How To Choose The Best Software Development Company

・12 min read
How To Choose The Best Software Development Company

What’s your approach?

Outsourcing entrepreneurs and firms vary greatly in the way they manage the sourcing process. Some progress through it speedily and are fairly spontaneous in their approach. Others take their time and use a systematic process to specify their needs, identify potential service providers, filter through the candidates and eventually select the vendor to deliver on their projects. Some are more likely to rely on their gut feelings and intuition, while others seem to stay emotionally detached and use their brain rather than their heart in the process. Those with a more mature sourcing process are more likely to identify and select the right service provider. Many outsourcing failures have their roots in a badly managed sourcing process. If you agree with the opinion, what are some of the practices and process steps you might apply to increase the likelihood of finding the right service provider? What follows is a brief account of what the more demanding outsourcers do while prospecting for vendors. Hopefully, the text will offer some food for thought for those who are about to outsource and are in the process of looking for provider(s). Note that you do not need advanced software tools to implement the process below. A simple excel spreadsheet will often do. If you prefer a tool, you might google for one and find some such aids as the Website Vendor Selection Tool or SupplierSelect, to name just two examples.

1) Compile a list of criteria your vendor should meet

Before you start looking for a vendor, think through your project and establish what is to be done. Divide the scope so that it is clear what is to be delivered by the vendor vs. what is to be delivered in-house. Having defined the scope of work for the service provider, you can now compile a list of criteria your vendor should meet. The selection criteria one uses should directly relate to the characteristics of your project as well as to the tasks, duties and responsibilities to be undertaken by the vendor. Some such criteria will be very specific; however, do not waste time reinventing the wheel. Instead, search for and utilize the lists compiled by others. Just modify them to fit the specifics of your project.

  • specify WHO is to meet the specific criteria you choose – is it the vendor’s company as a whole, the team which would deliver the service or a specific individual at the firm, e.g. the vendor’s Project Manager / Team Lead?

Financial stability, for instance, is naturally connected with the company. As regards accumulated experience, however, you would be able to make a better decision knowing what the specific team / individuals have delivered so far. An overall company portfolio may not paint a complete picture of what the specific team offered to you have contributed to the vendor’s track record. As a rule of thumb – by default – assume you recruit a specific team / specific individuals and rate them rather than the firm. Only when a criterion clearly relates to the organization should you assess the vendor rather than the team. Accordingly, while gathering information in later stages, be specific and ask for information on the team and the individuals to be involved when appropriate. For the sake of convenience, the criteria are sometimes grouped into broader categories, e.g. technology, business, communication, etc. The more criteria you are going to use, the bigger the benefit you gain from the practice.

Output: a set of (categorized) vendor assessment criteria

2) Weight the criteria selected

Projects differ in character. Some are, for example, small and may easily be delivered by a freelancer rather than a team. On top of that, those who outsource differ in their specific requirements, e.g. a bootstrapping entrepreneur views price differently than an existing SME with a consistent revenue stream and a budget set aside for the project. Accordingly, some criteria matter more than others. It is time to capture that fact in your selection tool: * weight the criteria you selected in the previous stage. If you divide the criteria into categories, you may weight the whole groups before you move on to modify the weights for specific criteria within each category. In other words, you may choose to weight both the groups and the individual criteria within each group. Some of the criteria, i.e., the critical **ones, should be marked as such. For example: * expertise / experience in your technology stack (programming languages, frameworks, etc.) * determine the top three technical skills that are the most important to you and therefore that the developers should possess. * check whether the projects the company has worked on overlaps with your project type and size * make sure that your team will consist of both senior and junior developers * take into consideration is the time difference between you and the outsourcing company

A candidate vendor who fails to meet a critical criterion should be automatically eliminated, however high they score on the other criteria.

Output: a set of weighted vendor selection criteria

3) Compile a vendor list

Now that you, hopefully, know quite well what/who you are looking for, create a list of outsourcing vendors who are likely to meet the set of criteria you have chosen. Cast your net widely, but sift through the findings and ignore the vendors who clearly fail to meet the key selection criteria. Where to find the vendors?

  • your network may know companies to recommend,
  • organic google search seems to be the preferred tactic,
  • use some technology-specific catalogues and listings.

Having completed the search, you should have a solid list of candidates for further scrutiny.

Output: a list of potential service providers

4) Gather and verify the information about the vendors listed

With the criteria and potential vendors listed, it is now time to gather and verify information on the vendors. So, do some digging and learn more about the candidates selected so far. You can start off by asking the service providers to deliver the information needed as well as to rate themselves, i.e., their company / team against the criteria you find important. Convert the (key) criteria into a list of specific questions and e-mail them to all the candidates for answers (a list of criteria-based questions can be found at the end of this article). On the whole, the longer the list of questions you send, the lower the response rate, so make sure you do not cross the point beyond which you receive too few responses.

Additionally, you may augment your initial search by using the information available online, e.g. you can check what the vendor say about themselves in their marketing collateral, what the social media contents connected with the vendor are like, etc. In further steps you will attempt to verify such information; you will actually expect the vendors themselves to substantiate the claims they make – and rightly so! The burden of proof lies upon them. You will also want to verify if others, namely the vendor’s clients, have the same story to tell – use references. Again, some of the key questions – by no means all of them – may be selected for reference sources to provide feedback on.

