnerships with a variety of global industry leaders including OpenText, Novell, Lebara, Currencycloud and over 50 other medium and large-scale businesses. With delivery centers in Ukraine, Poland, Bulgaria, and Belarus, we deliver excellence in software engineering and deep expertise in a range of verticals including finance, healthcare, hospitality, telecom, energy and enterprise content management helping our clients to innovate and implement technology transformations.

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