April 5, 2012

How To Hire a Software Engineering Outsourcing Company

Waverley understands that hiring an outsourcing vendor isn’t easy. As a client, you have to be methodical and focused in your selection process. You must involve several people so that your final choice will have broad support in your organization. You might include multiple people on the selection committee, negotiate carefully, and it’s still a challenge to select the right company for you and your project. Although you’ll be examining a broad range of capabilities and have industry-specific criteria for making outsourcing decisions, here are five key questions to ask (you might also ask these questions of each candidate’s references).

Does the outsourcer have the right experience for your project? After you’ve verified that a company has the right industry, domain, technical, and management experience, it’s time to dig a little deeper. First, a larger company may have people with the experience you need, but have those people worked together to complete a project like the one you have defined? It’s like the difference between a general contractor who has an impressive list of subcontractors who don’t know each other and one who has a tight-knit group of craftspeople that he has used on many projects. Second, are you looking for a full-service vendor or for one offering specific expertise? If you’re planning to turn over day-to-day decisions on the project to an outsourcer, then a full-service vendor is likely to be appropriate. If you need a vendor for specific engineering needs, then a smaller, best-of-breed company is a better choice.

What tools and processes do they use? Before you can commit to a vendor you need to know how they invest in their resources. This can include their equipment and infrastructure, the training they provide their staff, and the internal development they do to stay on the cutting edge of their engineering specialty. If the company can show that it continues to invest in itself and its people, then it will likely also be able to show how the company continuously improves both its productivity and the quality of its work.

Do they leverage their experience across several projects? Unlike your own internal team, an outsourcer is exposed to many other companies and their practices. Smart outsourcers pick the best of these practices and make them their own. As a client, you get the benefit of this exposure. The outsourcer will bring fresh ideas to your organization and can pass on industry trends and new techniques. Of course, this only applies if the outsourcer leverages exposure and experiences. Talk to them about how they (formally and informally) leverage their experience across client companies and incorporate this experience into their working methods.

Who will you be working with? Often the senior person who sold you the project “disappears” once the project starts. While it may be understandable that the person who sold you the project doesn’t end up managing it, that doesn’t mean you shouldn’t be able to meet the Project Manager or Program Director before you decide to go forward. And what about turnover? While total turnover numbers don’t tell the whole story, double-digit turnover numbers are a red flag. Look for vendors where turnover is low, especially at the senior level — not only will engineers at these companies be used to working with each other, they are also more likely to keep the same engineers for the duration of your project.

How does the outsourcer manage the project and their communication with you? Outsourcing projects that don’t succeed most often have communication issues. Ask the outsourcing company how its employees communicate day-to-day, how they initiate a project and lay a good foundation for productive relationships. One way to understand how an outsourcing vendor will communicate with you on the project is to watch how they negotiate. If the negotiations are clear and focus on everyone “getting to yes,” then that is an indicator of how the project will be managed. If the negotiations are less transparent and the negotiators view the end as a zero-sum outcome, that can indicate another way that the project will be managed.

And remember that a quality outsourcing shop will be evaluating you at the same time that you evaluate them. At Waverley, the key characteristic we look for in a new client is the potential for a long-term relationship. Even if a client is planning to start us on something small, we ask ourselves whether this is a company we could picture doing business with for many years. That’s a question you might ask about your potential new outsourcing vendor.