  • check team members references and carefully analyze resumes
  • don’t hesitate to go deeper than a Linkedin profile, check other platforms
  • the resumes should include projects the developer worked on with technology stack and what contributions he had to the project
  • don’t be afraid to ask if the team has worked together in the past and whether or not they are located in the same office
  • ask about the open source contributions of developers, review their publications, presentations and past workshops.

Output: a list of potential service providers with information from the initial search

5) Use the weighted criteria matrix to assess the vendors and shorten the vendor list

It is time now to review the information gathered and use your initial findings to assess the service providers’ suitability to deliver the service on you project. Assess individual vendors, as well as the teams they are ready to dedicate – against the pre-selected criteria, compare their weighted scores and decide which vendors to progress with. Ultimately, you should end up with a shorter list of the most promising candidates meant for more detailed scrutiny.

Output: a shortened list of potential service providers

6) Gather more information and re-evaluate the remaining candidates to arrive at a shortlist

Your initial search and assessment have hopefully shortened the list. With a more easily manageable list of candidates, move on to interviews to gather more information and/or verify what you have found out so far. For instance, suppose the service provider claim their language skills are excellent – they now have an opportunity to prove it live. You are not just buying an abstract service from a company or, at least, you will be much better off if you go beyond such a perspective. **You are recruiting a specific individual or a team of specific individuals to serve on your project – your crew. Thus interview THE individual(s) as well as THE reference sources related to the specific team and their track record. * hold an interview with every developer in the team to check their soft-skills, especially the ability to communicate well (especially if speaking a foreign language will be necessary to communicate during the collaboration), as well as hard skills. This way, no ‘weaker’ developer can hide behind his more talkative, better-skilled colleagues * be prepared to review their code samples, or even better, conduct pair-programming sessions with each of them * you can also give them a test project of restricted scope and time

 The vendor’s company _en masse _may have impressive experience in your area, a rich portfolio of projects implemented and clients ready to recommend. The question is what has been your team’s contribution to it. It is also a good time to ask such a team for code samples and application/system walk-throughs. Don’t forget to check whether the projects the company has worked on overlaps with your project type and size. Also, consider the vendor’s size, if there are enough people to take over. Remember that bigger doesn’t necessarily mean better. If you decide on a large company you may experience frequent staff swapping, so be prepared for that. While talking to the vendor, make sure that your team will consist of both senior and junior developers. An additional, more practical factor, you should take into consideration is the time difference between you and the outsourcing company. A couple of your working hours should overlap to avoid early morning or late night meetings, so if you don’t have a preference from which country your partner should come from, time zones may make it a bit easier for you to narrow down your search.

With the new information at hand, re-assess the remaining vendors and further shorten the list or select the best candidate to deliver the service (if you do not intend to use the steps below).

Output: a list of 2-3 shortlisted vendors / the vendor selected

7) Visit the shortlisted service providers

When the project is mission-critical, it is highly advisable to consider an on-site visit to gather and verify even more information on the shortlisted candidates / the vendor selected. It is obviously much easier when you intend to collaborate with an onshore or nearshore service provider, and it is much more convenient when the shortlisted candidates are located in the same geographical region / country. With the additional information gathered during the visit you can re-evaluate the remaining candidates and select the most promising vendor. You may still want to keep in touch with the other shortlisted providers though. If – for whatever reason – you fail to complete negotiations with the top candidate, you will have the others to go back to.

Output: the vendor selected

8) Use a pilot project

Selleo’s prospects / clients vary greatly with reference to the practice. Those from Germany, for example, have applied the practice invariably. Clients from other geographic locations have been less consistent. Whenever possible, I strongly recommend the practice as it provides you with an invaluable opportunity to test the vendor’s ability to deliver on their promises. The development team can now prove many of the claims they made in the previous stages of the sales process. A pilot project also helps to “smooth things out” / “get things up and running” (e.g. communication, collaboration practices, etc.) before the actual work on the project starts rather than during the process. Should the team fail to meet the expectations created earlier, you have a list of other shortlisted candidates to return to.

Output:  the vendor selected

If at any stage you are dissatisfied with the results, i.e., you feel none of the identified candidates seems able to deliver successfully on your project, do not hesitate to go back and broaden your search at point 3. If you become satisfied with mediocre findings you may have to accept mediocre service delivery.


As you can see there is quite a lot of things to be done. You can manage the process yourself or use a sourcing agent / broker to support you in the process.  Whichever way you choose, the process requires resources:  time and/or money – it comes at a very tangible cost. What are the benefits then? You significantly reduce the risks involved in outsourcing your software development project. You increase the likelihood of selecting and building a relationship with the vendor who is actually able to deliver good service on your project. All in all, the cost may well be considered an investment which pays off later on when you build your application. Many outsourcing entrepreneurs / firms would be better off if they had decided to account for the upfront investment.

Post Scriptum 1 I would like to express my gratitude to Daniel Young from Dragon Sourcing for all the insights and useful tips he offered.

Post Scriptum 2 I wrote the article and compiled the lists of criteria / questions below  with the outsourcing entrepreneur / firm in mind. Still, I guess, the contents are equally important for service providers, development teams or even freelancers. What are your answers to the questions? I mean, the answers you provide in the daily practice of service delivery.

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