Meeting the Deadline

When choosing an outsourcing vendor, very often companies put an emphasis on responsibility. We in our turn think that meeting the deadline is the most crucial thing as it protects your business from unfavorable factors and at the same time guarantees reliability and high quality of work.

A person who adheres to timescales is not just reliable, he is responsible.

Consider for a moment and think of a following situation. You are in the café waiting for your friend. Some time passes but your friend doesn’t show up. He is late. If you friend is a responsible person, he will easily acknowledge his fault and apologize for the delay. If he arrives late one more time, he’ll tell you: “Sorry, my bad”. If it repeats again, your friend admits his shortcoming with the words: “You know what, I have trouble coming on time”.

When it comes to a lunch with a friend or colleague, you are likely to be angry and dissatisfied with such behavior. But what if it causes damage to your business – on-time goods delivery, necessary documents dispatch or services rendering? Non-compliance with the deadlines may result in business interruption.

No matter whom you are dealing with – a copywriter, designer or programmer, make sure your partner delivers work right on time. Of course, in case of outsourcing, it’s more difficult as you are wide apart from your vendor and can’t control the process 100%.

It’s important to know that a responsible and reliable vendor will always make an agreement for delivery terms where all the term details are specified – early finish time, deadlines, possible extension of the delivery time, penalties, etc.

Also, you can seek advice from the clients of the vendor you’ve chosen to find out how he deals with the deadlines and how he handles the situations when he is unable to deliver the work on time, etc.

Remember, a really reliable vendor will always communicate with you and strain after maintaining permanent contact. And of course, in case of emergency (e.g. employee dismissal, etc.) disrupting delivery terms, a responsible vendor will always inform you about this beforehand, apologize, and which is more important, search for solution approaches of the problems encountered in order to meet the deadlines.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

Drafting the Budget for IT outsourcing

Sometimes when using outsourcing services a client can be shocked and even struck dumb with astonishment when they get a bill payable. Statistics show outturn costs can exceed expected by 65%. That does not mean a vendor wants to fool you, not at all.

The thing is many clients do not take into consideration unobvious outsourcing principles. They see only costs that lie on the surface. That’s why, when the work is done, they often get blindsided by the huge sums of money they need to pay for the services as this may not fit their budgets.

This is precisely why we want to tell you which hidden costs are at the back of outsourcing procedure, so that in future you could effectively distribute your own or company money.

So, first to expect is additional costs of 1-10% during the process of outsourcing vendor choice. These costs are associated with workflow management, RFP preparation, also vendor’s feedback evaluation and analysis.

Next item of additional expenditures of 2-3% is work transfer to the outsourcing company. This process of function transfer can take from 3 months to one year and is the most important and expensive outsourcing stage. Project management during transfer, control over all processes, client communication organization and support, staff arrangement of work and labor force administration, juridical and technical aspects – all these can take more time than you expect.

It’s necessary to take into account that it’s almost impossible to avoid cultural and language difficulties. Very often misunderstanding caused by them can lead to a dismissal of this or that employee, delay in the workload delivery, and thus, loss of efficiency. In this case be ready for additional costs of 3-5%.
What else one can expect? 1-10% of additional costs for software development processes improvement. By that we mean software debugging and this can force a vendor to hire extra employees to balance work and improve its quality. Also, one can refer expenses for any development testing and specification failure correction to these costs, which are sometimes called Ramp-up costs.

And finally, 6-10% of additional costs can lurk during offshore contracts and business processes management. This item of expenditure is one of the most substantial. This is due to the fact project manager takes huge responsibility for intervening work. They should not only control production process, but also plan project financing, resolve conflicts, watch expenditures and deadlines, etc.

Let’s sum up. Expenditure planning is a crucial stage when deciding whether start outsourcing or not. In this respect, one should know exactly where and how much the funds should be channeled. We hope these “cunning” hidden expenditures will help you draft a budget in a right way, so that you could avoid unforeseen expenses in future.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

Apple Is Most Valuable

How to write and manage the RFP for software vendor

So, you have already made up your mind what kind of outsourcing services you need and how to choose an appropriate vendor. Now you need to make the RFP (request for proposal), and this is the main topic of our today’s post.

Firstly, let’s clear up what RFP is exactly (request for proposal).

Request For Proposal, or RFP is a request for commercial quotation from a potential outsourcing vendor. In other words, this is a document which you send to several potential vendors to get comprehensive information in the form of commercial quotation about what they can offer you according to your request. As a result, you get the most appropriate outsourcing vendor.

