Search
  • Panaton

7 Key Indicators that Make Software Development Outsourcing a Successful Story

I bet you have heard many outsourcing stories that are circulating around you. But truth is that every story has its backstory. Laying the foundation of a successful outsourcing initiative is the key for a positive outcome. Knowing what to do first when you start looking for an IT partner could be crucial not only for the process itself, but also for the final story. Here is the essential checklist for you to follow in the beginning of your outsourcing journey:

  1. Establish Clear Goals for Outsourcing – It is a known fact that every project starts with a goal in mind but let’s not forget that written plans are way better. By carefully outlining all objectives one client has in mind, a step-by-step action plan can be built to define crystal clear outsourcing goals. Launching such project will be a breeze in comparison to deciding on the go. Setting a foundation early on will help by utilizing IT resources much better.

  2. Involvement and Collaborative Effort – Get involved in the project management and collaborate with remote teams to track progress and added value. Engaging with the project and the people behind it gives you perspective and room for improvement. You can be agile by setting in place and monitoring KPIs on every step of the project.

  3. Choose the Right Outsourcing Model for You – There are a few outsourcing models that one can choose from. They are defined by 3 main attributes: Location, Relationship and Contracts. Since we are all connected online now -- outsourcing IT talent is limitless. Either way there are 4 main location choices: Onsite, Onshore, Nearshore or Offshore. Truth is that Multisourcing is also an option. Based on the distributed level of responsibility and ownership there are 3 distinguished outsourcing models. First of which is Staff Augmentation, where major responsibilities are distilled by the client. This model is based on leasing software specialist from IT provider. By the managed team outsourcing model, we find a balance of shared ownership. Here the client has a dedicated team where agreed responsibilities are managed equally. If the project-based model is chosen then the outsourcing provider is obligated to own the project from start to finish. This type of relationship-based model is also called a full process outsourcing and it is usually the most commonly used. When location and relationship status are already out of the way then the type of contract needs to be chosen. If you want to bill the project on a flat rate then the fixed-price contract is for you. If you want to consider all the recourses and the exact time spent on the project then the time-and-materials contract might suit you better since the project is billed at an agreed-upon rate.

  4. Have Realistic Expectations – Technology development has evolved that much that it needs its project managers. Only this way customer’s expectations will be set within the scope of the realistic realm of software delivery. Poor planning can lead to project failure and this is why realistic timelines need to be set. Keeping track of the project ensures that deadlines and goals are met.

  5. Set Milestones and Frequently Track Progress to Provide Feedback – Identifying clear KPIs for every project is another critical point that needs to be addressed early on. They help executives to track progress and measure the added value of the outsourcing engagement. Stepping on these indicators also allows you to have the confidence to give constructive feedback and corrective steps is needed.

  6. Mitigate Outsourcing Risks – By understating that outsourcing comes with its flaws, you need to be prepared to face the challenges that come with it. Some of the key points here that you need to look after are: Ensuring security of outsourcing, building trust and control systems, recognize that there could be hidden/extra costs, quality issues might occur along the way, confidentiality and Intellectual property rights need to be also clearly stated at the beginning.

  7. Communication is Key – Agree on top communication channels and establish communication culture from the beginning in order to keep strong Client/Vendor relationship. This builds the foundation that will foster close partnership where both sides can predict, adjust and agree on the little details that come with every project. When nourishing a responsive and transparent communication structure, flexibility inevitably occurs when addressing issues and changes.

While this is a rather short list of the 7 key indicators we gathered for you, we know that it can go on and on with all the little details you really care about. Having said that we understand that every project has its specifics that need to be talked thru. This is why the last point 'number 7 communication' is often overlooked.


As we managed to distill the essentials in this article, we hope this small list would be helpful to you.