Part 2: The Choice of an Offshore-Based Software Development Partner

According to Statista, Ukraine is among the leading countries in offshore business services. It ranks this high thanks to being financially sensible, having necessary and readily available people skills, and a favorable business environment. Besides, compared to other destinations, the country scores well on digital resonance.

Leading countries in offshore business services worldwide in 2019 Published by E. Mazareanu, Aug 30, 2019 Owing to its financial attractiveness and availability of staff and skills, India was considered the most attractive destination to offshore business services, with an index score of 2.82 and 2.23 respectively, according to a 2019 survey. Where India was not as attractive though was in the new category assessed, digital resonance, scoring 0.87. For comparison, the United States scored 1.21 for its digital resonance. Offshoring versus outsourcing While both may involve moving a business function to a different country, offshoring is different to outsourcing. Offshoring refers to the relocation of work to a different country, usually to lower costs, whereas outsourcing involves contracting out work to a third party (which may or may not be in the same country). There are also the additional categories of nearshoring, which is offshoring to a neighboring country, and onshoring, which is outsourcing to a third party located in the same country. Across all industries except manufacturing, spending on onshoring is expected to grow faster than offshoring in 2019. Data from the IT industry suggests this may be fairly a recent trend, with increases in offshoring spending outpacing outsourcing spending up until 2014. Popularity of offshoring In recent years, the popularity of offshoring appears to be declining. Across all business functions the growth in offshoring spending between 2018 and 2020 is predicted to be much lower than between 2014 and 2016 – in most cases, around three to four times lower. This decline is occurring in the context of a slowing of the broader outsourcing market, with total global revenues contracting slightly from 2017 to 2018, and currently well below their 2014 peak. Nonetheless outsourcing remains very popular for certain functions – especially software, with a majority of companies outsourcing software-related functions in 2017. Read more Leading countries in offshore business servicesSource: Statista

Meanwhile, for any company or startup in the USA, Israel, Europe finding a software development company in Ukraine remains an excellent way of completing various IT projects. If you are a business executive looking for competent Ukrainian developers to join your in-house team, below are the stages to follow and things to consider when choosing an offshore technology partner.

Stages of Finding a Tech Partner in Ukraine

It’s necessary to implement three essential stages before selecting an offshore-software-development partner. After all, due diligence is vital since your outstaffing provider is responsible for paramount matters such as the hiring of programmers, HR processes, back-office services, etc

Research

For one, you need to find out more about the geographical location of your outstaffing provider. This way, you understand time zone differences, how your cultures align, available facilities, and legalities.

Software Development in Ukraine

Clutch and GoodFirms are excellent online resources to start your research. You can use them to filter IT staff Augmentation or Custom Software Development partners by location, ratings, relevant cases, number of clients, charges, etc.

Negotiations

After researching and identifying the right offshore development team partner, it’s time to negotiate. Some things to deliberate on include:

  •  Pricing: ensure the cost model fits you and be sure that it is transparent enough.
  •  Services: ask about the services you will be provided with and ask for a comprehensive services description if needed.

Personal Visit

Since there’s a high chance you will make negotiations online, it is essential to organize a visit to the vendor’s premises. Doing this helps in cultivating an excellent working relationship and in understanding each other’s culture.

A personal visit can also help you get an idea of the physical facilities at the vendors, project management styles, etc. Moreover, some agreements can be finalized during the visitation.

Things to Consider When Choosing a Tech Partner

Some important considerations when choosing an offshore partner for building your own development team abroad:

Hiring Speed

You need to check the speed of hiring a specific vendor. As a business, the goal is to cut the time to market significantly. This way, the establishment can maintain competitiveness and stay ahead of other players with similar products.  The length of the recruitment process will mainly depend on tech expertise and the number of developers you require. Therefore, provide your partner with the most detailed job descriptions and share your expectation.

Tech Recruitment Expertise and Team Sizes

It is essential to pay attention to the technical expertise of an outstaffing vendor before hiring them. If you prefer a specific tech stack, it makes sense to settle on a provider that has it.

You also need to gauge and ask regarding the team of tech recruitment experts that will work on searching and finding the right software engineers for your dedicated development team in Ukraine.

Model of Cooperation

Will you be involved in the recruitment process, salary negotiations, or team management? These are some questions that will help understand the way both of you can work together.

Scope of Services Provided by the Vendor

A partner that offers a comprehensive set of services is ideal for growing a turnkey software development center in a foreign country. After all, a service with a broad range of services can handle complex issues. Besides, it will have all the requirements to realize whether they have the capabilities to deliver. For instance, here at Newxel we cover the nest services while building development team for our clients: recruitment, HR, legal, admin, finance issues.

Facilities and Admin Staff

It is essential to scrutinize providers for their office facilities and administrative, human resource. Do this by asking and making inquires on professional personnel.

Account Management

Usually, the offshore partner will assign an account manager that will work with the client and the client’s team on a daily basis. This manager typically oversees the team’s maintenance on behalf of the client. He/ she is essentially a bridge between the team and the client. Therefore, it’s also prudent to assess the competency of the account manager.

He/she should be aptly experienced and knowledgeable in the kind of project the offshore team is handling. The manager should also be conversant with the priorities, goals, and core values of the team and the company.

NDA and Data Protection Measures

A non-disclosure agreement is usually signed to ensure that critical product information is protected. An NDA acts as an understanding between two companies, i.e., the vendor and the client’s company. Therefore, the vendor should offer an NDA and have data and intellectual property protection measures to safeguard clients.  Ask your partner about the way they are going to protect your IP rights.

References and Clutch Profile

Also, ask for a couple of references from the potential vendor. That is people who can vouch for the offshore team development partner. Another way to learn more about the offshore company is to check its Clutch profile, portfolio, and reviews. But remember, most vendors are tied by NDAs and cannot reveal specific project details of their clients.

Office Facilities, Security Systems, and Branding Options

Setting up an offshore development team involves setting up infrastructure. So, it’s also essential to look at the facilities provided. That is the office premises, security systems, and tech tools used to see if they are up to date. If needed, ask about branding options and access control to your dev team office space.

Costs/ Pricing

Different vendors apply varying pricing models for their services. The most common pricing models that are available include time and material, fixed price, dedicated team. At Newxel, our pricing model is fully transparent and consists of the gross developer’s salary and a fixed Newxel monthly fee.

Final Words

Choosing the right foreign partner will make help cultivate a productive long-term working relationship. It will also ensure that there’s a smooth flow of work. Do plenty of research beforehand, hold negotiations with vendors, and, if possible, visit the location too. Also, use this checklist to assess different vendors and find the right one for the specific project.

Need to build an offshore software development team or R&D center in Ukraine? Contact Newxel to get started.