The main aim of the RFP is to get trustworthy and full-length information from the vendor about the services of your interest. But it’s a bad idea to think that it’s enough just to send a couple of requests and all your problems will be solved. Experience shows, to make a good RFP, one needs to execute titanic work to analyze huge amounts of information. Also, it’s not worth making bulk mail-out in order to save time. How one should act? How one should make the RFP in the quickest and wisest way possible? So, we can recommend some steps of making a sound RFP:

1. Don’t use patterns when making the RFP. You don’t need them. You should know for sure what your needs are exactly.

2. Engage your team when making the RFP, discuss aims that are to be reached and needs that are to be met. Also, your capabilities and forthcoming risks should be mentioned here.

3. Don’t try to select 20-30 potential vendors, 5-6 is enough. Choose those vendors who can really help using general criteria.

4. Before making and sending the RFP, contact the vendor directly. Find out his general work principles and enquire about his fulfilled projects. This can help you cut off some outsourcing vendors on this stage, also.

5. Include following paragraphs into your RFP: your project description, technical requirements (detailed specifications); budget; performance time; project owner and, of course, potential pitfalls.

Take into account that a vendor will search for maximum of the information about your company in your RFP: who you are, your financial stability (your ability to finance the project to the very end), which timeframe you offer, who is a decision-maker on this project and some other specific things. You have to understand the more information you provide about your project in the RFP, the more accurate quotation you’ll receive from the vendor. What’s more, in this case you will spend less time communicating with each of the potential vendors to get the appropriate quotation.

Consider the culture of services delivery within the company of the potential vendor. Sometimes, it can be crucial, especially when you are hesitating which vendor to choose.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

How to choose the right Software Outsourcing Vendor for big companies?

Today we finish our series of articles about the most effective way of choosing an appropriate outsourcing vendor. In our previous posts we examined the key criteria of choosing the vendor if your company is a start-up or a small/medium enterprise with sustainable growth.

Now we would like to cover the main issues one has to take into consideration when searching for the right outsourcing vendor if your company can be characterized as the one with sustainable growth, long experience and of medium e size.

So, there are 10 questions one has to answer for himself to choose the right outsourcing vendor:

1. Does the vendor have a strong team or does he in general have it? Nowadays the complexity of projects increases exponentially. That’s why, there always must be a team to work under a certain project. Of course, you can hire a developer, an architect, and etc. But you shouldn’t forget one person can’t deliver work of good quality and positive results if projects are very complicated and large-scale.

2. What is your potential vendor’s competitive advantage? When visiting this or that vendor’s site, one can notice a great amount of articles and news posts about how professional the engineers are and how advanced the company is in literally almost all of the industries. Don’t get your hopes up, everyone has his strengths and weaknesses. Also, any vendor has a certain industry where the company is the most competent in or has gained successful experience and gathered high-class experts.

3. What are the outturn full outsourcing costs?

4. Are you really going hire an expert? Somebody writes great texts, somebody masters website development or database creation. Take it into consideration and check it out if professionals are really going to work under your project.

5. Does the vendor have an adequate experience in efficient project management?

6. What scalability guarantees does the vendor give you?

7. Does the vendor meet delivery dates, deadlines and does he follow the timetable?

8. Does the outsourcing vendor represent a sustainable company? How quickly and efficiently can the vendor solve problems encountered?

9. Will your company own the initial code?

10. What is the reputation of the vendor?

We would like to highlight that this expanded set of criteria will suit small- and medium-sized companies, and also start-ups.

Hope our posts will help you find your ideal outsourcing vendor to translate your business ideas into reality.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

How to choose the right Software Outsourcing Vendor – for SMB

What qualities should an outsourcing vendor possess to meet the needs of your company in the most optimal way? An outsourcing vendor for small and mid businesses should match the following criteria:

How long vendor is present on the market

You should find out how long the company has been working in the outsourcing market. Today the market is really very dynamic, so the company with a 4-5 year history is consider to be fairly stabel. Also, you can check out financial indicators of the potential vendor to make sure your potential outsourcing partner generates enough revenue and is a reliable market player.

Experience of the team

How strong is the formed team of professionals selected to work on your project? You can ask for CV of potential team members who could be assigned to work for you. Treat these developers as if they were your own employees. If the potential vendor is not a medium-scale company, you can ask for CVs of company owners or executives.

Track record of projects and clients.

Current company clients and proven track record of projects. Enquire your potential partner about the quantity and quality of the performed work. Usually the more experience the developer team has, the more experience you can attract to your project which will play a key role in case of difficult abnormal situations.

You can contact some clients of the potential vendor – they can tell you a lot of interesting information about how the vendor works with his clients in the short-term and long outlook and how big the value can be that your potential vendor can bring to you during the whole period of cooperation.

