In our experience, there are three key characteristics of highly effective software outsourcing providers:
The provider is located in a region with availability of talent, cultural similarities (to its customers), strong communication skills (fluency in customer’s language), and a strong education system. Sometimes only two of these four criteria are available. But then the challenges are greater. We prefer to hit the mark on all four.
The best software providers are highly capable operationally. They have strong HR teams to compete in the marketplace and recruit qualified candidates. They have well established on-boarding, training, and on-going mentoring programs. They’ve established structured career paths for their personnel, and they invest in recreational and team-building programs. In other words, they developed infrastructure that attracts the best candidates and draws their people’s best work. We find that going on-location is an effective way to judge providers’ operational strength. In a broader sense, we look for providers that have grown past their adolescent years, have a very professional managerial staff, and are highly competitive in their marketplace.
3. Focus on the Relationship
Building strong trust relationships is critical to long-term success in outsourcing. The most important aspect here is the willingness to invest in the relationship. Successful software providers value the relationship with their clients above all things. They are willing to invest in the relationship in the form of extra time, trips to the client, and low-cost trial/pilots. I’ve also seen providers invest time in product innovations for their clients.
But consider also that from the client’s side a focus on relationship is needed also. For example, schedule periodic high-level meetings, discuss your business opportunities and challenges, turn your providers into partners. Make sure to go on-location at least once a year. Build relationships on multiple levels: send your engineers to your software partner and invite their engineers to your location. The benefits may not seem quantifiable. Yet they are! We’ve seen significant advances in productivity as a result of on-location visits.
Recently one of our customers said, “Our timelines are tight, the pressure it high, the project is complex, but we know they [the provider’s team] are very skilled and that we can count on them to pull through for us.” As directors, we have enough internal pressures. What we want are partners who are self-managing and proactive; we want to trust them to do great work.