Best practices for an outsourcing development contract
Best practices for an outsourcing development contract

Finding a trusted partner will ensure you benefit from the best practices of outsourcing development. But you must rely on a solid contract. Learn more in this post!

The outsourcing trend is growing. For different reasons, companies of all sizes are currently investing in offshore or nearshore professionals to carry out their projects. This hiring model allows for more flexibility as it connects businesses with talents from all over the world. To avoid its downsides, however, it is vital to rely on a trusted partner.

If you don't follow the best practices of outsourcing you will expose your company to several risks, such as hiring unskilled professionals and looking to oversaturated markets. Specialized companies will probably help you prevent those risks and ensure your project has what it needs to succeed, but not all of them are good enough.

That is why you must know what to look for in a outsourcing company and, most importantly, rely on a solid contract to ensure a beneficial agreement. Keep reading to learn more!

What kind of businesses can benefit from outsourcing development?

Outsourcing development is a strategic move. As such, it requires a lot of planning and demands managers to fully understand this kind of arrangement. Understanding the benefits of outsourcing is vital to convince investors in the first place. Your company's stakeholders will want to know why you are going this way.

The reasons may vary from business to business but, first of all, it is important to understand what kind of companies can actually take most advantage from this model. At this point, you are probably already thinking about startups. Yes, these new businesses are usually characterized by the need to scale quickly and limited budgets.

However, don't be mistaken. Companies of all sizes can use outsourcing in their favor, as long as they maintain reasonable expectations and know where to look for talents. After all, even in the big tech industry, it is possible to observe a discrepancy in demand and supply of qualified talents. Many employers struggle to find a good fit for their teams in the internal market.

Therefore, it doesn't really matter the type and size of your company. If you need to augment your staff in a cost-effective approach and expand your project's possibilities, looking for professionals outside of the United States may very well be the answer. But don't go on this journey alone! It is essential to find a trusted partner.

What to look for in an outsourcing company?

The whole idea behind hiring an outsourcing company is accessing qualified talents that can help your development process. So, when looking for options, it is key to understand how these professionals are selected. Focus on partners that provide in-depth selection processes that consider both hard and soft skills.

You must also keep in mind the region where your labor force will come from. This is relevant for several reasons, including communication barriers and cultural differences. In short, it is interesting to avoid faraway countries, even those traditionally known for outsourcing IT professionals.

Instead, you can narrow down your alternatives to companies that work in the nearshore model, i.e., connect you with talent from geographically closer regions. A tip? Keep an eye on the LATAM region, filled with developers, designers, and engineers ready to use the most advanced methods and technologies.

Relying on a Latin American outsourcing company will eliminate barriers related to culture and timezone — and definitely reduce cultural differences.

Here, it is crucial to keep in mind that matching you and foreign workers is just part of your partner's job.

A healthy relationship depends on open and transparent support channels, reasonable contract durations, and flexibility. There is a reason we use the word "partner". Your service provider must help you not only to find the right professional but also to ensure mindset alignment and high-performance standards.

That means you want to look for companies that help you through the onboarding period and monitor KPIs to improve results actively. It is easier said than done. So, before making a decision, it is always recommended to look for feedback from other clients and study any success cases available.

Once you have chosen the one, it is almost time to sign the contract. Read the next topic to avoid any problems in this stage.

What are the best practices to ensure a solid outsourcing contract?

You have to keep a few things in mind if you want to ensure a solid contract. Signing this document is a huge step, and its specifics may define how successful the partnership will come to be. Check out some of the most important practices when it comes to an outsourcing contract.

Define an SLA

A Service Level Agreement (SLA) is the document used to describe the specifics of a partnership between two parties. In the context of outsourcing, it must contain crucial information, such as expected goals, KPIs, milestones, and any relevant clauses.

The SLA will serve as a guide to indicate what you can expect from the agreement. It must set expectations for how teams will work together and what will be delivered by the end of each stage. It is also essential to forecast possible problems and assess ways to work around them.

Specify documentation processes

Documenting your project's development is more critical to its success than most people think. Even if you are not working with an outsourcing company, having your internal processes documented will make life easier for newcomers and provide higher quality stability.

So, make sure you define in the contract how will the documentation procedure take place. Besides providing transparency, this effort will enable your developers to debug or further develop their codes in the future. Also, the contract must indicate how the reporting process will work.

Outline payment schedules and contract duration

As in any contract, both parties must state duration time. You must clearly understand how long the partnership will last and know the conditions to renew it.

If you own a startup or are in the development phase of a product, it is vital to preview ways to escalate the project when developing the contract. Information on payment dates and conditions is also indispensable.

Also, the document should state cancellation terms. Is there any penalty if you decide to terminate the agreement? How can you do so, if necessary? Even though you don't want your partnership to come to an early end, it is crucial to know what to do in case it does.

Only by following the best practices for outsourcing development will you experience the benefits of this kind of arrangement. At first, it may be challenging to find the best partner for your business, but once you do, make sure you rely on a solid contract and start a long, fruitful relationship.

Are you interested in nearshore development? Learn why Kobe is the best choice for outsourcing in Brazil!

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