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Software Outsourcing Vendor Selection Process and Criteria

In today’s highly digitized and interconnected world, any business can find the best remote software development teams at the most attractive prices to build their own business apps. However, the searching process of these teams can turn into a real challenge. The IT outsourcing market is highly competitive. And every software outsourcing vendor proudly represents its achievements and great developer skills on their sites. All that can be quite perplexing, especially for a novice who looks for a decent software development company for the first time.

How to avoid confusion and choose the right outsourcing partner? In this article, we look into the software vendor selection process in outsourcing and share practical tips on how to opt for the best one.

Key Ideas to Keep in Mind When Choosing an IT Service Provider

Before selecting any outsourcing company, businesses should take their time and turn their attention to their projects. They have to realize clearly the type of their project, what are the requirements of their product and decide on an engagement model.

Project Evaluation

To understand their projects better, businesses can take the following steps:

  • define the type of a project – if it’s an MVP or simple project with minimum features to implement or a complex solution with flexible requirements;
  • evaluate the scope of a project – customers need to decide on details that they already know about their future product, define the questions they need to discuss with their future vendor, consider staff and equipment it needs for successful app development, and others;
  • estimate the project budget – budgets for small projects with detailed requirements are easy to calculate, while the budgets for large ones with changing requirements can be reevaluated several times along the project;
  • define time to market – customers should realize if an early app release is a determining factor for the success of their business or they could afford more time for their app development;
  • establish deadlines – customers have to define the deadlines that can’t be postponed or moved and are extremely important for the project success;
  • choose a software process model – there is a wide range of software process models in IT, including waterfall, Incremental, Agile, RAD, and many others.

Each of them defines the working style of a project team and the activities undertaken during the development process. The selection criteria for software process models strongly depends on the project’s scope, requirements flexibility, type of system to be developed.

Choosing the Right Engagement Model

Once a company has evaluated its project, the next step it should take is to decide which engagement model suits its project best. This will help them to define customer-vendor working regulations, including terms of cooperation, project deadlines, pricing policy, and other regulations.

vendor selection in outsourcing

Here are the most widespread engagement models in IT outsourcing.

  • Fixed price model

A fixed price model is a classic approach in software development when a customer obtains software development services for a fixed price. This type of service implies that a customer decides on the product requirements in advance and they can’t be changed later on. The fixed price model works great for small projects when the budget is limited and features and requirements are clear.

  • Time & materials contract (T&M)

The T&M model is based on the idea of gradual spending of project resources on product development. It means that customers get actively involved in their app development project. They decide which features to spend their time and money on and which changes to implement so that their apps meet most of the end-users requirements.

This engagement model suits well for long-term and complex development projects when product requirements aren’t clear. The costs are based on an hourly rate and discussed with software outsourcing vendors in advance.

  • Dedicated team model

A dedicated team engagement model is about hiring a software development team that performs a full circle of product development. These teams usually include front and back-end developers, QA engineers, designers, project managers, and any other specialists a customer needs for successful app development.

Customers get a fully-equipped software development team that can fulfill projects of any complexity and duration. Moreover, they can scale up or down their teams depending on the project needs.

  • Outstaffing

The outstaffing engagement model involves hiring particular specialists from a software outsourcing vendor to integrate them into a customer’s in-house developer team. It means that a hired employee works remotely full-time adjusting to the policies and schedules of an in-house team.

Outstaffing is ideal for staff augmentation when customers need to enhance their team’s working capacity, hire seasonal workers, or substitute temporarily absent employees.

Here is a quick engagement models comparison you can quickly refer to when making your choice: