3 Ways to Minimize Risks When Outsourcing Software Development

Outsourcing software development is an excellent way for companies to increase their productivity without incurring the additional expenses and time investments it takes to hire new employees.

Recent research from Deloitte shows that 57% of companies who choose to outsource do so to help cut costs, and 31% do so to increase competition.

But how can a company know which outsourcing partner is right for them? Like selecting the right employee for the job, choosing the right software development company to partner with depends on which one has the necessary expertise, relevant experience, and a good reputation. 

1. Evaluate the company’s technical expertise

A recent Manpower Group survey found that IT is one of the top three industries suffering from a talent shortage. For that reason, many companies are looking to outsource software development to help fill in the gap.

When looking for help with custom software development, companies need to know that an outsourcing partner can handle all of the job’s technical requirements. That’s why evaluating a vendor’s expertise should be the first step.

“First of all, the client has to evaluate the vendor’s technical capabilities, including their proficiency in the programming languages, frameworks, and technologies required for the project,” Marko Knezovic, Kibernum’s U.S. Country Manager said.

Marko notes that companies should evaluate a potential outsourcing partner’s infrastructure, security measures, and backup systems to ensure they can handle all necessary service requirements.

“Inquire about their risk management strategies to understand how they handle unexpected challenges,” Marko added.

Evaluating a vendor’s capabilities before they start the project will help ensure that the project is within their scope of capability.

2. Find software development companies with relevant experience

While all companies have unique projects, many have one thing in common: They outsource to find the right expertise. Deloitte data shows that 49% of companies outsource to gain access to new capabilities.

Not every outsourcing partner will have the same experience, and some companies may be a better fit because they’ve worked with similar clients in the same industry. “It’s important to make sure that the vendor has experience in your company’s industry. Having a portfolio and case studies are always useful to prove this,” Marko said.

Marko recommends examining a company’s customer software development projects and history of client work “to see if they align with your project’s complexity and requirements.”

This may involve asking for references and contacting previous clients to get feedback on a company’s technical skills and overall project performance.

3. Choose an outsourcing partner that has a good reputation

Corporations need to do their due diligence when evaluating a nearshore software development company to see if the tech partner will be the best fit.

“Due diligence is crucial to assess the capabilities and reliability of potential outsourcing or nearshoring partners. You should always check the company’s history, financial stability, and legal standing,” Marko said.

You can also look for any red flags or negative reviews, Marko noted. “There’s no better advertising than word of mouth, so it is a good indicator if the vendor has positive past or current client references.”

In addition to reviews, companies should also assess if the potential vendor is compatible with a company’s culture. “Shared understanding of work culture can help prevent miscommunication and foster smoother collaboration,” Marko said.

Here are a few more things to consider

In addition to the above, companies should look for a development partner who offers clear contractual agreements, including service details and expectations.

Companies also need a tech partner that has regular and clear communication. “This helps you identify any issues early and provides transparency into the development process,” Marko said.

Marko added that Kibernum works hard to develop close relationships with its clients. “We always partner with our clients to provide them with the best possible service and are always striving to learn and grow together with them.”

Find out how Kibernum can help you with your software development needs. Our company has over 30 years of experience working on projects with the world’s largest corporations. Get in touch with us to find out how we can help you.