Flexibility in work

Meeting delivery deadlines

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

How to choose the right Software Outsourcing Vendor for a Start-up

Start-up companies are new entrants, that’s why, the things that really matter to them are rapid growth and sub-vertical development restricted with small budget.

For such companies outsourcing vendor should be selected according to the following criteria:
• the process/scheme of rendering the services
• meeting deadlines of services delivery
• relatively low price

Also, it should be noted that in the first line one needs to find out some information about the potential outsourcing vendor. This applies not only to start-ups, but also to small, mid-sized and big businesses. For this purpose, it’s useful to visit the official site of the pre-selected vendor where it’s easy to find all the necessary information about the company itself, its services, employees and terms/conditions of cooperation with clients. A good idea is to arrange a phone/skype talk with vendor representatives – so that one could get first-hand information and understand whether the vendor satisfies one’s business needs or not.

So, after the above mentioned is done, one should explore the scheme of rendering the services, the process of cooperation with clients and general operating principles of the company. To determine the operation style of the potential outsourcing partner, one should spot the following aspects:
• how they build communication and interaction during a real project in case of emergency;
• what web-oriented solutions they use to manage and track projects, and etc. (web-oriented solutions for project management are very useful in case of starting several projects simultaneously or when a client wants to track work performance, control the budget and in general grasp the whole picture easily – where the team is exactly in the process of development, also it helps coordinate the work of the team and company own employees).

The next step is to determine what business processes occur in the company of the potential vendor, then one should project them on his/her own company – how this work style matches the one that reigns in your company. After that, one should request to provide some samples of their work and then ask how they see it could be the most effective to establish mutual business processes.

Meeting deadlines is the most important criteria of choosing outsourcing vendor, irrespective of the scale of the company – start-up or a big business with many years’ experience.

Whereas start-up companies have limited budgets, every now and then price can play a crucial role in choosing a vendor.

If one cannot make up his/her mind when choosing a vendor, and has several companies to choose from – one can ask potential vendors to make a small scope of work (during 2-4 weeks) as a showcase. During this period one will be able to evaluate the level of technical expertise of the vendor, the level of communication and work style – then one can decide whether to start cooperation or not. By the way, the result received after the so-called probation period can be used later on irrespective of choosing this very vendor or not.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

To Outsource or not to Outsource: Risk Factors

Following the article “To Outsource or not to Outsource” we would like to draw your attention to the risk factors that can occur when working with a handpicked outsourcing vendor.

Hereafter we will review the key aspects you should take into consideration if you decide to make use of software outsourcing services:

So, here comes the list of risks typical for Outsourcing Software Development:

Cost-Reduction Expectations

One of the misconceptions of software outsourcing is the expectation it will save you a sight of money. Many people are sadly mistaken – the lower the price is, the better the saving will be. But this has nothing to do with the reality. The key factors here are cultural differences, the experience of the vendor, his technical security and optimality of internal business processes within the company of the vendor. Also, you can expect a decrease in costs on 15%-25% (as there will be fixed expenditures on knowledge transfer and equipment preparation) in the first 6-12 months and later on after the above-mentioned period is over you can easily count upon 35%-45% of economy.

Loss of Business Knowledge

The majority of IT companies focus on program development itself without understanding of the specifics of the business realm it will be used in later on. In some cases it will be a huge benefit and a saving of time if an outsourcing vendor can speak the language of your business. But one should not expect the vendor, chosen according to this approach, to be cheaper, as such companies add value to your business and can significantly accelerate the process of software development which eventually saves money/time.

Cultural and mental differences

Here in Iksanika we have enough clients who opted for Eastern Europe region after having bad experiences in working with Asian countries (such as India, Pakistan, etc.) as cultural differences cost clients much in terms of communication, working approach and, as a result, affected the quality of the performed work. Usually such differences extend the application development period which increases the price for these applications and the volume of undrawn profit because of the delay in application delivery.

Scope Creep

Very often companies who want to develop their own solutions but don’t have clear and precise specifications demand of vendors a fixed price for the solution development services. But if there is no a detailed description of the solution, the vendor can not in full estimate the project. That’s why, a vendor has to provide baseline and assumptions in the contract. That helps drive into a conclusion there are no, actually, real fixed-priced contracts. If the performed work depends on the initial appraisal, you will have to pay the difference if the scope of work changes. Sometimes this comes as a surprise for customers of outsourcing services, as they often insist on changes in the previously estimated and fixed work scope and then they expect the same price as it was initially. As a result, the budget for the project can increase on 6%-14% from the one approved in the beginning. To avoid such situations, the best is to make travaux preparatoires in a more detailed way before the work launches – the more detailed the description is, the more accurate the estimation.

