Off-shore software development vendor selection process

Off-shore software development vendor selection process

Joseph Vargheese PMP CISA CSM

Atlanta, GA, USA

Dated: 2011-July-5


1.     Initial planning

  • Number of resources and budget
  • Type of project
  • Complexity
  • Development process
  • Data Security
  • Compliance

2.     Countries of preference

  • India (Very high process maturity)
  • China (Very cheap testing resources. Very good for Japan and Korea with no language barrier)
  • Brazil (same time zone  with North America, Good for Infrastructure)
  • Vietnam (Very good rates for medium skillset)
  • Russia (Very cheap single digit per hour rate for email only communication)
  • Costa Rica (Same time zone.   Medium skill set)

3.     Preference parameters 

  • Quality of deliverables vs. cost
  • Quality of manpower available
  • Communication Overhead
  • Overlapping hours of operation
  • Process framework
  • Information and Data Security infrastructure

4.     Primary screening process sources

5.     Right sizing a target vendor 

  • Above 10 Millions :  Large companies above 50000 people
  • 4 to 10 Million :  Companies with 10000 to 50000 people
  • 1-4 Million Companies with 1000 to 10000 people
  • < 1 Million: Companies below 1000 people

6.     Pre-screening process

6.1 Domain Expertise

Does the vendor have organization has expertise in the domain? example insurance, banking, healthcare etc…

6.2 Technology Expertise

Does vendor organization have expertise in the technology domain   Example: mainframe, client server, Web, Database etc..

6.3 Process Expertise

Does vendor organization have expertise in the process framework and exposure the development process used by client whether it Agile, Waterfall etc.

7.     Development methodology alignment

  • Agile Development
  • Waterfall Development
  • RUP Development

8.     Cultural alignment
Please make sure cultural alignment is good with destination vendor organization including fast paced environment vs. highly process environment

9.     Training and development

Continuous infrastructure for training and development is key factor the success of the offshore environment due high employee turnover as high as 20%

10. Full RFP process

Full RFP process is recommended only for engagement above 2 million.  Engagements below 2 million a short RFP process will suffice.

11. Vendor presentation preparation

An agenda with short set of slides should be provided in advance for streamlining presentation material.

12. Global rate card

This point client should start collecting all possible needs for next two years with in organization and start getting pricing for the same.  It will be a tough negotiation  to get a better rate on a later time.

13. Vendor contract components

If it is not black and white, it can’t be enforced.

  • Intellectual property rights
  • Communication channels
  • Overlapping hours
  • Governance model
  • Escalation Process
  • Penalty for not performing
  • Exit Criteria
  • Offshore performance management
  • Rate lock

14. Managing a vendor 

  • Governance model  Implementation
  • Escalation Process
  • Formal issue reporting and tracking system
  • Continuous staff training programs
  • Key employee backup program
  • KPIs
  • Tuning of delivery model and process framework

About Joseph Vargheese

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