1. Cultural awareness: According to HRAF, founded in 1949 at Yale University, there are 186 cultures in the world. Understand the importance of knowing one’s own culture, values, and beliefs in order to relate more effectively across cultural lines. When around people from different cultures, watch for three things: moments of tension, misunderstandings, and points of conflict. Meet both the vendor’s management and technical team to determine if your communication will crush in an unbridgeable cultural abyss.

2. Technical skills evaluation According to Evans Data Corporation, in 2018 there were 23.9 million software developers in the world. In 2019, this number reached 26,4 million and is expected to grow to 28.7 million until 2024. In this dynamic, multifarious market, how can you prepare for outsourcing a software project, ensuring effective communication and quality code? Do not rush your interviewing process! The urge to start quickly, build a robust, well-engineered system that is also operational, might get you over-excited. By doing so, you will lack the patience for a proper technical evaluation. Take your time and organize multiple interviewing sessions, because it doesn’t matter how fast you’re going if you’re on the wrong highway. You have chosen the skilled engineers that match your project’s requirements. Before turning on the green light, know that a hired team will usually have a difficult time identifying the real pains of your company and finding adequate remedies. They lack the context and connections to the right people in your company.

The best solution to this problem is to extend the team by adding someone from within who already has both the context of the business and the connections. That is the role of a product owner. Make sure that your supplier’s technical team is also validated by your inhouse product owner.

‍3. Financial alignment According to Quality House, 50% of the outsourced projects either fail outright or just fail to meet the expectations. 76% of the companies reported issues with the management effort on behalf of the vendor and hidden costs. Problems with these vendors may result in lost revenue for your organization. It is important to identify and segment these types of vendors, to design the most appropriate diligence and oversight activities. Make sure there is complete transparency and the vendor can be integrated with your operational risk planning. The contract you sign with your outsourcing partner should also cover all scenarios related to contingencies. We recommend picking a vendor who is willing to accept a hybrid pricing plan, to share the financial risks. For example: instead of a fixed-price model, use hybrid pricing with lower rates, if the vendor exceeds the pre-defined budget. With these non-profitable over-budget rates, the vendor will do its best to follow the initial plan.

4. Clear communication flow According to Flat World, a study of 305 buyers and providers in North America, Europe, Asia, and India concluded that 25% of the reasons for outsourced project failures are due to poor communication.

It’s hard to meet with providers personally if they are based offshore. However, they must be at least willing to conduct conference calls with you to interact and hold open discussions. Be wary of providers who only prefer to communicate via email and are unwilling to actually talk. Make sure your outsourcing partner uses a clear communication flow and communication tools that your company’s personnel are also familiarized with. Every message or email needs to be responded and within time. From our experience with software companies, if a person sends an email requesting some information, there will be no answer until the information is available. This keeps the sender anticipating the situation and at times may derive a wrong conclusion. We recommend an outsourcing partner who promptly responds, even if the information is not available, and may need more time to gather the details.