10 Practical Tips for Choosing an Offshore Software Developer (Part 2)

Last week, I shared 5 issues an expansion stage software company should consider when choosing an offshore, outsourced development vendor for its product development.

Here are five more.

6. Experience with companies similar to yours.  Look for vendors that have worked with companies like yours. If you are a US business selling software to financial services company, you want a vendor that has worked with many US businesses on B2B commercial products and, ideally, on financial services software. You do not want a vendor that has only one other US customer, and has focused primarily on B2C software or internal IT applications. If you are an expansion stage software company or a start-up, you do not want a vendor that only has had customers like HP and Microsoft.

7. Best practice & tool adoption.  Assess to what degree a vendor is using a best practices process and tool set. More importantly, assess the degree to which a vendor is continuously improving and keeping up with the cutting edge practices and tools out there. You don’t want a team that’s not taking advantage of the latest industry advanced in productivity and quality.

8. Turn-over. Always ask, “What percentage of employees did you lose last year?The year before that? On x-year projects, how many of the key people that started on them are still there today?” This is key. The last thing you want to deal with is a team that is constantly changing. Constant personnel change means low productivity, possibly defects, and constant re-education by you.

9. Access to the best people. There’s a reason the Agile Manifesto that’s Agile Development Methods states this as the first value: Individuals and interactions of processes and tools. If you don’t have great people on your outsourced team, you won’t have great software built with great productivity, no matter what methodology or tools they’re using or how mature they are. That’s why you need to ask questions about how the vendor sources, recruits, trains, and retains the best developers in their locale. Do they have university relationships?Do they have a special training unit? What benefits do they offer?How do they compare with other companies that hire developers?Who are those other companies?

10.Price. Whatever you do, do not pick a vendor just because they’re the cheapest in a region. Also, try to avoid going with the most expensive vendor in a region. The cheapest ones probably do not have the best developers, or have a hard time retaining them. The most expensive ones are probably making too high a margin on you. Try to find someone in the middle. Also, do not negotiate price too aggressively. You want your project to be valuable and financially important to your vendor, so they pay attention to it and resource it well. You don’t want to be the lowest margin project that they engaged on because they had low utilization, or the sales guy was trying to meet his quota and got too aggressive. Remember, this is a partnership, so if you “win” a price negotiation, you might ultimately “lose” on getting great software fast.