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Wednesday, April 14, 2021

CEO Insider

How to Choose a Reliable Partner for Offshoring

While running an operations service company for software R&D centers in Ukraine, I’ve seen enough companies fail to properly set up teams abroad at the beginning. Vendors who lacked transparency and/or couldn’t live up to contractual expectations were usually to blame. Thus, I’ve decided to share with you some tips and tricks on how to rule out unfitting offshoring partners and work with the top experts from the start.

How you can tell if your offshoring vendor is a scammer

An offshoring provider is an agency that helps you create your development team abroad. This company is in charge of all the operational services that are usually time-consuming and lag behind core product development, so you may outsource such tasks and focus on your main business.

However, some offshoring providers tend to promise unrealistically attractive services for the lowest prices and never deliver them in time and on budget. Below, I’ve listed some “alarm bells” that you need to pay attention to as you choose an offshore vendor:

  1. Hidden costs
    Not that long ago, a CTO of one company came to me after they’d had an unpleasant experience with an outstaffing provider. They used to pay twice the market rate for a Middle engineer in Ukraine while working with this vendor. The former was convinced that he was paying this much for the developer, while in reality this was the service fee.
    A reliable offshore provider is always clear when it comes to prices. Sometimes, they even offer to use their free online calculators to see how much it will cost you to set up your team. If they don’t have this feature, you can always ask them about the cost directly – and get an answer as soon as possible.
  2. Transparency issues
    Unreliable offshore vendors not only have weird pricing and hidden costs but also don’t provide you with any guarantees. If you want to find out how long it will take to find 5 developers, they’ll say something like, “In the shortest time possible”. If they fail to do so, you’re back to square one.
    A skilled provider will give you realistic timing based on your needs and a candidate’s expertise. You may find this information on their website or get it on your first Zoom call. Besides, in case your vendor doesn’t find the necessary candidates on time, they’ll provide you with compensation fees.
  3. Lack of expertise
    Another “red flag” is when your potential partner for offshoring can’t provide you with real case studies. When you ask a provider about the companies they have worked with, they’ll say nothing but “non-disclosure agreements” and “confidentiality issues”. It means that they either lack experience or have a bad reputation on the market.
    A qualified provider usually has a bunch of case studies that contain problems related to their previous client, the solutions that they provided, and further results. The best vendors even allocate resources to post their case studies on their website so you don’t even have to ask for them yourself.

A reliable offshoring partner: tips to find the “one”

We’ve already pointed out the three main problems most companies face while looking for a trustworthy provider. But, how to choose the right one for you?

  • Specify your needs
    Before you start looking for an offshore vendor, analyze your team’s performance and pinpoint their weak spots. Is it the skills and expertise that you’re looking for? Or maybe you just need more helping developer hands? Establish your necessities in a clear and crisp way.
  • Make some research
    It may sound obvious but everything starts from good old research. Use the data of a trustworthy source such as Statista to help you make up your mind about what country to offshore to. They single out the 10 most financially attractive offshoring destinations, including Ukraine.
    Once you’ve done this part of the research, define what providers lead the offshoring market in your go-to country. Use free platforms such as Crunchbase or Clutch to find the top vendors in no time.
  • Come up with the list of top providers
    Read the testimonials of their previous clients, go through their case studies, and choose the most experienced vendors in your niche. Pay attention to those who have a clear customer portrait. This is how you get the best customized solutions for your business.
    For instance, if you’re an IT product company, it’d be best to work with a provider who specializes in your field, has in-depth IT law expertise, and provides back-office functions to ensure the stable development of your team abroad.
  • Conduct interviews
    Allocate your time to speak with all the candidates at least via Zoom. This way you’ll find out what they have to offer better. A professional offshoring vendor will provide you with up-to-date information regarding their services, pricing, delivery dates, and agreement terms.
  • Go for all-in-one-place solutions
    You may look for different providers to get the services such as legal & compliance, real estate, payroll & accounting, employer branding, and others. However, it’s usually more expensive and time-killing. I suggest you stick with the vendors that can create and maintain your entire office from A to Z.

You’re all set!

If you follow these recommendations and choose a vendor more carefully, you’re likely to find the most suitable offshoring partner for your business! Remember that your potential provider should be:

  • transparent about pricing;
  • honest when it comes to delivery dates;
  • experienced proven by case studies;
  • high-potential when offering a range of services for your specific needs.

Commentary by Dmitry Ovcharenko. Here’s what you’ve missed?
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Dmitry Ovcharenko
Dmitry Ovcharenko is a founder and CEO of Alcor. He specializes in helping product tech companies from Europe and the US conduct their business in Ukraine (by assisting them in opening software R&D centers). With over 15 years of experience in the tech industry, Dmitry understands well how to connect client business needs with the right solution. Dmitry has a Master’s in Information Technology Law from the University of California, Berkeley. He also finished a course on IT law at the University of Geneva in 2014. Dmitry Ovcharenko is an opinion columnist for the CEOWORLD magazine. Follow him on Facebook or connect on LinkedIn.
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