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Software Outsourcing: How to Choose Your Best Option

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Software outsourcing is reaching new levels of participation from all sectors. It can be difficult to classify all the differences when making an outsourcing decision versus a local company for your company. We will explain the details and help you to be attentive to all the details and options with some key tips to choose an external partner, regardless of your industry. Technically, every time you hire an outside company to do something for you, you are outsourcing, regardless of where the service provider is located. There are three types of outsourcing:

  • “Onshore” is where the subcontracted company is located in the same country as your company
  • “Nearshore” is where the outsourcing service provider is located in a country close to yours. An example of this would be a US company that subcontracts IT services to a company in Mexico.
  • “Offshore” is where the outsourced company is located far away. For example, a US company outsources business processing to a company in India. In recent years there has been a growth in the popularity of nearshoring and even onshoring as companies shift their focus to more complex services, shared time zones, and fewer language barriers.

Tips for choosing the right partner: Finding the best-subcontracted service provider can be a big challenge and a little fearful. In this guide, we share the key things we should look for in an outsourced service provider.

  1. Flexible contracts: when considering your subcontracting needs, look for a service provider that provides you with the flexibility you need in the terms of the contract. Flexible terms should include scalable staff and services so you only pay for what you need.
  2. Proven reputation: check the service provider’s references and talk to previous clients. Find out what previous clients liked about the external provider and any problems they may have had. Take the time to talk with at least 3-5 former clients to get a clear picture of the outsourced company.
  3. Infrastructure: When considering a provider, ask detailed questions about your infrastructure, such as capacity, secure backups of company data, disaster recovery and if you have any downtime during routine maintenance. If a service provider does not give you clear answers about how they process and store your data, do not use them; go somewhere else.
  4. Communication: if the external provider is in a foreign country, ask about English language proficiency. If your company’s primary language is English, make sure that the outsourcing staff is fluent in English. Also, ask about the frequency of communications: will it be in real time? Daily email reports? Weekly writings? Ask how the questions and problems of customer service will be handled, too. Do they have a team of customer service agents or will they have to talk to a specific person based on the services they receive?
  5. Data protection and IP security: Third-party service providers in other countries should be aware of US data protection and security laws, including those that apply to specific industries, such as finance and health. They must comply with regulatory requirements and be able to comply with electronic discovery requests within a reasonable period of time.

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