I was visiting several customers this week to discuss various software development outsourcing opportunities and the topic of what makes a good IT outsourcing company repeatedly came up. Our VP of Enterprise Solutions and Mobility practices, Alex, gave a Webinar on the topic. It’s worth accessing the on-demand recording. In the interim, I thought I would weigh in the subject. Since I have recently been creating top 10 lists on several topics, I thought I would continue the trend and give you my top 10 things to look for in outsourcing vendors.
- Consistent delivery
This goes without saying, really. But there is nothing more valuable than a partner that can, and does, do what they say they can do. The best way to validate this is by giving a potential company several short four to six months projects and see how they handle them. Do they do what they claim? Is it smooth? Look for how consistent the delivery is over a few projects. If they can handle the short term engagement, it is a better chance they can handle a long term outsourcing engagement. If they are consistent with delivery, then they probably have quality and delivery embedded in their culture’s DNA.
- US Based with Global Delivery
In my opinion, there is a distinct value in working with a company that is U.S. based, preferably with local presence, and who owns global facilities. The reasons are logical. A U.S. company tends to understand the cultural nuances, customer service, and work norms better than a company headquartered in another country. The biggest advantage for a customer working with a US-founded and headquartered company is the legal protection. If the IT Outsourcing company was founded and headquartered in US and has US-based management then the customer has the appropriate legal protection and does not have to worry about pursuing their IT vendor in a foreign country (we all have seen and heard the tragic stories). Plus, there are times where every project could benefit from someone being onsite all the time and that someone has in-depth understanding of customer industry and US culture. Additionally, there are times where escalation occurs and the senior team may need to visit the client to ensure both organizations are in sync with the process of achieving objectives and goals.
- Finding the Right Size Organization
One of the important factors is finding the “right sized” IT vendors. What this means is find the right size company for the size of your project. If you are looking for a 100mm dollar outsourcing deal, there are only a dozen or so companies that can really handle that. On the other hand, you do not want to be a small fish in a big pond. If you have a 2mm dollar outsourcing deal, you do not want to go with a big firm. You will get the large vendor’s ‘C’ level talent (maybe worse). It is important for you to select an IT vendor where you are a big fish in a small pond. This will help ensure that you will get ‘A’ level talent, favorable terms, attention of executive management, and other favorable perks and terms and conditions that you will not get from large IT vendors. Of course, you should do their due diligence to make sure that the ‘right sized’ IT vendor has the experience and technical capabilities to meet your needs. So getting the right size vendor is critical to overall success.
- Business Continuity
Look for a company that has been doing onshore for a long period of time. Having worked for a company that was new to offshoring and one now that that has been doing it for 18 years, I can tell you it takes a while to work out the kinks. It takes a few years to really mature. If I were looking for a company, I would want at least ten years of experience before I would work with them. The longer the company has been doing offshoring, the more likely they are to have matured delivery processes and perfected working with clients to achieve the overall goals of the project.
- Communication Plan
This may need to be much higher, particularly if you are not familiar with offshoring/nearshoring. Communication plans should be based on a complete team approach. Daily meetings with the PMs and developers. Weekly status meetings with the business. A minimum of monthly meetings with the exec team. There should be clearly defined escalation processes, as well, as regularly scheduled meetings with the business champions to demonstrate results and get feedback. When evaluating potential offshore partners, thoroughly investigate the communication plan and determine if there is transparency and open, ongoing dialogue.
- Company Culture
The company culture matters because it effects both employee longevity (as discussed above) and the culture of quality and customer service. It is hard to evaluate culture. Make sure to do your due diligence. Is quality and customer service engrained across the organization? Is it consistent? How is it taught, encouraged, and reinforced? It should become evident very quickly if the company culture is prevalent, if it is consistent across the teams, and if there is emphasis placed on it.
- Average Duration of the Team
Turnover can be a real issue in offshoring. Get stats on how much turnover the company has in a year and find out what the average duration is for their consultant base. Ask to talk to a representative sample of the consultants. Try to randomly select them. Ask them about the length of their tenure with the company. It should give you an idea of the actual average duration.
- Technical Certifications
Companies with employees with long tenure can experience another problem: complacency. The longer they stay with the company, the more comfortable they get. The more comfortable they get, the less they strive to stay on the cutting edge. That is not to say that all employees do this, but it happens enough that you should check. It is very important that when talking with the consultants, you investigate what certifications they have, when they last received a certification, what do they do to keep current, etc.
- Innovation and Thought Leadership
Very closely associated with tech certifications is how involved and current the consultants are in the tech community. Do they publish articles, do research projects, speak at events, train others, or participate in critical discussions? The more they do these type of activities, the more likely these consultants are to speak up, offer suggestions, provide insight, and provide critical thinking.
- Point Solutions
Of all of the other things mentioned above are present, than the more specific the expertise of the partner the better. My experience has been that the quality of the vast offshore companies that do everything are not as good as if niche companies that are good at what they do. A Microsoft based company, with experience in SharePoint for hospitals tends to deliver better results than a larger, broader based company. But be careful, because these type of companies also may not have all of the things mentioned above. But if they do, the niche play is usually better at delivering the highest value.
Thank you for reading. I hope it helps. As always if you have questions, please do not hesitate to reach out to me. I would also love to hear any feedback or suggestions on topics or ways to improve the blog. Until next week, I wish you a happy, healthy, safe, and prosperous week.