This is how to choose the right software partner for outsourcing software development

In the world of IT outsourcing, you sometimes hear horror stories about projects running over budget or time, poorly written code, or projects failing in other ways. However, an outsourcing project can also be highly successful. Much depends on effective collaboration with the right software partner. But how do you find them? You can achieve this by setting clear requirements upfront, looking for the right technical expertise, and ensuring a good cultural fit.

Outsourcing a software project is a serious matter, and there are several reasons for this. For years, companies have struggled to find and retain tech talent. Looking at the UWV’s labor market tension indicator, the map is deeply red: the shortage in the Dutch ICT job market is enormous. Software developers are as scarce as they are costly. According to Glassdoor, the average base salary for software developers in the Netherlands is €4,000 per month. The more experience someone has, the higher that salary becomes.

Finding the right people for a project is a challenging and expensive task. Moreover, not all companies require an in-house development department. Many organizations use IT solely to support business processes, as it is not a core activity. These organizations do not continuously develop new software but only do so at specific times when necessary. In such cases, there isn’t enough work for a dedicated development team. The ability to scale up and down, accelerate when needed, and benefit from specific expertise and experience are other reasons to outsource software development.

The foundation for choosing the right software partner: requirements, skills, and scope

Finding the right partner for a development project requires a thorough approach. It starts with clearly defining the goals and requirements you, as the client, have for the project. What exactly do you want to achieve? What falls within the scope and what does not? What does the final product look like? What minimum requirements should the first version meet? And equally important: how much time and budget are available?

The next step is determining the technological expertise needed to make the project a success. Which programming languages should be used? Are there specific frameworks or platforms to consider? Will you need just developers, or also testers, AI experts, and data scientists?

The need for specific skills is often partly influenced by your existing IT infrastructure and any administrators you already employ. Integrating various software components becomes easier when the technologies used are consistent across projects. Only when these prerequisites are clear can you begin searching for a partner capable of delivering the project.

The most important factor when choosing the right software partner: the team

The foundational factors are usually considered when searching for a suitable software partner. However, the most critical factor – the team – is often not given enough attention. Beyond the previously mentioned prerequisites, a good rapport—both between key individuals and in terms of company culture – is a major success factor. A partner’s track record can also be crucial: how much experience do potential partners have with specific types of software, technologies, and programming languages? Have they recently delivered successful projects? Were these projects completed on time and within budget?

Domain knowledge is particularly important here. If developers from potential software partners have experience in your industry, it can offer significant advantages. The onboarding process will be faster, and industry-specific insights and knowledge add substantial value, potentially having a direct impact on the success of your project.

To assess this, don’t rely solely on online reviews and references. It can be incredibly helpful to speak directly with previous clients of potential partners. How did their projects go? Were they satisfied with the collaboration and the end result? How quickly was a strong working relationship established? How were challenges or conflicts handled? Were the right features delivered at the right time?

Organizational advisor and coach Giancarlo Scaramelli strongly recommends also talking to the developers themselves. “When you’ve chosen the right people, you’ll see their pride when they talk about a successful project. That’s a good sign. I want to see enthusiasm: ‘Look what we did!’ When you see that, you know they take ownership of their work. They enjoy what they do. That gives me confidence that, if something doesn’t go as planned, these people will do their best to fix it.”

In search of the popcorn

Giancarlo Scaramelli has decades of experience in the IT sector, including outsourcing. Over time, he has learned that while technical requirements, results, and financial aspects are crucial, they alone don’t guarantee a successful outsourcing project. He compares the technical requirements to the menu at a restaurant and the company culture to the chef’s passion. “If these aspects are not balanced and equally valued, you often have to work twice as hard to make the collaboration successful. You may have all the ingredients, but without passion or understanding of what the client wants, there’s no guarantee the meal will taste good.”

To properly evaluate whether a software partner is truly the right fit for your project, you need to look beyond the technical menu. As Scaramelli puts it, you need to look for “the popcorn.” By this, he means the unique factor that sets a software partner apart from their competitors. The term comes from Scaramelli’s personal cinema experiences. “When I go to the movies, I want to eat really good popcorn. Movies are shown in so many places that I can choose from countless cinemas. So, I look for the one with the best popcorn,” he explains. “The question is: what’s your popcorn? What’s that extra something that makes a partner the ideal choice for your project?”

