Did you know that software development in most cases relates to information technology outsourcing?

IT outsourcing is popular among companies of all sizes. According to Deloitte’s Global Outsourcing survey, most of the organizations questioned have already outsourced most of their IT operations, taking the most of the cost and flexibility benefits.

Just imagine - the size of the global ITO market has accounted for 77.75% of the overall outsourcing market, valued at over $500 billion. The Covid-19 pandemic has only supported the idea of IT outsourcing rather than physical presence and co-location of resources.

Thus, information technology outsourcing has become a common practice among companies worldwide with no burden on building long-term, trustworthy relationships.

So why shouldn’t you take full advantage of IT outsourcing too?

The following guide helps you answer the critical questions:

  • Benefits of IT outsourcing explained with examples
  • Risks & challenges related to IT outsourcing and how to overcome them
  • A list of the best IT outsourcing companies in 2022
  • Step-by-step process for hiring a professional IT service provider
  • Tips to ensure that the IT outsourcing process will go smoothly

Let’s dive right into explaining the main ideas of technology outsourcing.

Information Technology Outsourcing: Examples, Regions, Models

What is information technology outsourcing? To answer this question, let’s first define outsourcing.

IT outsourcing is the practice of sub-contracting or “farming out” some tasks related to information technologies. Companies engage external resources to perform certain operations which helps them streamline the workflow, and save time and money.

Technology outsourcing opens up a whole world of possibilities for companies and allows them to not be limited to a particular location or market. It became a panacea for many growing companies that require software development services and highly experienced professionals.

What are Examples of Outsourcing?

Aside from information technology outsourcing, there are numerous types including the following services that frequently turn to outsourcing, namely:

  • Offshore software development services
  • Web hosting and cloud services
  • Software maintenance and management
  • Technical support
  • Telecommunication services
  • Database development and support
  • Infrastructure
  • Business process outsourcing
  • Human resource management
  • Supply chain management
  • Accounting
  • Marketing and SEO activities
  • Legal documentation

Best IT Outsourcing Regions

Based on the place where the information technology outsourcing is performed, the following types of IT outsourcing are defined as follows:

  • Local or onshore IT outsourcing implies hiring staff outside your company, but that are still based within your country (e.g Company physically located in the USA would sub-contract a local IT vendor.)
  • Nearshore IT outsourcing means hiring contractors in a country near yours, often a bordering country (e.g. Company from the USA decides to reach out to Brazil or Mexico for software development services.)
  • Offshore information technology outsourcing happens when a business hires a company or individual who is more than four time zones away from their own, typically to enjoy the benefits of lower costs. (e.g. US-based organization sources IT developers from Ukraine, located on another continent.)

Main Information Technology Outsourcing: Regions & Rates
Main Information Technology Outsourcing: Regions & Rates

The places you can look for IT outsourcing companies are numerous. Depending on your business needs, you can hire a software development team to work exclusively on your project.

The choice of a particular IT outsourcing vendor is interconnected with the location of the most prominent software development companies. The destination of your information technology outsourcing often depends on the language, time difference, and service cost.

Eastern Europe, Asia and the Middle East, and Latin America are considered some of the best places for hiring IT, service providers.

The following table compares the main advantages and disadvantages of IT outsourcing in these regions.

Eastern Europe (Ukraine) Western Europe Asia and the Middle East Latin America North America
Cost-savings + - + + -
Service quality & skills + + - +- +
Great tech basis (universities, number of companies, tech hubs) + +- +- - +
Good level of English + + - - +
Culture similarity + + - +- +
Average hourly rates $40 - $50 $50 - 100 $20 - $40 $35 - $50 $70 - $170

After taking all of the above into consideration, it should come as no surprise that Eastern Europe (Ukraine) is the primary technology outsourcing destination for many businesses all over the world.

While Asia and the Middle East can offer lower costs, Eastern Europe provides IT services of exceptional quality. The majority of technology outsourcing teams from Latin America are just making the first steps and have not yet established a good reputation nor do they have a lot of experience in providing this service at a high-quality level.

Interested in IT outsourcing from the top experts in Eastern Europe?

Receive a free consultation from the experts now! MLSDev team has been operating in the software outsourcing field since 2009. We can share our knowledge, explain all the details involved in IT outsourcing, as well as advise on how to remove the related risks.

Get your free consultation

Where Can You Search for IT Outsourcing Company

Let’s take a look at the most common places to look for vendors:

1. Work exchange platforms like Upwork and Fiverr

These sites are a great place to start your search. They contain profiles of freelancers who are ready to take on different tasks in the field of IT outsourcing. Anyone can create a profile, so you need to be careful with your choices and try to avoid the risk of hiring under-qualified specialists. This is one of the main considerations among IT outsourcing risks.