Failure to Deliver on Time

It’s a mistake to think the best outsourcing partners owning the best practices and huge work experience always guarantee to deliver solutions on time. The thing is any outsourcing company had in its history precedents of delivering solutions with a delay, even the best of us. One should be aware of this fact and build outsourcing strategy accordingly – you have to evaluate how this delay will affect your business in general. Perhaps, it will be reasonable to keep an eye on another vendor in case of delay just to be safe or you can include the financial risk of the delay in payment to organize business processes after solution delivery phase.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

To Outsource or not to Outsource?

There have been and still are a lot of debates about the outsourcing some business processes to outside organizations. Many start-ups, small, medium and large business wonder which processes should be delegated to services providers and which should be developed in-house. We have statistical information based on our long experience and experience of our clients that both speak to the truth of the statement – one should outsource only those processes which are not crucial for the company, which don’t give a competitive edge or which require investing significant funds into the infrastructure or human resources and this, perhaps, is not affordable at current stage of company growth.

Outsourcing has many advantages such as possibility to concentrate on core business, no need to duplicate key specialists, adaptation of innovative technology, quality improvement and service reliability.

Nevertheless, many companies question the effectiveness of outsourcing.

We would like you to ask yourself a string of questions that will allow you to make a sound decision:
• Will software outsourcing give you more time to focus your attention and efforts on the strengths of your company? If yes, then this will help your employees concentrate more on the reinforcing the strengths, major tasks and future development strategy of the company.
• Will software outsourcing improve your effectiveness and quality of service? Choose such an outsourcing company that specializes on the processes and services that will work for your company welfare.
• Will your business get a competitive advantage? Outsourcing can add flexibility to your business, converting your fixed costs into variable, releasing human resources and assets. Also, it can give your business an advantage when adapting to changing market conditions.

What options do you have? (Let us explore all the options)

You might want to rush headlong into outsourcing – hold it! For a start, set aside some time to think over which processes are best to outsource and which vender is the most appropriate to work with. Let us examine the following:
• What are your key strengths and what are secondary? Which processes are you going to outsource and why?
• What are the costs of implementing this process within the company? Including hidden costs such as office space, recruiting and payment.
• Calculate ROI – ask your potential vendor to help you out with this as nowadays many of them offer such a service.
• Is it worth cooperating with an independent advisor who will search for an appropriate vendor? Doesn’t the advisor recommend the company which he has special arrangements with?
• What are the costs if not outsourcing? Will your business suffer if you don’t invest into knowledge and artifacts your partner already has and can supply you with.

Also, we strongly encourage to ask yourself the following questions before outsourcing:
• Are your expectations realistic?
• Are you ready to regularly set aside time and effort for managing outsourcing relationships (managing the work of outsourcing partner)? Or can you assign a special person who will manage the communication and create tasks for an outsourcing partner?
• Is this process a key concern which your company should address directly for the sake of future competitiveness?

Also, one shouldn’t forget about potential risks that can arise when working with outsourcing partners>>.

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.

Real Titbits from the World of Software Outsourcing

It’s not for the first time when clients of different caliber from startups to major companies approach us having under belt frustrating experience in software and IT development outsourcing in different regions, such as Eastern Europe and India. Having carried out a thoroughgoing research, we found out there is not much material available that could send a clear message on how one should choose an outsourcing partner, so that it could turn into a mutually beneficial cooperation. That’s why, against all odds, we decided to launch a series of articles that will contain a considerable amount of insider information that will explicitly inform or even warn about the pitfalls one can encounter dealing with outsourcing vendors. Besides, we will give you a detailed description of solutions to the potential problems or already encountered.

As the majority of resources offer only general information about software development outsourcing, literally “the bits of everything”, we decided to launch a series of informative and themed articles. The problems and solutions that will be described later on are based on our clients’ experience, our personal experience and experience of several of our current employees who previously worked for some other companies with clouded reputation, as well as managed offices in different regions of Eastern Europe and India.

This material will be useful for you if you:

• have never commanded the services of outsourcing companies or custom software development companies;
• use such services on a regular basis;
• have your own outsourcing center in aforementioned regions,

irrespectively whether your experience is positive or negative.

If you have specific preferences regarding the topics of our articles, do not hesitate to contact us or comment below – we will definitely try to help you out, covering these burning issues in detail.

The articles will be really hot! Stay tuned!

Please, do not hesitate to contact us if you have any questions, or would like to get any clarifications or consulting.