A look beyond the software development services agreement into factors we often forget about
The demand for software engineers and their development services in Tier 1 countries has never been higher, particularly in technology hubs like the Pacific Region of the US and London, which is creating a huge supply/demand imbalance in these marketplaces.
In cities like London where there are only 0.4 candidates for every digital job posting, the task of attracting high quality software developers to work in-house is a big challenge.
10 years ago, large corporates only considered hiring in-house staff. This makes sense because it is what they were familiar with and it is undoubtedly the lowest risk option. But now large corporates often need to look outside of their own organization, and even outside of their own geographic regions to source software development resources.
Based on the size of their organization, large corporates will often turn to top-tier outsourcing companies to provide global software development services. These organizations often package software development consulting services with large volumes of engineering resources.
However, not every company is a market-leading global enterprise that needs top-tier Global software development services. Second-tier companies tend to operate as a slightly different cost-risk profile because they have fewer management stakeholders, they are implicitly less risk-averse and are more willing to consider smaller and more cost-efficient software development companies to partner with.
What is the best solution for second-tier companies, who want to hire developers?
Theoretically, it should be mid-tier software development companies either within the same country or in a trustworthy offshore destination.
The other approach is to source engineers directly through a hiring platform like YouTeam which provides the profiles of engineers who work in a number of small and medium-sized engineering companies in nearshore locations like Eastern Europe or across the pond in the Latin America (which is convenient for startups and businesses located in California or NYC looking for development help).
Based on my experience, it is very important to match up the customer organization with the vendor based on their ability to accept the hourly rates and the level of risk, which often varies in proportion to the size of the outsourcing company.
It is very important to match up the customer organization with the vendor based on their ability to accept the hourly rates and the level of risk.Click to tweet
Brand-first vs. talent-first approach to outsourcing software development services
The traditional process of outsourcing involves partnering with a particular brand, who will then resource your project. But in many cases, it is still difficult for them to recruit the exact right combination of:
- Communication skills
- Cultural and language compatibility.
Most of the time your team will consist of whoever happens to be available within the outsourcing company. It is often difficult to know the level of seniority of your team members until it is too late.
This is why we advocate for a Talent-first approach, which involves looking inside the organization and seeing who is available to join your team.
YouTeam’s Talent-first approach to Outsourcing
Instead of selecting software development partners (firms) based on their marketing and branding information, YouTeam provides you access to the most important information:
- The cost and skill-level of the individuals they have on staff AND
- When a particular specialist will become available (after they finish up with their previous project)
- Profiles of actual developers you can hire, not profiles of the firms
Here is an example of a search for java software development services within YouTeam.
If you want an overview of YouTeam’s alternative approach to hiring and managing Customer Success at high-level, here you go:
- Customers are given free access to a huge talent pool of dedicated developers and designers, etc. employed by the pre-vetted software agencies.
- A customer shortlists the developers they are interested in after going through the list of relevant profiles (selected by client’s criteria of a project.
- Once these developers have been interviewed, teams of developers are then assembled. In most cases, they will be from the same software development company or at the very least the same city so they can be co-located.
- A dedicated YouTeam account manager is assigned to handle the communication and financial part of the cooperation with the team.
What should be covered in the software development services agreement?
Irrespective of how you procure software development services, here is a list of issues related to the future cooperation which need to be captured (at minimum) before you sign on the dotted line:
- Project duration and deadlines,
- Payments in connection with a detailed scope of work,
- Team size,
- Quality guarantees,
- IP transfer,
- Dispute resolutions
- Code and payment escrow,
- Money-back guarantee.
IP transfer is one of the key factors in the software development services agreement and shall be stipulated properly. Code escrow clause is well suited for eliminating risks connected with IP transfer.
When hiring through the YouTeam platform, you can rest assured that all of the above issues are capture in detail. YouTeam has also considered a wide range of other possibilities and in this way has created a very client-friendly contractual framework within which to operate.
Other than software contractors, YouTeam can also put you in touch with a variety of software-related consultants in the following areas:
- Commercialization, Go-to-Market and Business Strategy for New Products
- Product Marketing
- Digital Marketing
- Technological Feasibility
- User Experience Review
- Product & Market Analysis
YouTeam has a separate software development consulting services agreement template for the purpose of engaging consultants through the platform.
It is also worth noting that within YouTeam, all payments are processed through the escrow solution and are released to the outsourcing company only upon the acceptance of the work.