2. Vendor-listing sites like Clutch and SoftwareWorld

These platforms are a worthy resource in your search for information technology outsourcing companies. Platforms like Clutch and The Manifest list the main players and provide access to reviews and references from clients of these IT outsourcing companies.

3. Local market search

If the advantages of lower cost of offshore outsourcing have not yet won you over, you can also consider searching for a company among those that are local. You just need to type in your search query in Google and you will get dozens of results with the technology outsourcing companies nearest to you.

IT Outsourcing Models: Pros & Cons

Here, we examine the most common models for information technology outsourcing based on your exact needs and final goals. By comparing the pros and cons of each model, you can decide on the best option.

1. Staff Augmentation

This method implies hiring one or a few IT experts or developers rather than a fully-packed development team.

This means that a client already has an IT project that requires additional expertise and extra resources to cover the new scope of work.

The pros include the option to fill gaps in your project fast and the flexibility to employ as many experts as needed. As well, there is no need to pay taxes and other perks for these temporary employees.

Cons may involve a long search for the necessary IT developers and time spent on onboarding.

Most suitable: This model is most suitable for short-term projects or the employment of the necessary expertise in the industry.

2. Project-Based Outsourcing

Here, the IT provider assembles a solution-based team of specialists according to the specifics of the project. The team includes services like business analysis, architecture planning, back-end, and front-end development, UX/UI design, software testing, etc.

This model offers process flexibility where it is possible to change the team set, project scope, and tasks to better suit the final result. More benefits of this IT outsourcing model include a faster hiring process, a clear project timeline and milestones, and no need to manage the process.

Most suitable: This technology outsourcing model is suitable for new projects being created from scratch.

3. Dedicated Development Team

A dedicated team model implies long-term cooperation between a client and an IT service provider (a team of employees under contract) who works exclusively on the client’s project.

This development team can perform as a separate IT department, help with multiple projects, and become your technical advisor. A dedicated team is a great choice because it provides a higher level of agility, control over the process, and availability of top experts.

Most suitable: The model is best for those who want long-term commitments, have complex technical projects, want to strengthen their IT department, would like to cut costs for hard-to-find talents, and work with the top professionals in the domain.

The next table compares the IT outsourcing pricing models that can be offered by IT vendors:

  • Time & Materials - or hourly pricing model; where a client pays only for the hours that the developer spends on the project. This is the most common model for IT outsourcing.
  • Fixed Price - this pricing model means that the vendor completes a project in line with a set budget. Here, clients make a one-time payment and cannot change anything along the way, which is not suitable not for many projects.
  • Rate Card - a client is billed every month based on the rate card of the specialist working on the project.
  • Cost Plus - the payment includes a monthly developer salary and a fixed fee for the IT vendor. This fee can involve a paysheet, office, staff support, work equipment, etc.
Time & Materials Fixed Price Rate Card Cost Plus
Flexibility yes no yes yes
Predictable cost no yes yes yes
Predictable timing no yes no no
Long-term cooperation yes no yes yes
Personal contact with developers yes yes yes yes
Direct communication yes yes yes yes
Developer’s commitment yes yes yes yes

IT Outsourcing: Benefits & Related Risks

Just like any other service, technology outsourcing is not without pros and cons.

The most common IT outsourcing advantages and disadvantages are listed below. Let’s more closely inspect each of them so that you will know what to be prepared for when outsourcing IT functions.

Why Companies Choose Technology Outsourcing
Why Companies Choose Technology Outsourcing

10 Benefits of Information Technology Outsourcing

The benefits of IT outsourcing are diverse and bring additional freedom for companies that turn to information technology outsourcing services. Flexibility, cost and time savings, and access to a pool of highly-qualified specialists are the main reasons why the market of IT outsourcing is growing.

The Data Analytics Outsourcing Market research states that the technology outsourcing market is expected to grow at a CAGR of 25.8% during the period between 2019 and 2027. By the end of the forecast period, it will account to $19.35 billion US dollars.

1. Cost Reduction

This is probably the most attractive advantage of offshore IT outsourcing. The level of payment in developed and developing countries varies greatly. Companies can save up to 50%-30% by outsourcing information technology tasks.

In contrast, when you create a dedicated in-house team, the business has to pay additional costs including employee salaries, taxes, leave, and so on.

IT outsourcing for small businesses is very beneficial, as these companies save precious money that is needed for the further development and improvement of internal operations.

