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Tips to Evaluate Reliability of IT Outsourcing Vendors

My view on IT outsourcing after 20+ years

Hi there! In my 20+ years of working with various Software development / IT outsourcing teams across Europe, Asia and the Americas. I have worked with small teams and grown to bigger teams of close to 100 people, so I can easily say that I have learned my fair share of lessons on how to frame the concept of reliability of IT Outsourcing vendors. My conclusion is clear on this:

Many owners of IT outsourcing teams are very pleasant to work with and eager to invest into a relationship, many are probably more fair towards customers than vice versa. Of course you have to spot the ones you want to avoid!

The triggers for this blog was invitation by Linkedin to contribute to a collaborative article about how to evaluate the reliability of IT vendors. I wrote a separate blog about this new AI powered feature by Linkedin here.

My conclusion: Find experienced vendors, engage with the founders and build lasting partnerships based on understanding and aligning with your business needs and growth path. Selecting the right IT outsourcing vendor is a critical decision that impacts your business's success. While credentials, communication skills, security measures, project management, technical skills, pricing, and value are all essential aspects, they should be evaluated in the context of your unique business needs.

Remember that outsourcing is not just about checking check boxes; it's about building a partnership that contributes to your overall growth and success.

By combining these considerations layed out in this blog with a tailored approach, you can confidently navigate the realm of IT outsourcing and forge lasting, beneficial partnerships.

So here's my view on Linkedin's collaborative article about for evaluating reliability of IT outsourcing vendors:

1. Credentials Matter, but Don't Tell the Whole Story: Credentials, such as certifications and awards, do provide insight into a vendor's capabilities, but they aren't the sole indicators of excellence. While larger IT firms may boast impressive credentials to satisfy checkboxes, smaller tech firms might offer unparalleled domain knowledge and faster issue resolution. Prioritize studying real cases and talking to references for a more accurate assessment.

Additionally, leverage your tech platform / framework account manager's expertise to guide you toward a partner vendor aligned with your company profile.

2. Communication and Collaboration: Building Strong Partnerships Effective communication and collaboration are vital for successful IT outsourcing. Go beyond the initial team and consider the full communication and collaboration process. Any sign of waterfall like approaches are probably a disaster waiting to happen.

Outsourcing challenges collaboration due to factors like time zones, reduced face-to-face interactions, respect & hierarchy perceptions, cultural differences, different English interpretations and more. Protocols for brainstorming, collaboration, feedback, and reviews are crucial.

Both clients and vendors need to foster an environment that encourages teamwork and open communication.

Lack of clear communication and collaboration will lead to misunderstandings. Assess a vendor's collaboration maturity by observing their approach to discovery, requirements specification and QA. Do they inquire about your context or focus solely on technical details? Do they play tag when establishing requirements or do they want a seat at the table? Prioritizing collaboration shows their commitment to problem-solving.

Strong communication and collaboration enhance understanding, relationships, and issue resolution. Most importantly it will prevent waste!

Shared communication & collaborative values lay the foundation for a strong partnership.

3. Balancing Security Needs with Business Realities Security is vital, but its implementation should be balanced against your company's stability and growth stage. While established companies can't afford to overlook security, startups may prioritize other aspects initially.

Rather than just seeking to comply with security checkboxes, discuss with the vendor how they plan to design and grow security in alignment with your growth trajectory.

Keep security-by-design in mind, but tailor it to your immediate business needs within the reality of your runway.

4. Project Management: Beyond Protocols to Business Success While project management is crucial, it's not enough to just follow protocols. Probably it's best to assess the effectiveness of project management in matters like:

  • when addressing risks in advance and talking about mitigation options

  • offering insights to stretch your resources rather than to agree with any requested change / feature development

  • handling budget overruns in a way that gives you a chance to avoid it in advance, rather than just stating it after the fact

So during your evaluation, build elements into your scope and requirements that you already know that need to be mitigated, averted or even outright rejected.

Besides all this I always want to see the co-founder / senior manager and the project manager care for your business success. They should know that a project's success is not solely defined by adhering to scope and schedule; it should be well aligned and contribute to your business success.

5. Technical Skills: Tailored to Your Project's Needs The importance of technical skills varies depending on your project's nature. If you need a quick technical fix, assessing their relevant experience is vital. However, if you're looking to grow a product or business, the focus should shift to how the vendor's technical skills contribute to your business success.

  • Phases of SDLC like automated testing, continuous integration, and deployment practices should be on par with their feature development proficiency.

The vendor should be strong in advocating solid DevOps as it will result in more frequent releases, eventually that's what you need to receive feedback in order improve the success of your software.
  • Does the vendor think with you in how technology can help with your online marketing efforts? Setting up analytics the right way, implementing the right analytical events to measure conversion correctly, suggesting tools to measure UX like heatmaps and recordings.

It's OK that a vendor acknowledges not to be a specialist in online marketing and refers you to others, but it's a NO GO to only talk about feature development and neglect how technology can you help you acquire and retain users.

6. Pricing and Value: Finding the Right Balance When considering IT outsourcing, pricing and value play a pivotal role. Flexibility is key, as vendors often work with varying margins up to 90% based on the roles and resources they provide.

A vendor offering pricing that aligns with your business trajectory has a solid mindset to grow a successful partnership.

For corporate clients, rates may decrease based on stability and volume, while startups might see rates increase with success. A vendor that is willing to adjust pricing based on business growth context demonstrates a commitment to mutual success.

At Optima Forma we select and work with teams that fit this profile:

  • We exclusively collaborate with software teams whose founders or senior management have a background in development.

Their motives are often grounded in providing technical solutions that genuinely help clients, rather than focusing solely on rapid financial gains through high gross margins and low salaries.
  • We prioritize working with teams that understand the value and risks associated with custom code. A team's ability to suggest solutions using existing software shows a level of experience and maturity. Seasoned developers understand the challenges of maintaining software and are more likely to consider the long-term implications.

  • Our chosen partners are led by individuals who genuinely care about the business success of their clients. They offer flexible pricing and payment terms tailored to each client's unique situation. This fairness-driven approach fosters a collaborative and mutually beneficial relationship.

  • The seniors of the teams that we work with understand that it's not easy to grow software products / service. They have had their own attempts to launch a product or have partnered / invested before with businesses that tried to launch products.


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