IT outsourcing market

Starting your own business may feel both exciting and scary. There are many things to consider, many decisions to make, and you haven’t even started building your product yet!

If you are still struggling with the decision about whether it’s better to build your own team or to start working on your web app right away, read a post about 6 reasons to choose outsourcing services for your startup.

If you have made a decision to outsource software development and are looking for a software services provider, you’ve probably realized that choosing the right software development company for your startup is not as easy as it seems.

The number of outsourcing companies in IT is huge: in 2014, the IT outsourcing market was worth $104,6B

There are many places to start your research: Clutch.co (or similar platforms gathering info about companies along with references from their clients), Upwork (recommended interchangeably with other sites for freelancers: Toptal, Guru, etc.), various lists created by third-party companies (e.g. Top Custom Software Development Companies), Quora, Facebook or LinkedIn groups, or even – the most obvious choice – Google.

But when you do your research, you will easily notice that offers for custom software development vary – by the approach to development, technologies, and prices.

If you feel a bit confused with all the information you get online about choosing the best outsourcing company for your startup, read this tip sheet. You will find out about the most important criteria you need to follow when selecting a tech partner.

1. Pay attention to how they work

A suitable outsourcing company should not only write good quality code but also understand your business needs and the market realities related to your product. They should also assemble a skilled cross-functional team that would work in the tech stack of your choice and could start work within the first two weeks as well as many more aspects.

However, the most important aspect of building successful products is the approach to web development. One of them is lean product development which helps improve on your value proposition before and during the whole process of building your product rather than after the product is launched to the market.

This means that instead of committing time, money, and effort to create a complex product based only on your vision, you create the minimum viable product (MVP) and develop it according to the needs and suggestions of its users.

This process is similar to how Scandinavian architects build streets – focussing on how people prefer to use them, not according to the architect’s vision. To learn more about the lean approach for startup development, read Lean Startups written by Mateusz Kurleto.

Lean development is effective because it can help you reduce time-to-market by launching an MVP, gathering user feedback fast, and as a result, build a user-centric product people want to use so that you are able to product traction and first cash flow in no time.

When looking to outsource web development, check out if a tech team you decide to work with supports lean product development by asking them about the way they have developed products in the past.

2. … and how you work with them

It is also important to check the framework for managing the product development of the company you plan to work with. Agile and SCRUM are the keywords to keep in mind.

The methodology of work in an IT outsourcing company should combine the flexibility of the project with the best practices of software engineering.

You need to find out whether or not you will have an insight into the whole development process, have direct access to developers and would be able to track progress.

When the company engages you in the process of software development by assigning you to the role of a Product Owner you have defined rights and responsibilities in this role and become a member of the team.

This gives you all the control that you need: you can see progress and intervene if something isn’t going as planned.

It is also important to ask how soon you can expect to see progress – if the company is working in sprints (or iterations), you should expect to see a new working version of your product after each one. Changes implemented during one sprint are functional, clear and visible for the users.

3. Check for remote work culture

You are probably considering different global outsourcing destinations – South America, China or Eastern Europe. Therefore, you will probably work with a team of developers located in a different time zone.

Obviously, it is much easier to work with a smaller time difference – for example if your company is located in London, UK and your tech team in Warsaw, Poland.

However, it gets more complicated when your company is located in Silicon Valley and your tech team is in Eastern Europe.

Time difference should not scare you if a web development team you are about to work with have remote work culture in their DNA. If they managed to work out solid practices of remote work management you can count on an uninterrupted communication and a successful outsourcing project.

According to the report of Upwork, a global freelancer platform, 73% of all teams will have remote workers by 2028. Remote work is here to stay, it is no longer a question of “if”, but rather “when” digital transformation will make it a requirement for your startup. There are serious reasons that cause this shift.

More companies decide to outsource IT processes and custom software development because their domestic market is limited – the talent pool is not developed enough to satisfy the growing need for the tech.

Just imagine yourself finding a developer in Silicon Valley or in such a tiny market as Luxembourg.

So how can you find a tech partner that would be proficient at working remotely?

Look for a software development company that is used to working with clients from all around the world, has some success stories of remote work and all necessary tools that will facilitate the process.

Such a company will normally send you a clear communication plan that would account for work in different time zones.

They will even be ready to provide you with strategy consulting on best remote work practices adding it up as a free bonus to the project and allow you to internalize the best know-how within your company to use for the future.

Remote web development
Find out why Poland is the best place to outsource software development

4. Assess their skills

The advantage of a good outsourcing company over a bad one is the quality of the delivered product.

They achieve it through the whole development process, including choosing the right tools, using continuous integration and continuous deployment (CI/CD) – a set of principles that help development teams deliver code changes more frequently, automated testing, setting high code quality requirements e.t.c.

Also, it is probably the most important thing to check when choosing an IT outsourcing company. Let me explain why.

Developing your tech startup idea with an outsourcing company doesn’t mean that you will continue working with them in the future. At some point, you may decide to change a vendor or hire your own team of developers.

