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June 10th, 2020

Vendor Selection Tips for a Company Looking for Outsourced Vendors


There is no denying the fact that the reputation of outsourcing segments of information technology is steadily growing. However, there is one concern that still exists- How to know that as an IT major, you are collaborating with a reputed vendor? The efficacy of digital technologies across the business domains has created a world where quality is an integral factor. Well, there is a collective realization among major organizations that it is hard to attain efficiency if all the tasks are handled internally. Through outsourcing, businesses have the ability to either scale or expand. This notion underlines the importance of finding an outsourcing vendor who can help in yielding the best possible dividends. Below are a few tips to consider that would be helpful in the selection of quality outsourced vendors.

Analyze the technical expertise of the vendor

Your outsourced vendors should be able to explain to you the methodology they utilize in managing their projects. Moreover, your outsourced vendors should be accredited in various critical areas, such as project management and quality control, to ensure scalability and flexibility. It would be great if the outsourced vendors selected by you have a business continuity plan. With the help of a business continuity plan, your outsourced vendors would be able to provide you with uninterrupted services.

Technical competency

While selecting an outsourcing vendor, you should be aware of their expertise in the technology stack. Moreover, the vendor should possess a library of reusable components. The outsourcing vendor you are opting for should also have a dedicated IT team to deal with several issues associated with systems like VPNs and cloud architecture. It is also imperative to check the current competency level of the vendor in emerging technological advancements. Also, the vendor should possess a library of reusable components. The vendor company’s culture to write reusable codes can play a decisive role in your overall success. Well, you also cannot rule out the significance of a maintenance team of the vendor you are opting for. With an effective maintenance team, your products can stay healthy and bug-free for long.

Set a clear scope of work

Before you indulge in the process of selecting outsourced vendors, set a clear scope of work. After all, it is your responsibility to decide the business goals that the vendor should try to meet. Also, the selection of a vendor should be based on your immediate business objectives.

It would help if you communicated your long-term as well as short-term goals to the vendor so that both of you are on the same page from the beginning. On the other hand, if writing a scope of work is too difficult for you, you can start by answering some simple questions.

  • What is your exact requirement?
  • What would be the best potential solution for your exact needs?

Answering the questions as mentioned above would help you recognize the issue you are solving. This would also help you prepare a clear roadmap for the problem you can discuss with the outsourced vendor.

While hiring a vendor, ensure that you are giving the vendor enough chances to be familiar with your business motives. It is unfair to expect an outsider to be familiar with your business plans in just one meeting. Hence, take time and define a clear scope of work, making the process of collaboration easier.

Process competency

The vendor you are opting for should be able to walk you through the entire process of application life cycle. They should have a robust code review process in place to ensure that the software projects remain streamlined. The outsourcing vendor should also have automatic testing platforms to carry out testing in a bulk manner. While selecting a vendor, it is also vital that the company has a sprint demo process in place. This ensures that the suggestions and feedback can come from the internal teams of the vendor. The realm of the delivery process is also an important consideration which you cannot ignore. You should find out how the vendor makes deliveries and release product specifications. The way they carry out technical documentation can directly affect your customers. The vendor company should also have a capable team of code reviewers to ensure that the final product is bug-free and well optimized for sale.

Secure your data and intellectual property

Privacy and data are the two biggest concerns when the context is about outsourcing. When you are hiring an outsourced vendor, you would often observe sharing sensitive data and information. If you are unable to manage your company’s data and confidential information, you can be in serious trouble.

This is the reason that signing a nondisclosure agreement with the selected vendor makes sense. Apart from that, it would be best if you opted for an outsourced vendor who regularly conducts security and network audits in their workplace.

When selecting an outsourced vendor, inquire whether or not they are using specialized tools to secure their partner’s data. This would also ensure that no data leaks are happening in the future.

Project Management Competency

The vendor should have a governance model in place so that the underlying issues with the product can be solved quickly. The vendor should be proficient in managing projects with the help of tools like Jira and other collaboration tools. Estimation capability on the part of the vendor can really play a big role in your success. The ability to estimate mechanism and time correctly would help you immensely in your operations. It is also imperative for the vendor to manage and streamline various projects using the agile methodology. Making demonstrable releases in each sprint would help your project to stay on track.

Assess client management systems used by them

A client-vendor relationship will only foster when there is communication at appropriate levels. To facilitate communication with your outsourced vendor, make your expectations clear to them. In this manner, everyone in the outsourced vendor’s team would be available to answer your queries.

Your outsourced vendor must use modern-day software to keep track of the progress made on each project. On the other hand, if you are operating in a different time zone, the outsourced vendor should ensure that both work hours comply with each other.

This would help in increasing the efficacy of organizational communication. Furthermore, while selecting an outsourced vendor, both parties must agree on a single point of contact to solve queries and concerns.


It is important to take referrals from other customers while selecting a vendor. In this manner, you can easily assess the credibility of your vendor in the current market scenario. Require each vendor to submit at least four references. And in case the vendor hesitates, it is good not to take things forward from there.

The context of using agile methodologies

If you want to stay relevant in your business domain, you should adapt to your customers’ altering requirements. Accommodating the changing needs of your customers becomes relatively easy when you follow agile methodologies.

In order to make the most out of the collaboration process, it is essential that your outsourced vendor also follows the same methodology. Agile methodologies work best when you have to collaborate with another business partner or vendor.

Agile methodologies also help your vendor to accommodate the ever-changing needs of your customers.


Considering the aspect of cost is quite important in the selection process of a vendor. However, it shouldn’t be your sole criteria in choosing a reliable vendor for your company. The credibility of the vendor can be well derived from the referrals. If the vendor has impeccable records, there would be no difficulties whatsoever in negotiating the cost.

Consider selecting a flexible outsourced vendor

Flexibility is the key when the context is about selecting an outsourced vendor. In today’s dynamic business environment, the best way to survive is to be flexible. You cannot predict when a particular need would arise from your customer’s end, which needs immediate attention.

This is why the outsourcing vendor you selected should be flexible to serve urgently in your organization’s cause as per the need. Moreover, flexibility is wholly vital when you and your outsourced vendor are operating from two separate time zones.

Thus it would help if you communicated the importance of being flexible to your outsourced vendor.

Nowadays, outsourcing is seen as a boon for organizations operating in dynamic markets. It can boost efficiency and business sustainability at the same time if managed in a proper manner. You can’t deny that outsourcing is devoid of risks!

But assessing the risk factors and discussing them with your outsourced vendor would save you a lot of time and effort. Thus, opting for an outsourced vendor is a calculated risk that would make your business flourish in the future.

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