Even giants like Telecom, Unity Technologies, and Alibaba reduce their software development costs by means of outsourcing information technology tasks.

2. Saving Time

Routine tasks like software maintenance and support may take a great deal of time.

Companies need to create dedicated teams specifically to address these problems, which is also time-consuming. Technology outsourcing companies can provide clients with ongoing support and software maintenance.

The result of IT outsourcing is the reduction in time that is needed for an in-house team to tackle problems. If there is a significant time zone difference, you get the benefits of round-the-clock business operations.

3. Access to Top Talents

There are instances when a company needs a unique talent that is not available in-house or even in the local talent pool. Information technology outsourcing is a workaround for many companies that get access to the best talent from all over the world.

The information technology outsourcing market is huge and specialists can be found with rate tech skills like blockchain developers and machine learning specialists. This is the key advantage of offshore IT outsourcing.

4. Focus on Business Strategy

In business, nothing is done without a good reason. Every decision should be made based on well-thought-out research and data. IT outsourcing allows businesses to concentrate on core operations and frees employees from tasks that do not match their expertise.

As a result, businesses better optimize internal processes and more wisely allocate resources to the tasks that directly influence the performance of a company.

5. Flexibility

IT outsourcing provides companies with the ability to quickly react to changes in the business environment. If the information technology outsourcing vendor under-delivers, it is quicker to find another company than to search for a full-time employee with the necessary skill set.

The same goes for the adoption of innovative technologies, as companies sometimes refrain from them just because they cannot find qualified specialists in the local market.

6. Speedy Hiring Process

Among the benefits of outsourcing, this one is crucial for many leading businesses. At one point or another, there might be a need for an employee with a rare talent.

Information technology outsourcing opens up the possibility to hire any professional from any part of the world. It is quicker to find a vendor than to hire and relocate a professional, which can lead to unnecessary bureaucracy and additional costs.

7. Fresh and New Ideas

An outsourced employee benefits the hiring company in many ways. One of them is the ability to look at a problem from a new angle.

If you have encountered a problem, there is a chance that other companies have also faced the same dilemma. An outsourcing service provider deals everyday with different challenges and, in some instances, can offer unique solutions that you may not have otherwise come up with.

8. Technology Availability

The world of software development is ever changing and new trends arise every day. For an in-house team of developers, it is difficult to keep up with all the latest changes and technologies.

This is why IT staff augmentation is a cost-efficient way of accessing innovative solutions and implementing them in your business projects.

9. Risk Sharing and Mitigation

Do not put all your eggs in one basket or, rather, do not invest all your money in a single IT outsourcing vendor. You can easily mitigate some of the risks of technology outsourcing by entrusting different types of tasks into the hands of different IT outsourcing firms.

As you can do due diligence, talk with the existing clients of an IT outsourcing provider and view the ratings from their former clientele. This can help to significantly reduce the risks and get assurance that the outcome matches your expectations.

10. Business Support

Information technology outsourcing allows a company to get support from the side.

Even if some processes inside your company fall apart, the operation you outsourced may continue to run smoothly. Even the loss of a significant employee will not influence the work as, in most cases, IT outsourcing companies have a few different employees that can take on the role.

In many cases, these vendors are not only able to support your company from a tech perspective but unite both the business and tech parts in a way that produces the best outcome.

8 Potential Risks Connected with Information Technology Outsourcing

Even though the benefits of IT outsourcing are plenty, many companies are still wary. Let’s review the main risks that may scare you away.

Risks of IT Outsourcing
Risks of IT Outsourcing

1. Loss of Control Over Operations

Many companies are afraid that when they tap into technical outsourcing, they will lose control over core operations. When dealing with in-house employees, companies can directly influence all processes, track the execution of tasks, and ensure that operations align with the business needs of the company. In comparison, IT outsource companies are more independent, which may make you think that you are losing control over everything.

Solution: Lack of awareness is a problem caused by poor communication. This can be solved with a properly established plan of action and regular communication. This way you will not feel that important operations are slipping through your fingers.

2. Relative Cost Reduction

Cost reduction can belong both to IT outsourcing pros and cons. If a company makes a poor choice and hires a vendor without learning about all the hidden cost components, this may significantly increase the final price of web or mobile app development. In this case, companies risk losing money instead of saving more.

Solution: To avoid these sorts of situations, it is important to learn about all of the hidden costs and extra charges, as well as payment models (fixed, time and material, etc.) so that you can be prepared for unexpected surges in development costs.

Want to better understand how app development cost is calculated?

Read the article App Development Cost: Understand Your Budget to Build Powerful Apps to find out about 10 hidden project cost drivers.

