Insights | Your Seven-Point Plan for Software Development Outsourcing Success

Your Seven-Point Plan for Software Development Outsourcing Success

By Rich Wanden & Ryan Schauer | December 15, 2020

Like many technology leaders, an international e-commerce company that came to us for help was feeling the crunch of the tech-skills shortage on the US market.

The fast, cost-effective solution was to expand its resources by outsourcing, adding the capacity needed to develop leading-edge software applications for its e-commerce platform. But the company was wary, after a poor experience with a previous outsourcing engagement that had not gone well.

This time, instead of trying to go it alone, they turned to Accelerance for guidance. After a thorough assessment, we recommended the perfect-fit nearshore software development firm from our carefully vetted global network of certified partners, drawn from the top 1% of companies worldwide.

The result was a successful, long-term development partnership that has restored our client’s faith in outsourcing as an effective business strategy. And it was Accelerance’s proven due-diligence process that made all the difference. 

Knowing how to assess and identify the right partner is critical to the success of an outsourcing project – and, ultimately, to the quality of the software produced. 

Our new Software Outsourcing Due Diligence Guide draws on our deep inside knowledge from more than two decades of experience in guiding clients like this one through successful partnerships, including key areas to consider when selecting a partner company, how to assess potential candidates, and what questions you should ask before deciding whether you’ve found a good match.

Whatever your goal, careful planning is essential – and that process needs to begin before you start thinking about picking a partner. Here’s our seven-point roadmap to set your next software development project on the right track.

1. Choose the Right Project

Technology requires a commitment of time and money, so review your priorities and assess each potential candidate. Look over your list of options and ask yourself: 

Which projects, if successful, will provide the best return on investment for the company?

Initiatives with a clear business benefit will generally get better buy-in and higher quality participation.

Which projects have the clearest goals and scope of work?

Clarity of vision is a key factor in ensuring a successful outcome. 

Do any projects require the use of new, unproven technology?

Unfamiliar technology can be a dangerous variable when it comes to accurately assessing the cost of development and the time involved.

How many other systems will the newly completed solution need to integrate with?

Integration testing can be very time-consuming and requires a higher level of coordination.

Which projects are expected to have the longest duration?

Variables beyond your control pose a higher risk in long-running projects, such as key personnel changes, loss of momentum, or other business distractions.

Which projects are expected to require the largest number of participants?

More people involved equals more complexity.

2. Do a Self Examination

Certain characteristics within your company culture can add unwanted risk to your project, and are particularly damaging if you’re outsourcing for the first time:

  • A highly conservative culture with a low tolerance to risk.
  • Internal processes that are immature or unproven in large enterprise work.
  • Key stakeholders who are relative novices, either in their current role or in leading formal IT projects.
  • Historical resistance to outsourcing – whether in IT or in the business community.

If you’re looking at outsourcing a high-impact software development with potential for significant benefit, but where the scope of work or complexity is high, you need to be willing to accept a greater level of risk. Companies compatible with this approach usually have one or more of the following characteristics:

  • Good ability to assess risk/reward payoff when evaluating options.
  • Confidence that the new application, when delivered, can contribute to the company’s performance.
  • Key stakeholders are relatively mature in their role – or are new to the role, but seen as good “systems thinkers”.
  • Strong sense of urgency in the business culture.
  • Employees are able to collaborate within teams and cross-functionally.

3. Select the Right Software Outsourcing Partner

This step is the most critical one. You’ll need to find a highly qualified software development team to build a strong relationship with and trust to deliver. Due diligence in the partner selection process will make all the difference in the success of your outsourcing engagement and ultimately, the quality of your software. Here are just two important aspects to consider:

Skills Matter

Access to technical skills is often cited by IT executives as the greatest barrier to their department’s success. Software development outsourcing makes it possible to access high-caliber teams with expertise you don’t have in-house. Look for technical certifications and relevant project experience that shows your nearshore or offshore partner has the right intellectual capital and company culture to be the best fit for your project.

Size Matters

A partner that’s too small won’t have sufficient bench strength to cover your needs. But a partner that’s too large can also be a mismatch if your project isn’t “big enough to matter”. At Accelerance, our rule of thumb is to make sure your engagement represents no less than 5% and no more than 20% of your outsourcing company’s revenue base.

4. Choose Your Methodology

For software development outsourcing projects, Agile has been proven to produce high-quality results. If you’re new to software development outsourcing or are working with a new team, the Agile framework also helps you get a good sense of your partner during Sprint Zero and Sprint One (the first 30 days). As a sweetener, some outsourcing partners will offer to waive the fees for Sprint Zero if the client feels irreparable issues have arisen and the relationship is severed. So, if a problem arises, the only lost investment is in time, not in wasted money.

5. Pick your Pricing Model

In concept, a fixed price seems appealing. After all, if you know exactly how much the project will cost, aren’t you minimizing your risk? Actually, we find it’s rarely the best option, for these reasons:

  • Design specifications are rarely complete, so many assumptions must be made to come up with a bid.
  • Most fixed-price models are padded for risk-contingency.
  • Most fixed-price models require upfront money.
  • You have one chance to document everything you want designed into your software. Anything left out will have to be managed by a change-order process, which can become frustrating and onerous.
  • Instead of incremental design and sprints of completed work, a development team on a fixed-price contract deploys software in large “big bang” phases – forfeiting the benefits of speed and effective design made possible using an Agile development framework.

The one exception where a fixed-price model may be worth considering is if the scope of work is small and fully outlined, such as a minor enhancement or remediation to an existing software application.

6. Use Project Metrics

Numbers don’t lie. You and your outsourcing partner need to establish a clear set of project metrics for tracking and reporting the work progress throughout the engagement. This won’t 100% guarantee the absence of problems, but will certainly identify issues that need to be addressed. Capturing metrics not only provides comparative analysis but, over time, also allows teams to refine their ability to estimate. Include metrics that reflect the iterative nature of Agile development: lead time, sprint time, sprint volume, issues and issue open/close rates. 

7. Prepare Your Partner Relationship

The real work begins after your partner selection is made and the contracts are signed. You’ll want to establish team member roles, finalize your software work plan, and set standards for coding, development environments, libraries and change management. Have a process in place to evaluate your new development partner’s ability to integrate with your team, communicate effectively, and adhere to mutually approved-timelines.

Beware of silence! If your partner is chronically late to meetings, absent from meetings, communicating poorly, or just generally not interacting with good questions – these are early-warning signs that your project may be in trouble. Your outsourcing contract should clearly outline a remediation process to resolve any issues that arise. 


How Working with Accelerance Can Make all the Difference

No one knows more about software development outsourcing than Accelerance. Our global network of certified partners draws from the top 1% of software development and systems integration firms in more than 40 countries, and our onshore consulting services provide guidance throughout your outsourcing engagement. 

Accelerance’s customized partner selection process and innovative software development outsourcing solutions connect you to a world of IT talent - ensuring a high-quality outcome for companies wanting to step up their software and digital strategies. From partner selection through delivery, we’ve got you covered.

Mockup - Due Diligence

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