Software Outsourcing Vendor Selection Criteria and Processes

Evolution in digital technology has enabled small businesses to compete on a global level. Due to which more and more businesses are found jumping in the bandwagon of software outsourcing and offshoring. Software outsourcing services is something that offers business owners a plethora of advantages. The following post doesn’t emphasize what is software outsourcing or how it is beneficial to work with an outsourced development company? We assume you already know that! This one focuses on the vendor selection criteria and the vendor selection process of software outsourcing.

1. Have You Met the  Potential Vendors Yet?

Initially when conducting the vendor selection process for the very first time might seem to be a bit daunting. After all, you will come across a wide range of software development companies across the globe  and selecting the right third party vendor who is capable of fulfilling your business goals could be a pain.  Also, not choosing the services of the right vendor could cost you more so you must carefully carry out all the vendor selection criteria.

  • Let’s zoom out a bit so that you can see the broader picture. In the end, selecting prospective vendors is way similar to choosing a babysitter. Your software outsourcing project is your baby in some way or the other, isn’t it? Now, what are the key elements  to consider when looking for a babysitter?
  • How many hours can he or she invest in your baby?
  • Selecting the candidates based on budget and experience
  • Interviewing them 
  • Ask for third-party recommendations and references
  • Plan a test see whether they pass or fail 
  • Choosing the right fit

Similarly, this is what needs to be done when choosing a software outsourcing company. Still not clear? Alright, now let me elaborate a bit more by offering some key aspects to keep in mind when conducting a successful vendor selection.

Key Aspects When Selecting Vendor

1. Project Evaluation – First and foremost factor among the vendor selection criteria is you need to decide on the type of your project. Does it comprise MVP or not? The next step is to evaluate the scope of the project. Do not forget to spot certain questions that must be asked to your vendors while interviewing. Have you thought upon budget restraints?  Last but not least is to define the deadlines. 

2. Start looking for the right vendor – Keep project specification as it is one of the most crucial vendor selection criteria. So what happens is you will directly get in touch with those companies which come right under your search requirements.Ask the service providers for a vendor’s Request for Proposal (RFP).   As you delve in by narrowing down the search, the more likely you are to get the right outsourcing vendor.   

We are sure you will come across a wide range of names and you will start researching their websites. Apart from their websites, also look around for third-party recommendations. For example, clutch, LinkedIn these are the best places to check how experienced and efficient they are. 

3. Test the Candidate – By now, we assume that you must have already narrowed your search and shortlisted certain potential companies to choose from. Have you tried conducting practical tests? Ask them to develop something for you. Make sure the task is quick to handle and it covers everything whether they can develop, test and deploy within specific time or not. 

For betterment, it is always advisable to pay for the small task. And somehow if they succeed start preparing for the Contract Negotiation Strategies. After all, it’s a partnership we are talking about. 

2. How an Ideal Vendor Selection Process is?

You must have come across several scenarios where the wrong software has been deployed despite precise details and requirements specified or the software ended up creating chaos instead of streamlining everything for your business. Well, this is not how things work! To safeguard yourself from such afore-mentioned situations make sure to choose an ideal outsourcing vendor. Before selection of any new vendor do background check and discuss pricing model.

Further, we would like to mention a structured approach to the vendor selection process. Read away!

2.1 Experience

Many of you have this misconception that the right way to choose vendors is by considering the price as soon as you are done with your business requirements. Well, that’s certainly not true! Price is and shouldn’t be the first and foremost factor here. Before even considering the term partnership, it is advisable to double -check how knowledgeable and well-experienced the company is. Now evaluating your vendor’s industry experience might not be easy but it is a doable job. All you have to do is conduct some practical tests! 

Also, please do not end up deciding on a company with no experience especially of working remotely. First time is not always a charm! An ideal one can be said to those companies who do carry some experience on handling projects as similar as yours. 

Fortunately, we have a bunch of specialized tech sites such as Clutch and Glassdoor, Upwork, and others, or social media like Facebook and LinkedIn where software outsourcing vendors can be discovered. 

