IT outsourcing has its specifics. By neglecting those, you risk making inefficient decisions resulting in wrong expectations, prolonged development cycles, low-quality products, etc. Do not be afraid, as we are here to help you!
Today, we will discuss which steps you need to take to get ready for IT outsourcing. Then we will discuss how to choose the right contractor.
Lastly, we will consider the example of an IT outsourcing contract typically concluded in the US – the most appealing IT outsourcing region. The article will be useful for project managers who are looking for an outsource software developer.
Getting Ready for Software Outsourcing
When planning to delegate the work to a distributed team, firstly, you need to assess your company’s readiness to IT outsourcing services in general. For this purpose, follow these tips:
- Make sure that you understand the main IT service management processes;
- Define the specific and achievable development goals;
- Ask yourself a question: “Am I satisfied with the current arrangement of IT requirement management in my company?”
This basic analysis will help you avoid unnecessary obstacles and make the contractor’s work as productive as possible.
From basics to details. Let us explore the main aspects of the IT outsourcing preparation stage.
Outsourcing Software Company: Types of Costs
So, you dealt with analytical work. Now you need to consider the economic part of the issue.
In theory, customers realize that IT outsourcing allows them to save money. In practice, only some of them can calculate the total cost of their software departments.
There are three main types of IT infrastructure maintenance costs:
- Wage costs;
- Direct and indirect work organization costs (including workplace costs, staff training costs, etc.);
- Other costs, including risk management, communications, etc.
Choosing the Right Embedded Software Outsourcing Company
Once you have ordered the outsource development services, the profile of your in-house development team (if you have one) changes radically. Ordinary specialists become managers that control the performance of the selected service provider.
Mind that the transformation from a developer to a manager is applicable not to every technical specialist in your team.
To avoid losing valuable resources, move individual employees to an outsourcing development company. This move will minimize “staff risks”, as skilled employees will still be involved in service delivery this way improving their qualifications.
Pick several outsource embedded software developers and contact some of their clients. Ask if they are satisfied with the delivered projects. Remember that a trusted IT outsourcing company should have at least three happy clients.
Software Outsourcing Agreement: the US Model
Found the right partner for the project? Now you need a clear agreement - a key indicator of making a contract.
Such agreement describes the following:
- Which services are provided?
- To whom they are provided?
- What is the quality of these services?
- What time frame is set?
In the US practice, parties that conclude an IT outsourcing agreement preliminary sign a memorandum of understanding. In essence, this document indicates the intention of both parties to make a deal. It gives an insight into the way the resources are distributed within the development process.
The memorandum of understanding allows parties to avoid any miscommunication issues resulting in wrong expectations and estimations. Moreover, it helps to identify potential benefits and challenges arising from management decisions.
This protocol may also include supplementary non-disclosure agreements exchanged by the parties during negotiations.
Bottom Line: An Ideal Contract with Outsourcing Software Development Companies
As an organizational document, an IT outsourcing contract should correspond to the interests of all parties:
- Client – the usage of the necessary resources and technologies;
- Contractor – the provision of conditions for business development;
- End user – the delivery of a high-quality product or service at an affordable price.
With no doubt, particular terms regarding functions and processes should primarily meet the customer requirements. In this context, an IT outsourcing contract should be as flexible as possible.