Outsourcing feature development to one remote software engineering contractor can be a blessing with lower costs and fast team expansion. But more often than not, software houses generate more problems than they solve. Learn to test foreign providers and check if the return on investment (ROI) is in your favor.

What impacts ROI when it comes to outsourcing software engineering?

There are usually two ways to go. Software houses deliver projects, while staffing firms provide engineers.

  • For the first, are deliverables up to your standards and deadlines? If you can’t deliver the desired product to your users, you lose competitiveness.
  • In the second case, what’s the time to fill and the quality of candidates that you end up getting referred to you?

If you’re constantly having to lower the bar, you will strain your internal team. Either by an added effort towards ramping them up, or making up for bug fixes and so on, they won’t be able to perform properly. Making up for low code quality is a no-no.

Lastly, if your contractors aren’t flexible with what your business needs, you might find yourself bound to a strict contract. This means that even if you’re not satisfied, you will lose the budget with contract termination fees.

Is your remote software engineering contractor worth the investment?

Do you need middle management or mediators of any sort to meet satisfying service levels? If so, you are actually transferring the costs. You pay less for the provider, but your internal leader is left with two options:

(a) To put in more hours to manage your remote software engineering contractor; or

(b) Remove themselves from actually managing your team.

If you are having too many setbacks by having to work within specific conditions established by your contractor, they might not be the partner you actually need.

In the case of staffing firms, it is important they get your candidates submitted on time. Moreover, they are actually good fits that have been properly vetted. Otherwise, you end up wasting time with bad interviews.

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Why time zone matters

Simply put: you have a solid overlap. This means you can probably skip the middle manager, promote interactions between teams, and react faster in case of downtime. If your remote software engineering contractor is located in Africa, Eastern Europe, or Southeast Asia, you might be dealing with hidden costs innate to offshoring:

  • The increased need for alignment between teams;
  • Overtime and meetings out of working hours;
  • Longer downtime and time to recover;
  • The strain on people and process management.

That is why many American companies have turned to Latin America as a source of stronger service providers. Nearshoring means service fees are still attractive, but there are no timezone-related annoyances to deal with. Product development culture and service quality levels are also closer to US standards.

When should I go looking for a new service provider?

If you realize it makes sense not to be bound to a contractor by long contracts, look for companies that work with annual agreements and monthly fees, having the flexibility to cancel with short notice and no fees. You will probably find it is smarter to count on a remote software engineering contractor that has more of a tailored approach and service. Look for those that work with Master Service Agreements (MSA) and Statements of Work (SOW) that assure service standards, proprietary rights, security, confidentiality, and other relevant warranties.