2.2 Qualifications and Expertise

The next point to keep in mind when looking for popular vendors is qualifications and expertise. Apart from specifying your project requirements make sure you also specify the tech stack and skill set. This narrow downs your list to a great extent. You see most of the software outsourcing projects somehow fail because they aren’t the best when it comes to quality and performance. 

And maybe that’s the reason why qualifications and expertise in the entire team is one of the crucial vendor selection criteria. Focus on the technical expertise. Of course, they might have not handled the very same project but even if they know how to handle such projects it will be a good start as they do understand what it takes to come up with a successful venture. 

2.3 Company Size

Another crucial dilemma, while you evaluate selected vendors, is the size of the company. Oftentimes, business owners get baffled between going with the name or going with the size. They have this misconception that small size businesses might not be able to handle their work successfully. My suggestion – avoid both parties and choose a mid-sized software vendor. Now why we asked you not to choose a large development service is that big companies often lack agility and small companies might delay the project deadline since they don’t have such manpower. Also their reliability will always remain questionable. 

So think thoroughly while choosing an outsourcing partner. Go through the client’s testimonials precisely. If possible do verify the physical location of the vendor. After all, reputability comes if there is some kind of reliability.  

2.4 Pricing

Of course, pricing is a crucial factor to consider when selecting the software outsourcing vendor. Though this doesn’t mean your decision should thoroughly depend on it. 

Low-experienced companies in order to attract more businesses often tend to use this price gimmick. So do not fall for the bait. Extensive delay in receiving the end result, poor quality, lack of security, and unprofessionalism are certain disadvantages to consider here. 

Now there is a thin-line difference in buying services of cheapest providers and cost-effective ones. Also, before fixing the price try to understand the overall scope of your project prior. No matter how non-techie you are. This is something you must know and then decide on the budget. 

Outsourcing is the most sustainable thing to consider in today’s times.

2.5 Communication

Last but certainly not least comes communication. As a business, when you look out for a trusted software development company, nobody considers the communication! By not considering this factor, what could happen is the provider might not understand what you are trying to say due to their insufficiency in  your language, your time and cultural differences cannot be solved since they don’t communicate well. Moreover, there is no transparency in the flow of work and soon you will get disappointed. 

3. Mistakes to Avoid When Outsourcing Software Development

Though software outsourcing is not a new norm, it has been practiced by several businesses, irrespective of their industries but there are times when companies do commit some mistakes, especially the ones which must be avoided at the time of the vendor selection process.

3.1 Not Knowing Your Exact Business Requirements

Sometimes it is possible that we are able to properly understand our business objectives. Well, there are times when we do misjudge ourselves. Clear, realistic expectations and a well-defined project scope are certain aspects that must be considered precisely. So what to keep in mind?

  • Know whether you are starting from scratch or  customizing existing system 
  • Is there any integration needed? 
  • Is it for your employees or customers? 
  • Any source code in mind? 
  • Have you checked for industry-specific regulations?

3.2 Communication Barriers

Effective communication is the pillar in any field and outsourcing is no different here. Time differences, cultural differences, language barriers are some of the common issues that hinder development procedures especially when outsourcing. So establishing a smooth communication channel is the only solution here. You can take advantage of available tools such as Google Meet, Microsoft Teams etc.

After all, if you have effective communication, nothing can stop your outsourced team from having a clear-cut idea of the project. 

Make sure your outsourced team must be clear about a few things:-

  • Project’s objective
  • What is their current working pattern? 
  • Do you have all the required resources?

3.3 Budget

How the budget can be a mistake, right? Since cost or pricing is one of the key considerations for outsourcing. Of course, outsourcing means you are asking for services at low price but low in price doesn’t mean cheap in quality.

Knowing your budget restraints can significantly help in determining how far you can stretch and you are not spending extravagantly. After all, you are outsourcing for the quality product at reasonable price.

4. In a Nutshell

We hope this blog on software outsourcing vendor selection criteria was helpful! In case, if you have any doubt feel free to mention it in the comment section below. 

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


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