Companies that look for cost-effectiveness, increased scalability, flexibility, and agility, often opt for outsourcing. However, the question remains about finding and establishing a partnership with a reliable IT development company.
How do you find the right IT development outsourcing provider with the tech and domain expertise you need, fits your budget, and which you can rely on? Let’s find out.
How to choose the best IT development outsourcing provider
Decide on the location
Businesses usually outsource their IT services to three main destinations: Eastern Europe, Asia, and Latin America. So, let’s view these regions, benefits of outsourcing to these spots, and their peculiarities in more detail.
When we speak about Eastern Europe as an IT development outsourcing destination, we mean countries as Ukraine, Poland, Belarus, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Moldova, and Romania. These countries are home to the combined talent pool of over 1M professional developers, and this figure tends to grow.
Ukraine, Poland, and Romania are the spots that are home to the most significant number of tech specialists. These countries boast a talent pool of 192,100, 295,300, and 119,100 professionals, respectively. However, 40% of Polish talent pool work in the BPO sector, thus are unavailable for IT development outsourcing.
The region is also known for its skilled talent as well as its attractive price-to-value ratio and cost-efficient software development services. To learn more about the IT outsourcing market in Eastern Europe - check out this report.
The main IT development outsourcing spots in Asia are India, China, and the Philippines. The region boasts a vast talent pool that reached almost 4M in 2018. There are 2.75M professional developers in India, 590K in China, and 190K in the Philippines.
The tech branch in India is a thriving industry with over a three-decade history, so many businesses choose this country to outsource their software development. However, according to the software association Nasscom, India lags in terms of digital adoption compared to US and European countries.
The outsourcing market in China might not be as famous as Indian, but a lot of Chinese IT development outsourcing vendors are listed in The Global Outsourcing 100 by IAOP.
Brazil, Argentina, and Mexico are the most alluring outsourcing destinations in Latin America. These countries house 431,000, 103,000, 180,000 tech professionals respectively. However, developers of Chile have made it to the 27th place in the HackerRank rating of the most skilled developers in the world.
Also, while choosing the IT development outsourcing destination pay attention to cultural compatibility.
This aspect is of the utmost importance when it comes to choosing your outsourcing IT development partner as cultural incompatibility is the factor that can hamper communication and, thus, cooperation.
A study by Kvedaraviciene, G., & Boguslauskas, V. “Underestimated Importance of Cultural Differences in Outsourcing Arrangements” settled five fundamental aspects that define the possibility of success of outsourcing agreements. They are cultural compatibility, internationalization, the social system, background, and religion. The first three have the most significant impact on outsourcing, so pay close attention to them.
Choose a vendor, compatible in size with your business
IT development outsourcing companies are usually classified as small ones (up to 250 employees), middle-sized (800-1,500 employees), and large ones (1,500-10,000+ employees).
There is a general rule - choose a partner that is compatible in size with your business, as such companies are more likely to understand your pains and challenges, as well as build a successful partnership with you.
However, it is also recommended to go for middle-size IT development outsourcing providers. Small vendors may not have enough capacity to boost your project, and large companies may not care enough about your business problems.
What’s more, medium companies are more likely to offer you an attractive combo: agile processes and structured organization.
Take into account the reviews, references, success stories, video testimonials
You can find this information on the websites of your potential outsourcing IT development providers, their LinkedIn accounts, as well as ranking platforms (Clutch, Manifest, Goodfirms, etc.)
You should also check the number of long-term partnerships of the shortlisted IT development outsourcing providers, as that is indisputable proof of their ability to cooperate and deliver.
Partner with a vendor that boasts a powerful employer brand
This aspect is crucial because of several reasons. The first and the most apparent - skilled professionals are more likely to work for a renowned outsourcing IT development provider. So, if you choose an IT outsourcing partner with a powerful employer brand, you have more chances to scale up your project with the needed talent quickly.
Also, renowned vendors usually care for their employees’ professional growth and offer professional development programs. For example, N-iX, one of the biggest software development companies in Eastern Europe, offers a mentorship program and Centres of Excellence to grow and retain talent.
Assess the communication skills of your vendor-to-be
It takes one phone call to estimate the communication skills of your potential IT outsourcing provider. If they are eager to clarify all the details, send you follow-ups, and are generally interested in collaboration - go for this outsourcing IT development partner.
Evaluate their tech portfolio
If you are looking for an IT development outsourcing company with specific expertise such as Cloud, DevOps, Big Data, ML/AI, or IoT/embedded, here is what your potential partner should be experienced at.
Cloud expertise of an IT development outsourcing provider
- Experience with different platforms (AWS, Azure, Google Cloud)
- Monolith to Microservices decomposition
- Classical SQL and NoSQL DBMS
- Big Data / Data Warehouse / Data lake
- Data Science
- Cloud readiness assessment
- Cloud strategy development
- Cloud-native app development
- Cloud migration (cloud-to-cloud migration, on-premise to cloud migration, hybrid cloud migration)
- Architecture redesign
- Cloud support
Big Data expertise of an IT development outsourcing provider
- Knowledge of SQL and NoSQL databases
- Python, R, Scala, Java, or C++
- In-depth knowledge of the Hadoop ecosystem, Apache Spark, Pig, and Hive
- Data science and machine learning algorithms
- Big data architecture design
DevOps expertise of an outsourcing vendor
- Infrastructure as a Code
- Configuration management
- Infrastructure automation and orchestration
- Monitoring, logging, and alerting
- Cloud adoption
Machine learning&AI expertise of an IT development outsourcing provider
- Technologies such as Python and R and additional frameworks and libraries, including Caffe, DeepLearning4J, TensorFlow, Theano, Torch, etc.