It will be important for a new team to get a clear and good quality code that will be easy to understand and to develop further.

With bad code quality, the new team will spend a lot of time to get into it and in the worst scenario, the team may have to rewrite the code from the very beginning!

It is a good idea to ask a few outsourcing companies that you are considering to give you some code samples for you to check quality.

5. Check their case studies

Case studies can help you find out if a software development company you want to work with has the necessary experience and an understanding of your business.

By reading a company’s portfolio you can identify the caliber of clients, industries and the project size they have worked with as well as the result of their work.

Case studies can also help you identify how skilled the tech team is in the tech stack you are looking for.

For example, if you are considering Node.js development outsourcing you will look for case studies explaining the process of implementing the project in Node.js.

In addition, you can also try to assess the level of expertise in particular technology by looking into other materials such as ebooks, articles or guidebooks.

When reading case studies I would recommend looking for examples from your industry.

Previous experience of working with clients from your field helps ensure that the tech team has the understanding of business and specifics of your industry.

Apart from the aspects described above, look for information that would explain how fast a tech agency is able to start projects.

This is particularly important if you have strict project deadlines and want to start as soon as possible.

6. Look for transparency and honesty

When choosing a team pay attention to how much they say “yes” to anything you ask them for. Checking this is simple – just ask them about something ridiculous you know is impossible to implement in practice.

There will certainly be aspects that the tech team will not handle in the future and it should not necessarily be their fault. For example, it could be some technological limitation or time restriction. Saying “yes” in these cases may lead to project failure or significant delays.

You also should understand why a tech team would say “yes” to everything. In the beginning they will want to sell you their services and will try to convince you that they can do anything.

In other cases, it can be caused by cultural differences – in certain cultures saying “no” and not living up to expectations may feel intimidating or embarrassing.

Hearing “no” is not bad. It means your team is honest and transparent with you in terms of what they can handle and therefore can live up to their initial promises. This also means you won’t experience delays in launching your product on the market.

To sum up, look for an outsourcing partner that would be honest with you even if it means saying “no” sometimes.

7. Look for critical thinking and creativity

Excellent code quality is a must on your requirements list for a custom software development partner. However, this is not enough to develop a product that will sell on the market.

What defines a top outsourcing company is not only skills and experience, but also critical thinking and the ability to identify mistakes and inconsistencies fast.

Sometimes it means saying that you were wrong in your assumptions about the product and that a different feature would have to be built and obviously, critical thinking helps identify bugs straight away if they appear.

It also means that developers you are about to work with don’t rely only on your ideas and initiative, but also come up with their own suggestions.

During your first meeting or call, observe if an outsourcing partner is able to show you a new perspective on your project, question your assumptions and freely communicate it to you.

8. Culture of freedom and responsibility

The culture of freedom and responsibility was at the very foundation of companies such as Netflix. This work culture defines engaged employees who take full ownership of a project and have excellent project management skills. For you, it means having peace of mind during the whole development process and minimum engagement with product development.

To understand why this is an important trait answer these two questions.

Would you work with a development company that asks many questions and takes time away from your priority tasks or with a team that takes the right decisions on their own where your engagement is not necessary?

Another question – would you prefer to work with a development company that makes lots of promises but then steps back blaming someone else for the project to fail or an outsourcing partner who feels responsible for delivering results?

9. Read their testimonials

Getting recommendations from someone who has already used the services of a tech agency is a great idea.

But what if you don’t have any recommendations? In this case, you can use Clutch.co, a platform listing in-depth reviews of clients who have used a service provider in the past.

Clutch contacts clients that wish to submit their reviews and conducts an interview without the presence of a software development company.

The feedback collected includes a description of the whole cooperation process. During the interview, clients also explain aspects of cooperation that were particularly good as well as the things that need improvement.

The review platform contains different filters such as industry focus, project size, locations, client focus (e.g. corporate clients or startups).

You can rely on those recommendations and find your best IT outsourcing agency there.

10. Calculate the final cost

Before getting into the nitty-gritty of this aspect, let’s run a scenario: Company A sets $30 for a man-hour while company B sets $80. It is almost three times as much as company A! Which company do you choose?

You’ve probably noticed that the range of their prices for a man-hour among IT service providers is huge.

It depends on the location (some regions are cheaper than others), experience, methodology of work, technology stack and many other factors.

Is it possible that the second company is cheaper than the first one? It surely is, because when you calculate the final cost of hiring a remote team of developers, you need to consider both: price for the man-hour and estimated time-to-market.

Let’s look closer at our two companies: company A estimates time-to-market for your product for 8 months while company B works Agile and claims to use some special tools to speed up time-to-market estimating for 3 months of work.

This means that the final cost of building the product that is ready to go on the market is $38.400 for company A and… exactly the same for company B.

The “expensive” company does not cost you more than the “cheap” one and it saves you 5 months of time-to-market. After 3 months you start to sell your application and get positive cash flow. Time is money!

Time is money

I hope this tip list will help you find a reliable tech partner to launch your product.

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