You can find that popcorn by asking questions that go beyond the standard checklist. “For example: are team members encouraged to voice their opinions? Will they challenge me? What are their hobbies? Where do they go on vacation? What kind of music do they listen to? I want the company to tell me about their team because these people are going to make my life better or worse. I want the company to prove they know their people, and I want to get a sense of the atmosphere. What’s the employee turnover like? That’s already a sign of the culture. These are often not things you’ll find in a contract, but they can make all the difference.”

It’s also essential to meet the employees in person. This allows you not only to see who you’ll be working with but also to verify if what your contact person has said is accurate. Of course, there’s a chance a company might refuse to answer such personal or unconventional questions. “But then I won’t become their customer,” Scaramelli says. Ultimately, it depends on what your popcorn is.

Communication and the development process

During discussions with potential partners, there are two other important factors to consider, in addition to the rapport. First: the language. Many outsourcing partners work with developers abroad, which means they may not speak Dutch. This doesn’t have to be an issue as long as they speak a language that the outsourcing party is also comfortable with. In most cases, this will be English.

Additionally, it’s important that there is effective communication. Are regular updates provided? Are team members available for discussions? Do they use tools like Jira, Trello, or Slack for communication? And what does their development process look like? Do they work in an agile framework, with updates expected after each sprint? Or do they follow the waterfall method, with updates provided at different stages? How is documentation created? These are all questions you can ask both the company itself and the developers on the team.

A dedicated team for continuity

For long-term projects, Scaramelli believes it can be beneficial to work with a dedicated team. Anyone starting work on a project needs to familiarize themselves with the project scope, the defined requirements, and the technology being used. Additionally, they need to understand what has already been built – what choices have been made and why? What’s completed and what’s still pending? Investing in knowledge about the product and the underlying domain ultimately leads to cost savings.

Scaramelli also stresses the importance of building a relationship based on trust. The best way to achieve this is by working with a dedicated team. As he puts it, “It’s a team where I know all the people and understand what they are doing.”

Pilot project and comparing costs

Once you have a list of potential partners, the next logical step is to compare the different proposals. What are the costs, and how have they been determined? How are issues related to intellectual property and confidentiality addressed? How are teams composed and coached? How does the potential partner allocate time for things like guidance, supervision, training, education, social events, quality control, and meetings? How are contracts structured? All of the points mentioned earlier can be compared side by side to make an informed decision on the best partner.

There are pitfalls in this comparison process. If the price is low or the turnaround time is very quick, there’s a risk that the project ends up being more expensive or taking longer than anticipated, for example, due to frequent discussions about additional work or exceptions, or because the quality is so poor that the project cannot be considered successful.

Many outsourcing clients therefore start on a small scale: with a pilot project or a proof of concept (POC), for instance, for a standalone product with its own functionality and a clear beginning and end. Experience shows that in a relatively short time – several weeks to a few months – you can get a good sense of how a partner performs in reality, as well as how they approach collaboration. Do members of your own team and the external team find it easy to connect? Does the exchange of information start quickly and work well? Only when you see a positive outcome do you choose to proceed with formal collaboration.

Your own attitude

A successful project depends on more than just good preparation. The outsourcing partner also plays a crucial role in achieving success during the collaboration, as Scaramelli emphasizes.

It is important that people feel valued. If they don’t, they won’t be motivated to give 100% effort. Of course, the company they work for plays a role in this, but the client does too. After all, the team is working on your project. “Celebrate successes together, because that’s how you build a bond. Show that you appreciate the members of the external team.”

If something goes wrong, it’s important to respond diplomatically and constructively, according to Scaramelli. “Sometimes mistakes happen. We learn from them and move on. If you always get angry about it, people won’t take ownership of their work. They’ll be afraid to make mistakes and will only do what’s necessary to get through the project. But if you create a safe environment, they’ll be more willing to take that extra step to improve the project.”

It’s also important to select the right product owner. This person must bridge the gap between you and the external team and will be the one you, as the client, have the most contact with. “You can do all the necessary preparation, find the proverbial popcorn, and select the company that delivers the quality you’re looking for, but when it comes to actually working together, it’s crucial that the person responsible for day-to-day collaboration shares the same mindset as you. That makes the chances of success much higher.”

In closing

When choosing the right partner, it’s important to find a balance between technical expertise, communication, and cultural fit. But most importantly, you need to select a software partner that aligns with your unique needs.

By taking the time to thoroughly understand and compare potential partners, their teams, their workflows, and their performance, you can avoid headaches and increase the chances of a successful project and a pleasant collaboration.

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