Choosing an outsourcing partner is an incredibly important step for every business and is key for the performance of the company and the overall revenue. Nearshoring software development could decrease the overall cost of your business significantly, but at the same time, if it is not done in the right way, there are risks of decreasing the quality of your product or service and lowering customer satisfaction which will inevitably drive less revenue.
For this reason, I have gathered as much information as I could on successful outsourcing partnerships, how they work and what is the selection criteria. I will describe a very clear and thorough methodology for choosing a nearshoring partner, comprising almost every best practice I have witnessed during my 10 years of experience in the industry.
Learn from someone who has already done it right
Today I’ll share the methodology that a Netherlands based bespoke insurance company used to hire a nearshore custom software development company based in Sofia to help them build their digital products. Here’s what Martijn Burger, Paston’s co-founder, says about why they needed to find a nearshore partner:
“It was more of a necessity as we couldn’t find any decent people in the Netherlands but I would definitely not change it even if we could find people because I really like that I don’t have to worry too much about all the stuff about how to keep people motivated, etc”
How they found their partner with whom they work now for more than a year? What was the process they followed to minimize risks? The answer is below.
The process for choosing the right company
It all started with a simple filter – the partner company had to be in Eastern Europe due to the proximity to the Netherlands, cultural similarities compared to some Asian countries and the cheaper cost.
Moreover, some of the Eastern European countries are members of the European Union and that makes them comply to the same data security standards as the western world. Other benefits are:
- Good education in mathematics, physics, and informatics
- Great English language skills
- Curiosity and a caring attitude
Having the list, now they filtered them based on relevant technology skills. Having in mind the technology stack they currently use and the languages which they knew would suit the needs of the product they wanted developed, the company shortlisted outsourcing agencies based on their core focus.
The process continues by scrutinizing the website and web presence of each company. All this was done by a company employee. Having a good website, with professionally written content shows that you care about high standards in work. If it is easy to find information about you through different sources means that you’re a serious company that offers enough added value so other companies share the content you produce. You can hire an intern that can make this initial research and then have the first call with the potential development company so you, the decision maker, can spend your time in the process as efficiently as possible. The described process is simple and requires little engagement on your side.
The next step is contacting the shortlisted companies through email. Those who replied and showed interest were asked for an introductory Skype call. Through such a video call you can see and feel the people on the other end. Nonverbal communication is essential and seeing your potential partner enables you to make a more educated decision about their credibility. During the call basic info was gathered, such as how big the company is, what the expertise and availability of talent is, company culture values and contact for potential reference was requested. Then the referrers were contacted. All the info here was gathered again by an employee, without the engagement of the key decision makers.
Afterwards you should schedule a second call where the technical, process and delivery expertise would be tested. The interviewed company has to present code they have written on previous projects, showcase any related industry domain knowledge and prove their skills in process management and agile methodologies like Scrum. The technical call could last up to 2 hours. You can dive deep into architectural knowledge, high level design, testing, database skills, etc. At the end, you must know whether these are the people that can do the work based on their technical skills.
After the second call, the list was shortened to 3 companies in 3 different countries and visit arrangements were scheduled. The purpose of the visit was to meet in person with the management and the team to feel the vibe of the potential partner – bonding in person. To emotionally connect is really important not only in marriages but also in building business partnerships. Why? Because if you bond emotionally you create trust, security and it boost the overall mood. Once the face-to-face meeting was a fact, the day consisted of a long meeting with the management, then with the potential development team and shorter meetings with each team member.
At the end a custom software development company from Sofia, Bulgaria was picked even though the offered rates were higher than the rest. It was the bond, the better tech expertise and the delivery process that won the Netherlands company. There is a proverb saying “I’m not rich enough to buy cheap things” and for building long lasting partnership this is completely true. If you’re for the long run, quality and building a relationship is way more important than money. You’ll spend your time almost every day with these “new” people and you’ll depend on their expertise to build a product that will bring revenue.
To ensure quality, the initial contract was with a three months trial period during which Paston could terminate it with a day notice. Having such a contract is better for both parties as they both get to explore whether the partnership fits their individual needs.
In summary, the steps are:
- Filter based on important criteria to you – proximity, cultural similarities, cost, expertise, university ranking in the area
- Website quality, core expertise
- Approaching the companies
- Introductory call with an ask for references
- Call the referrents
- Second call about what is expected and deep dive into the delivery expertise of the potential partner
- Onsite visit
- Selection with a trial period
Hope the above will help you out in selecting the right nearshore partner. Do you have a different methodology that works? Please share!