- Natural Language Processing (NLP) software development
- Neural networks and deep learning
- Self-taught analytical tools
IoT expertise of an IT development outsourcing provider
- Experience with platforms such as AWS, Microsoft Azure, IBM Watson, etc.
- Experience in embedded hardware prototyping as well as the development of connected systems
Opt for a vendor with established security policy
To efficiently respond to all security threats and prevent potential risks, the reliable IT development outsourcing provider needs to have a well-established security policy that covers:
- Compliance with Infosecurity regulations and standards (ISO 27001:2013 and ISO 9001:2015, PCI DSS, HIPAA, etc.)
- Business Continuity and Disaster Recovery Plan
For instance, N-iX Business Continuity and Disaster Recovery Plan covers:
- Test scenarios for infrastructure, network, and physical security;
- Load VPN tests;
- Network security attacks;
- Power failures;
- Server failures;
- Backup scenario;
- Backup failure, etc.
How to partner with the best outsourcing IT development provider?
First off, you should choose the engagement or cooperation models that suit your business needs. In IT development outsourcing, we speak of the following engagement models:
IT development outsourcing cooperation models
T&M or Time and Material
This engagement model is usually applied when a project cannot be estimated in advance. This model is flexible in creating new specifications and involving new professionals to the project when needed.
As for the billing process, a weekly/monthly charge is based on the total effort reported by each member of the team, as they all get an hourly rate. Yet the main hidden risk in this model is that the client may lose focus endlessly improving the final product. Thus it’s of utmost importance to have clear objectives and stay focused on the outcome.
Dedicated development team
Within this model, you get your team of developers built according to your specific business needs and requirements. The team is very flexible, so you may scale it when necessary and complement the project with new skills.
Before the beginning of the project, you agree about a monthly cost per engineer in the team, which is definitely more cost-efficient. An engineer is usually allocated full-time (160 hrs per month) with a long-term assignment duration (1+ year).
This engagement model encompasses fixed quota, the fixed scope of work, and fixed time of project delivery. You, as a client, address the provider with your business problem and a vision of how it may be resolved. The provider comes up with a software development outsourcing solution.
Fixed-price model is suitable for well-specified and smaller-scale projects (up to six months of development) or the outsourcing solutions development in several fixed price iterations.
No matter what cooperation model you choose, it is vital that your service provider has a robust knowledge transfer plan. Unshared knowledge costs money, especially in IT outsourcing. Knowledge loss can lead to lots of organizational waste when the whole process gets reworked from scratch. So, a robust knowledge transfer plan will make the whole journey easy and safe.
How to sign a win-win contract with your IT development outsourcing provider
Apart from choosing the engagement model, it is vital to sign a win-win contract with your IT development outsourcing provider.
Here are some aspects that have to be included in the contract:
- Established deadlines for issuing an invoice and invoice payment and the outlined consequences for missing payments;
- Liability clauses which define responsibility for both sides;
- Warranty clauses which ensure the certain level of quality of services provided;
- Notice periods - time frames of the project kick-off and scaling up and scaling down a team;
- Data protection rules (deidentification, reidentification, and anonymization of data);
- Client’s ownership of the code, when it is delivered and paid for;
- Agreeing on what country has the governing law if the contract is international.
And here are some examples of the successful collaboration with an outsourcing IT development company:
Companies that benefited from outsourcing IT development:
Lebara is a telecommunications company that provides services in many countries around the world. Since December 2014, the company started a partnership with N-iX and has built a development centre that consolidates a wide range of expertise. Examples include software development, quality assurance, business intelligence development and operations, application support, database administration, and infrastructure support. N-iX professionals are responsible for code quality, stability, high performance, and maintainability in such products as Lebara Money, MyLebara, Lebara Mobile, Community, 4G, a Campaign Management Tool, and more.
Gogo has been a leading provider of in-flight connectivity and entertainment for over 20 years. They needed the support of business functions and decisions with analyzed and prepared data, so, have decided to extend their team capacity with the N-iX team.
N-iX has allocated a team of specialists with vast experience in AWS, Hadoop, Apache Spark, Tableau, etc. Currently, N-iX dedicated team is engaged in the following activities for Gogo:
- Big data
- Data science
- BI operations and support
- Reporting & BI analytics
Currencycloud is a B2B platform that provides administration and control features to automate the entire payments lifecycle of businesses.
Currencycloud has partnered with N-iX to develop a client-facing responsive web application Currencycloud Direct with RichUI powered by Knockout JS and development of a new enhanced version of CC RESTful API.
Also, N-iX professionals are responsible for the maintenance of existing internal services, integration of CC services with third parties, and payment optimization for different regions.
Why choose N-iX?
- N-iX has over 1000 top-notch professionals on board and offices across the globe, so you can tap into an extensive talent pool to scale-up your team;
- N-iX has vast experience in the tech domains such as Big Data, Cloud, DevOps, IoT, AI&Machine Learning, and many others;
- The company is well-recognized in the IT market: it is a finalist in three categories of GSA UK 2019 Awards, Global Outsourcing 100 by IAOP, and many others;
- N-iX is certified to meet ISO 27001:2013, PCI DSS, ISO 9001, and other security standards.