The way organizations go about IT outsourcing has changed. They no longer look for just accelerated time-to-market and minimizing labor costs. Sure, these factors are still valid, but companies have noticed that partnering with the right software vendor may lead to more dynamic growth and transformation of their whole business.

Doug Plotkin, the Managing Director of Deloitte Consulting LLP, acknowledges this transition saying: “the focus has shifted from traditional work transfer to upfront transformation and automation.” (Source: The Deloitte Global Outsourcing Survey 2018)

No wonder then, that the process of software vendor selection has also evolved. The old criteria of affordable and good at the programming craft no longer cut it. There’s simply much more at stake.

Partnering with a tech company is usually a substantial investment. Ensure that you make a smart decision by looking at different qualities of your potential software vendors. In this article, we’ve divided the process into three steps:

• initial research
• first meeting/call with a software vendor
• test drive

Each of these phases allows you to evaluate different factors and gather valuable insights. Let’s start with some online research to create a shortlist of potential technology partners for your company.

Here’s the Table of Contents for this blog post:

The first question you need to answer when looking for a new vendor is am I looking for a software shop or a tech partner? The former is useful when you have a well-defined project at hand and a set of fixed requirements. If that’s the case, look for a software house with significant experience in a given field. If on the other side, you’re looking for a vendor that has a more holistic approach to technical partnerships, there are some additional criteria you should evaluate. Most of them will be covered in the next section of this blog post–during your first meeting or call with a potential software partner.

In the research phase, you should focus on three main elements:

• Reputation: what do others have to say about a given vendor? Reach out to your network: recommendations from your colleagues may turn out to be especially valuable. You may also want to check client reviews – Clutch is a popular source of opinions about B2B companies. Truth be told, however, it’s quite difficult to spot exceptional vendors there, as most companies have very similar ratings.
  Take into account both the number of reviews and the score value, but also the qualitative feedback left by the clients. Such an analysis may take longer, but you will have a better idea of how a given vendor operates. Of course, you still need to actually speak to these companies in order to decide if they’re the right fit for your project.
• Experience: browse the portfolio of any company you want to evaluate. You’ll see what kind of products they usually develop, what technologies they excel at, what industries they predominantly work with. All of these bits of information should help you decide whether a given company is the right fit for the project you have in store.
• Physical proximity: this is a critical aspect for many organizations that prefer to work with a partner within the same/similar time zone (nearshoring/onshoring). Geographic location will also be a significant factor if your project requires meeting up with the outsourced team.

Initial research should allow you to come up with a shortlist featuring companies you can further evaluate. Get in touch with them and set up calls or meetings to discuss your project and potential collaboration.

The first meeting with your potential software partner is usually a very telling one. This is your chance to learn a lot about that company, probably even more than they explicitly tell you about. How come? The way they communicate with a future client may be a reflection of their approach to technical partnerships and the outsourcing business in general.

So how do they communicate? Are they just interested in the tech requirements of your project, or do they want to learn more about your organization, too? Do they ask about your business goals, internal processes, organizational structure? That’s usually a sign that they go beyond just delivering the product and are interested in a long-term, mutually beneficial collaboration.

Pay attention whether they’re trying to get an in-depth understanding of your project. If you want to build a consumer-facing product, an experienced software development company will probably ask you for some details about your customer persona and their needs. Focusing the attention on what truly matters to your target audience may result in building a really successful product (even if it ends up being a little bit different from what you imagined initially).

Ask about project management. How do they conduct projects? Are they committed to any methodology? Do they have a history of adjusting their PM processes because a project or a client needed it? As a side that makes a significant investment, you want to work with a team that works effectively but also efficiently, watching out for your bottom line.

Make sure you understand the pricing model a given business operates under. Project fees, team fees, time & materials: each of them is recommended for different circumstances. Learn more about the pros and cons of different IT outsourcing models here. Since it’s a software project we’re talking about here, you’ll definitely talk about technology. That’s an excellent opportunity to gauge your vendor’s approach to people who are not necessarily as tech-savvy as they are. Software companies should be able to successfully communicate with people outside of the IT industry. Marketing buzzwords and tech jargon can be a bit overwhelming, so don’t be afraid to ask follow-up questions. Terms like continuous deployment, serverless, or microservices get thrown around often when talking with software houses. Ask: “How do I get value from that? How does it affect my particular project?”

Before you choose a software vendor to test drive, ask them about a broader spectrum of capabilities. Some software houses have established partnerships with different companies: interactive agencies or video production specialists. At New Gravity, we connect our customers to partner brands that offer marketing, recruitment, or strategy services. Having a “one-stop-shop” digital partner is a tremendous time and money saver. Instead of trying to find a suitable vendor on your own, you can benefit from a network of reliable partners that work well together.

The comforting thing about selecting a software partner is that you don’t have to commit to a long-term collaboration right away. Instead, you may want to conduct a proof of concept of sorts and ask them to deliver a small part of the project. A test-drive project could be a 50-100h implementation, running an audit of your current digital ecosystem or exploring a tech hypothesis you have for your next product.

Most outsourcing companies will share some suggestions for test-drive activities, whether it’s conducting a discovery phase for your product or building a prototype. Such a recommendation (provided it’s appropriate for your purposes) shows that this vendor is likely to come up with valuable ideas to answer your needs.

Once you see this vendor in action, you’ll know if they walk the walk technology-wise but also how they fit your needs in terms of day-to-day communication. The important thing is to come up with a “test project” that is actually valuable for your organization and not just a throwaway task. It makes sense from a business perspective but it will also provide extra motivation for both your tech vendor and you – the product owner.

Upon reading this guide, you probably realize that the best technical partners go beyond the technology itself. They help you transform your organization in the right direction and support your growth.

The right software vendor for your company will display a genuine interest in your success and show a history of supporting other businesses on a wider scale. A combination of software development expertise and business competencies is what distinguishes the top vendors from run-of-the-mill software shops.

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