Has the time come for your company to explore software development outsourcing? The potential for cost savings is always attractive, but there are many other good reasons software development outsourcing has been pursued by other companies, including:\n\nA large backlog of existing projects, exceeding your staff\u2019s capacity to address\nLocal talent pool challenges \u2013 finding and retaining programming talent.\nA need for new (or even niche) technical skills that are not part of your team\u2019s core skillset.\nA need to temporarily scale up in programming capacity, then throttle back down at some point.\n\nRegardless of company size, outsourcing has delivered on promises for cost savings, flexibility, and scale.\n\u201cHow do I get started?\u201d you may ask. Let\u2019s explore a couple of options that could allow you to \u201ctest the waters\u201d with a chosen outsourcing partner.\nScenario 1: Small and safe software\nOne possibility is to select a project that is small in scope with a clear set of project objectives and deliverables. The main idea is to hire your outsourcing partner to tackle a software project with clear boundaries. Start with a project small enough in effort that the success of the outsourcing relationship can be quickly measured. Typically, the software will not be mission critical or high profile.\nIf all goes well, then your new outsourcing partner has presumably earned the right for larger (and more lucrative) assignments.\nWhat kind of company will pilot a small project?\nCompanies who favor this \u201cSmall and Safe\u201d approach will usually have one or more of these characteristics.\n\nHighly conservative, low risk-tolerance culture\nInternal processes that are immature, or unproven in large enterprise work\nKey stakeholders (IT project leaders, User SME\u2019s, etc.) that are relatively novice: either in their role, or in leading formal IT projects.\nHistorical resistance to outsourcing \u2013 whether in IT or in the business community.\nThere is some lack of confidence or comfort with the chosen outsourcing partner.\n\nPros and cons of piloting a small project\nPros: Work complexity is low, so demands on your internal people and processes are low, therefore the risk of failure is low. Some companies feel it would be easier to part ways with a \u201cbad fit\u201d outsourcing company in this scenario.\nCons: The project may be too small or strategically insignificant to matter. Because the project is small, some companies will be tempted to allow themselves to be sloppy in process or people-contributions to the project.\nScenario 2: Significant engagement\nAnother option is to take a more ambitious approach. Some companies opt to spend money, time, and effort (including energy to establish an outsourcing relationship) on a software project that has high business importance. Companies will want to pair this option with a commitment to an Agile development method for the pilot project. While this option is more aggressive, it aims to solve the ultimate challenge of getting impactful work done.\nSprint Zero and Sprint One\nWhile using Agile, you\u2019ll get a good sense of your software outsourcing partner during Sprint Zero and Sprint One (first 30 days). Some companies find that their new outsourcing partners will waive the invoice for Sprint Zero if the customer feels that irreparable issues arise \u2013 and the relationship is severed. The outsourcing company offers this option to waive fees in order to entice companies who wish to try outsourced programming for the first time, but are hesitant. If a problem arises and the fees are waived, there is some investment cost of time, but not money \u201cwasted" by business to get started.\nWhat kind of company will pilot a significant project?\nCompanies who favor this \u201cSignificant Project\u201d approach will usually have one or more of these characteristics.\n\nHave a good ability to assess risk\/reward payoff when evaluating options.\nHave imminent software development needs that, when delivered, can contribute to the company\u2019s performance.\nKey stakeholders (IT project leaders, User SME\u2019s, etc.) that are relatively mature in their role \u2013 or are new to the role, but seen as good \u201csystems thinkers.\u201d\nStrong sense of urgency in the business culture.\nAble to collaborate inside teams and cross-functionally.\n\nPros and cons of piloting a significant project\nPros: Typically, the key reason for choosing this option is that you will deliver on a system that really matters to your organization (i.e., high impact). Even if the outsourcing relationship sours, your company will have made progress in design considerations and reusable code. Your work efforts will never be \u201call a throw-away.\u201d Also, because you\u2019ve chosen a software project of importance, the organizational commitment to success will be higher. Your stakeholders may demonstrate a higher level of personal investment.\nCons: Because you have chosen a high priority project, the organizational visibility will be high. There may be some elevated angst as your company and the outsourcing partner work out the kinks of your daily rhythms of work.\nChoose a great software partner\nRegardless of the project you chose as your pilot for outsourced software development, make sure you invest the time to select the best-fit candidate. It\u2019s crucial that you have an outsourcing partner that fits your software needs.\nProper skills and experience. It may seem obvious, but don\u2019t short-sell the importance of performing a full due diligence of the prospective partner\u2019s skill sets. Look for technical certifications. Look for certifications and\/or expertise in related experience in your business vertical (manufacturing, healthcare, financial services, etc.). Look for experience in software projects that are similar to yours. Examples might be:\n\nCustomer-facing with high transactions through a website,\nA mobile solution with \u201cstore and forward\u201d capabilities because of inconsistent wireless service or internet access,\nA web solution for shop-floor workers which is highly visual and intuitive, with minimal \u201cclicks\u201d required.\n\nSize-appropriate. We believe the best outsourcing relationship matches are those where the company size of your partner complements your needs. The obvious bad-fit is a company that\u2019s too small, with insufficient bench strength to cover your needs. The not-so-obvious mismatch is a partner so large that your project and company\u2019s needs really aren\u2019t \u201cbig enough to matter.\u201d My rule of thumb \u2013 which I call the Steve Mezak 5% Rule is: make sure your engagement represents no less than 5 percent and no more than 20 percent of your outsourcing company\u2019s revenue base.\nTime zone. Collaboration with your outsourcing partner will be key \u2013 especially if you are using Agile development methods, with small rapid Sprints of completed work. Make sure your company and the outsourcing team will be able to collaborate easily and rapidly without asking either group to reach into non-standard hours just to converse. Your options are no longer limited to a U.S.-based outsourcing company or Asia-based team on a 12-hour time zone difference.\nCulture. Any hiring manager knows that cultural fit is the most important criteria for a successful hire \u2013 far beyond experience or technical skill fit. Make sure that your candidate outsourcing partner fits your company\u2019s important distinctiveness: highly formal or informal, aggressive or conservative. You must make sure that a team hundreds (or perhaps thousands) of miles away can operate in a natural rhythm of communication and productive work with your company.\nGet started with your first engagement\nMany companies, large and small, have benefitted greatly from successful software development outsourcing relationships. It\u2019s a proven model. The partnership options have never been more diverse. Pick your pilot software project, pick your software outsourcing partner, and get started!