Outsourcing Software Development Can Be Challenging – Unless You Do It Right

February 15, 2017

By Andy Hilliard

Outsourcing your software development can be an easy process, if you do it right. That’s according to Michael McAuliffe, managing director of Accelerance, a Silicon valley-based Advisory firm that helps enterprise CIOs, CTOs and other established business leaders understand their options when developing software: on, near and offshore.

In this Q&A, McAuliffe – who has more than 25 years of experience in technology business development, sales management and financial analysis – answers some common questions about outsourcing software development.

Question: Why do companies small and large find it challenging to locate and hire software FTE developers?

Answer: A big part of the reason is a significant, well-documented shortage of developers in mature markets around the globe. It makes it difficult and costly for companies to hire and retain competent developers. So as desirable as it is for your development team to be located down the hall, this is just not always possible: for just a part or, perhaps, the entire the entire development team.

Question: But what’s the alternative? It must be difficult for companies, regardless of size, to find remote groups – whether on, near or offshore – with any degree of confidence.

Answer: Offshore or nearshore outsourcing is a viable and effective alternative but, as you pointed out, a busy company finds it difficult to locate qualified firms, manage risk, maximize value and consistently achieve outsourcing success.

Question: You hear of many stories where outsourcing software development has worked. But it does seem the general perception of it is negative. If it is tough for companies to find the good groups, I guess it is difficult for the good groups to present themselves to these companies.

Answer: Correct. They try, but it seems the less reputable groups are more aggressive at their marketing, which often comes off as unwelcome spam. So when a company that can really help introduces themselves, how can you expect a company to quickly differentiate between the two? But it remains true that, in emerging markets, there are many highly qualified software development companies with an abundance of educated, experienced software developers looking for engagements.

Question: Seems ‘Buyers’ and ‘Sellers’ have a difficult time meeting.

Answer: They do. The result is a large, high value, underserved, two-sided market of ‘Buyers' and 'Sellers' of software development services who don’t have the time, means or knowledge to connect with each other.

Question: So if a company tried to outsource to a software developer on its own, what would that process look like?

Answer: In our experience, companies do one of two things: ask a colleague for a referral or do their own research.

Question: A referral sounds like a good way to go: if someone you trust had success, that is a good place to start at least, right?

Answer: But you make a lot of assumptions when you accept a referral from a colleague. You assume that your software initiative is like your colleagues, that your success expectations are the same, that you have the same developer needs and requirements as your colleague, and the list goes on. Just because your colleague had some success with a developer, doesn’t mean you will. Your project is just too unique, and the success of it too critical, to leave it to an expedient referral.

Question: You make a good point. I guess to do the job right, you have to roll up your sleeves and do your own research.

Answer: Many companies do, and we find this random act reverts to a mean of six months. Given the work involved, this is like a second job for the person doing the research. Clearly, given the time needed, it is impossible to respond to any immediate need.

Question: Six months? I never thought it would take that long.

Answer: It does. It is impossible to quickly 'know' the market, especially when you factor in important variables like vertical expertise, certifications, attrition rates, recruiting practices, IP management and, of course, price.

You literally start with “the world”. Then you’d narrow your search down to a region or country, based on preferences like language, time zone differences, travel distance, etc. You might develop a list of 30 developers. You’d visit each company’s website and gather information; you’d create a matrix to compare offerings and capabilities. Once you made sense of that, you’d narrow your search down to about 10 possible candidates. You’d email them and start a casual dialogue to learn more. You’d ask a lot of questions about their experience, successes. You’d ask for references to substantiate their work. You’d learn a lot about their processes. Are they Agile or focused on DevOps? Are they aware of the latest technologies and standards? Is security a priority, etc.? The list of evaluation questions goes on and on. Eventually you’d travel and meet these companies face to face.

Question: I guess it is worth it if you find the right group?

Answer: The effort can be worth it but most companies don’t have the time or resources to spend months on this. But you don’t want to cut corners: if you are casual about selecting a good outsourcing partner the odds are high that they’ll pay for it later via low quality work, missed deadlines, wasted time and resources, cost overruns, etc.

Your business is ‘x’, and you need to be dedicated to doing this as best as possible. Your business is not evaluating global outsourcing providers. Best not to get caught up with this It's a tedious and redundant process.

Question: How does Accelerance help? What services does it provide?

Answer: Accelerance simplifies or “de-risks” the process of finding and working with offshore, nearshore and even onshore software development companies. Since 2001, we have endeavored to “know” the global software development landscape. This includes engaging with over 6,000 providers, reviewing over 1,500 of them. For a select few – presently 50 leading leading groups located in 30 countries – we’ve boarded a plane to go visit them on site for final Certification. We package the material collected during these visits and provide it to our Clients in an easily understandable and actionable way.

Question: What does this Certification process look like?

Answer: The Certification process is the last step of our detailed review, where we go on site to the Partner's location – regardless of where in the world they are located – and spend a week executing a thorough due diligence review. Frankly, this is the traveling our Clients would want to do if they had the ability. The Certification includes, but is not limited to:

  • Understanding their software development expertise
  • Reviewing their proven ability to deliver and ensuring they have an impressive portfolio
  • Checking references for each verified technology and industry
  • Meeting with team members who are highly educated by top universities
  • Confirming English fluency and effective communication skills
  • Verifying best practices in engineering, project management and business.

Question: So, in a way, you are giving a referral, too?

Answer: Exactly! But a highly curated one that takes into the unique characteristics of our Clients needs.

Question: And as far as comparing the Accelerance service to doing your own research, how long does your process take? I’m assuming not six months?

Answer: More like six days. We are able to do this with our proprietary Rapid Referral System. Since we have done the work for our Clients, and have worked with these Certified Partners over many years and engagements, we can introduce very quickly two to three “best aligned” Partners for our Clients to consider. We have seen the process -from initial introduction, to contracts being signed, work starting-- take as little as two business weeks if all parties are similarly motivated, but that is “moving” I have to admit.

Question: Can you tell me more about this process? How does a company get started with outsourcing software development with Accelerance?

Answer: We will guide you through a list of things to consider when outsourcing your software. What technology platform is right? Is methodology important? How many developers do you need? What global regions are right for you? There’s a lot: from ‘hard’ criteria like tech stack, certifications, etc., to ‘soft’ criteria like how you like to work and what you value in a team member. Based upon the answers provided, we will identify best aligned groups to consider, facilitate introductions to these groups, and be with you through the review process up to and including signing the final agreement.

Question: How much should a company expect to pay an Advisory Group like Accelerance, as well as the developers themselves?

Answer: For Accelerance Advisory Services, you should expect to pay…nothing. We earn revenue from our network of software service providers. As for developer fees, hourly rates for developers vary by region, experience and technology. The one constant is that you will pay less for higher quality work when you outsource. We understand the costs of hiring various types and sizes of teams in the regions we represent. Because of this, and because our service providers want to win and retain your business, you can be confident of fair and competitive software outsourcing rates.

Question: You mentioned Intellectual Property (IP) before. How does a company protect against theft of their IP?

Answer: Accelerance Partners are selected based on their technical skills, culture and reputation. They’re accustomed to non-disclosures and non-competes with some of the largest, most powerful brands in the world. Additionally, most Accelerance partners work through U.S. entities and comply with U.S. intellectual property law. With Accelerance Service Providers, your IP will be in the very best, experienced hands.

Question: Any final thoughts?

Answer: When you have the right team, everyone shares the goal of creating great software to grow your company; and Accelerance can make that process of finding that Partner very easy. If you still have questions about outsourcing software development, visit the Accelerance Resource Center or contact us directly to get the answers you need.

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