How to Screen and Pre-vet an Offshore Development Company. Due-diligence Checklist

Imagine your business partner highly recommended a particular offshore PHP development company for your next project.

Have you planned your due-diligence process properly? If you try to skip or rush this foundational step, many of the remaining measures will be difficult to implement and (in worse case scenarios) enforce. Here’s a software due diligence checklist which will help you optimise the process of hiring an offshore company. 

1. Fully utilise the screening and vetting services available online.

The first and easiest thing is to review your prospective vendor on Clutch, which is an online service designed to help clients make B2B purchasing decisions for hiring both onshore and offshore development companies. It is important to note that Clutch represents the only client generated ratings which makes it a trustworthy resource, it doesn’t, however, show you the full picture. YouTeam takes quite a different approach to vetting and provides access to profiles of individual engineers working within offshore software development companies. So why not use both in combination for optimal results?

2. Ask your professional circles for a referral to a competent firm.

It is often the case that someone in your professional circles has had a good experience with particular software development firms. If these firms have successfully delivered a substantially sized project (in terms of quality of code, meeting deadlines, budget estimations etc.), it makes sense to take heed of these warm referral as part of your decision-making process.

3. Compare outsourcing cost by country

Another important point is to compare outsourcing cost by country, as prices might significantly vary and influence your decision on where to outsource your software development. If you’re considering Eastern Europe as an offshore destination for your project, make sure to get acquainted with the differences in the pricing between Ukraine, Poland, Romania, and Moldova. Having become a mainstream outsourcing location during recent years, Eastern Europe has a great talent pool of developers to choose from.

4. Test Assignments

Another measure that you can implement, also done by YouTeam, TopTal and Gigster, is to give vendors test assignments and then assess these test assignments within the parameters of Codewar or Hackerrank. These are services which can be used to screen the developer’s skills based on the written code. This ensures you most probably won’t pay for a lead or senior software developer whose skills are at a junior developer level.  

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5. Do a legal background check

Legal background verification is a crucial point on the vendor vetting checklist. Potential risks in this regard can be eliminated by undertaking thorough due diligence, a process which YouTeam conducts as a part of their vetting process. This process involves examining the software company’s legal documentation, checking employment agreements. Making sure you’ve eliminated IP risks in the contract. The Service agreement should cover certain key risks, including poor performance, unforeseen fees or charges, data loss, intellectual property (assignment from the software development firm to the client), confidentiality and non-competition. It’s also worth checking whether the firm has a significant history of court proceedings. 

6. Visit the offshore/nearshore facilities

When YouTeam onboard a new software development company onto their platform they go to the company’s premises to observe their working environment. You can also use this approach and visit the development firm’s office to assess how organised they are and the overall quality of their operations. It is particularly important when you hire a full team rather than an individual offshore developer, to go and spend real time on location with your team, wherever they are based in Vietnam, Philippines, or Ukraine.

7. Prepare for working with offshore developers

Working with and managing a team of offshore developers might seem tricky and even problematic, especially considering different time zones and asynchronous communication which follows. In order to avoid possible misunderstandings and keep getting the work done, it’s extremely important to synchronise work of your offshore developers and to make sure all processes are well coordinated. Building remote communication requires a different approach compared to one when your employees are gathered in one space, but given the number of collaboration tools available it’s more than possible. In the most cases, it’s all about how you set up communication and ensure that everyone has all the questions answered first and that there’s alignment. 

Some companies come up with their own internal tools for these purposes, e.g. “Async” developed by Zapier which allows synchronizing everything across the different time zone.

8. The back-up to the back-up plan

Having viable alternative vendors is another important risk minimisation tactic. You should have suitable replacements lined up in case your chosen firm underperforms. If something goes wrong you will not be forced to stop the development process for too long to look for new vendors. Which is why we recommend working with platforms such as Venturepact or YouTeam, where you always have a variety of suitable alternative to transition to, to avert any crisis.

Once you’re comfortable that you’ve undertaken an appropriate due-diligence process on prospective vendors, it is time to check the quality of their work is guaranteed, should something go wrong after the project starts.

Make sure all the above-suggested steps are on your software due diligence checklist to minimise possible risks of going for a wrong offshore development company.

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Tristan Senycia

Tristan Senycia

Tristan Senycia is a Product Manager at YouTeam - a curated b2b marketplace that matches businesses with dedicated engineers from pre-vetted software development agencies.

He is also the founder of LeverPoint Advisory, which consults in the areas of commercialisation management, go-to-market strategy, High-Tech marketing strategy and customer development. 

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