Outsourcing has become one of the fireproof saving boats in this heating lava of the IT hiring market. However, it’s not just a way to find additional professionals for your project. Companies often opt for outsourcing to reduce cost (70%), be more flexible (40%), make it faster to market (20%), etc. Whatever the reason for building such a partnership, it will be in vain if you choose an outsourcing vendor that is not up to the task.
Warning Signs of Outsourcing Vendors
But what do we mean by “the wrong outsourcer”? What should we NOT look for? We gathered the top 9 signs of an outsourcing vendor who can hurt your business and dispel your belief in outsourcing’s success.
1) A little bit of everything all of the time. Isn’t it funny how some companies always say “yes” to everything you request even if it’s out of their scope? On the surface, it seems like you’ve found the panacea to all your business dilemmas. Vendors who are not outsourcing giants claiming to know every industry and every topic tend to overestimate their expertise. A lot.
2) Trying to push you to sign a contract fast. Have most of your questions yet to be answered, but you are pressured to start the collaboration right away? Is the outsourcing vendor telling you all the things you want to hear in an attempt to get you to sign a contract? That means the vendor’s services will be misleading, and this partnership will be less than transparent.
3) Unclarity in communication. Having constant questions about how the collaboration will proceed and your vendor giving vague answers indicates poor business communication. Your situation won’t change as you begin to collaborate, so don’t get tense and keep searching. Communication is key! If you don’t have it, no door will open.
4) Insane turnover. The IT hiring market is tense right now, and all companies are experiencing some increased turnover. Understanding when this is too much, however, is important. Let’s say you start your project with one team, and soon developers come and go, one by one. It is not long before you find yourself working with a completely different team, and the turnover does not seem to stop. If that is the case, the company has poor labor practices and unhealthy working conditions. You won’t be able to build a team that truly delivers with this outsourcer.
5) Neglecting the scope of work. Have you noticed that the vendor is not meeting the outlined goals, is not on schedule, and offers poor estimates? Have you not been given an explanation for why this is the case? Unfortunately, it indicates that the vendor is irresponsible and not completely upfront with you about what they are really capable of.
6) Reluctance to innovate. Yes, what’s tested and tried hundreds of times gives a sense of stability and reliability. Sometimes though, old habits die hard. Software development stagnates whenever it ceases to innovate. In other words, if your vendor uses outdated technologies and ignores the best practices, your product will soon become obsolete.
7) Habitual hidden costs. You’re never pleased when your agreed-upon price ends up being higher than you envisioned. This may occur as a result of dynamic requirements, change requests, or rising hourly rates for developers. Most mature vendors, however, warn about these things as part of their risk management. Additionally, they should be able to provide clear explanations of why this occurs. Nonetheless, if this happens all the time with no explanations, chances are they are only looking for money.
8) Focus on their profit only. Obviously, outsourcing is not just a temporary fix, and your vendor should be fairly compensated. The problem arises if, however, you always feel like giving and never receiving value in return. Creating a partnership in such an environment is not a good decision.
9) No respect for deadlines. Yes, we can all make mistakes in predicting how and when the outcome will play out. However, if your vendor repeatedly postpones the production with vague explanations – you have encountered a bad business partner.
What are the Factors to Consider When Choosing an Outsourcing Company?
Certainly, if the business world had its own Halloween traditions, a costume of a bad outsourcing vendor would be a hit. Still, it’s not October 31 yet, so let’s continue with a good part of the story. We want to offer you a few tips on selecting an outsourcing provider who will ensure the success of your business! No trick or treats. Just good partnership and met expectations.
1) Know what you outsource
You likely began your search for an outsourcing provider because you believe something is lacking in your business: talent, expertise, or certain business activities. You won’t be able to find a good match by recognizing your gap alone. It is important to clearly specify what you expect from your future outsourcer. Even with a good vendor, you will get a poor result without vision. Think about it: what will your vendor have to do? Simply implement several add-ons? Create a brand new website from scratch? Test some features? Or just provide tech specialists for you to manage on your side?
2) Check the relevance of their expertise
Check out the information provided on the websites of outsourcing vendors. They usually describe what they do, how they do it, and who will be doing it. At least you will know if a vendor is familiar with the industry you require expertise in and at what level they deliver their services. Example: You need to create an E-Commerce project. The potential vendor only has expertise in developing mobile games. It’s, therefore, better to consider another option with more relevant subject domain expertise.
3) Monitor reviews and testimonials
Having narrowed down your list of potential companies, you need to verify how well they performed during their previous or current partnerships. Be sure to choose reviewing resources that verify the clients and do not allow testimonials to be edited. These websites include Clutch, Goodfirms, Upwork, FeaturedCustomers,
In addition to the feedback from clients, you can also see how the workplace is doing by visiting employee review websites, like Dou for Ukrainian companies.
4) Check cases and long-term partnerships
Most outsourcing companies are willing to show the case studies of projects they have completed and how they achieved results. For you, this is an invaluable resource for learning how their processes work. Case studies usually outline the client’s challenges, the vendor’s solutions, the technologies used, and the timeline of the project.
Also, it’s a good omen if a majority of case studies show long-term partnerships. It is clear that the outsourcer is trustworthy when the client refers the vendor for different services again and again.
5) Research the turnover of employees
Poor work conditions, unfair compensation, and stagnation of HR processes undermine employee motivation and morale. Consequently, they either switch jobs, causing high turnover or stay and underperform. Not only it will be detrimental for your business, by choosing such an outsourcing vendor you will support unfair labor practices.
Mature outsourcing vendors not only provide fair wages, but also include benefits like sick leaves, vacation leaves, paid education (English lessons, courses, internships), well-established human resources processes, conflict resolution practices, and fair working hours.
6) Scan for the use of outdated technologies
Outdated technologies, programming languages, frameworks, and tools are a highway to obsolescence. Make sure your future vendor uses best practices, newest versions, and is not afraid to innovate. If you yourself do not have relevant experience to make judgments about the tech expertise of outsourcers, hire a tech expert on your side to at least help you make a choice.
7) Make calls or visit the facility (when the pandemic’s over)
As you have made significant research and narrowed down your list to several options, it’s time to actually communicate with the vendors. Of course, the best solution would be to visit their office and see for yourself how the company operates and in what conditions employees are working. Also, face-to-face meetings tend to be more productive as they involve more non-verbal interaction.
Unfortunately, we are still in the mids of pandemics. So, schedule a call and talk to the company’s leadership board and tech specialists. Make sure to ask questions to verify your research. If you feel uncomfortable sharing your business information, request signing an NDA (Non-Disclosure Agreement).
8) Request a proposal
Often, words do not suffice to determine if the company can deliver the results you need. Ask them to create a proposal that showcases how they will solve your problem, what tech stack they propose to use, as well as what the project costs and timeframe is. Even though those are just suggestions and predictions, the proposal is a great way to start. There is no problem in furtherly negotiating terms that are agreeable to both you and your vendor. First, you need to know if it’s even worth a shot.
Finding the right vendor is not an easy task. Still, if you want outsourcing to reap the benefits, it’s a journey worth taking. Remember: outsourcing is a tool, and you need to find people who know how to use it.
As an outsourcing company, SapientPro has experience in industries like retail, education, logistics, healthcare, and finance. We offer complex custom PHP development if you have an industry expert on your side. Contact us to learn more about how we can help you!