3. Risk to the Business of Downtime Failure

Businesses that rely on an external company for IT outsourcing run the risk of downtime during critical system failures. A busy contractor might not have time to instantly fix the problem and businesses may need to wait for days. These types of failures may have a daunting impact on performance, productivity, and may even cause money loss.

Solution: This risk should be considered during the preparation of any contract agreement between the companies. These instances should be registered in the document and these should be an established plan of action in case of emergencies.

4. Culture, Time, and Language Discrepancies

Offshore international technology outsourcing involves a few challenges. Very often, companies do not only differ due to location, but also because of the differences in time zones, languages, and cultures. These diversities can become a real stumbling block, as they negatively influence the effectiveness of communication.

Solution: Before a project commences, both parties should have an established process for communication and a schedule for the exchange of information. This will ensure that all the requirements are met and your project will go on as planned.

5. Insecurity with Regard to Service Quality

Exchanging lower prices for lower quality services is a bad idea. The fear that an IT outsourcing company will not be able to deliver the needed results often stops businesses from exploring the possibilities.

Solution: Finding the right quality-to-price ratio is vital for the future success of a project. You can ensure this success by reviewing feedback from former clients and comparing the offered prices with those of other companies.

Do you want to learn how to choose the right developer for your project?

Read the article How to Hire an App Developer for Your Project, which will provide you with some insight and the step-by-step process for choosing the best app developer.

6. Complexity of Function Migration

The process of IT outsourcing may seem like a difficult task, especially when we talk about function migration. If your vendor loses an important employee, the functions of this employee should be transferred to another specialist, which may take time to accomplish.

Solution: IT outsourcing companies have established processes in place that help to transfer important functions to a few specialists with the needed background so that you will not face the same problem.

7. Inefficient Management

Inefficient management of an IT project can lead to loss of money and a failure to deliver the desired result within a set timeframe. This is another concern that makes some companies doubt the viability of application outsourcing.

Solution: It is important to conduct thorough research of the company you want to hire for software development. If you go to trusted companies with highly professional teams, this risk will not not necessarily come to fruition.

8. Risks with Data Security

Another key concern when choosing an IT outsourcing provider is data security, which may negatively impact the reputation of, and result in multi-million-dollar penalties for a company. With ever-changing data regulations, businesses should choose a vendor wisely.

Solutions: It is important to pay attention to the established processes that prevent data loss, breaches, and privacy compromise if you do not want to deal with the consequences of these occurrences.

It is important to note that all risks connected with IT outsourcing can be mitigated with the right vendor. Businesses should choose a reliable company that develops web and mobile applications, operates in different countries, and has a crystal-clear reputation in the market of information technology outsourcing.

Overall, the pros and cons of outsourcing IT are not equal, as the former clearly outweighs the latter.

Best IT Outsourcing Companies in 2022

Choosing a proper vendor is not a trivial task when there is such a diverse array of IT companies with different specifics and locations.

We analyzed 1,000+ teams and looked at factors like price-quality ratio, technology diversity, years on the market, case studies available, and successfully launched projects.

This approach has allowed us to make the most packed list of IT outsourcing teams on the market.

1. MLSDev

MLSDev Logo
MLSDev Logo

Details
Services Custom Software Development, Web Application Development, Mobile App Development, Dedicated Development Teams, IT Staff Augmentation, Business Analysis, UI/UX Design, Software Testing & Quality Assurance, DevOps
Key Clients McDonald's, Gopuff, ESPN, ArtStation, Idana
Offices US, Poland, Ukraine
Founded 2009
Size ~100 employees
Rates $25 - $50 / hr
Industry Expertise Healthcare, On-demand Economy, Social Networking, eCommerce, FinTech, Streaming Platforms, etc.
Awards Clutch review - 4.6 (31 reviews)
Top B2B App Developers in Ukraine, Top 10 Mobile App Development Companies from Eastern Europe 2018,Top B2B Companies Global 2018, Top App Developers Ukraine 2018, Top Web Developers Ukraine 2018
Tech Stack Swift, Kotlin, Ruby on Rails, Node.js, Go, HTML5, CSS3, Vue.js, AngularJS, React, MySQL, PostgreSQL, Redis, Flutter, React Native, GCP, AWS, Docker, Ansible

MLSDev is one of the best IT outsourcing companies from Eastern Europe; specifically from Ukraine. The team employs only the top 1% of tech experts available on the market. MLSDev works according to proven tech standards with 50-70% development price savings compared to IT outsourcing companies from the USA.

Portfolio: MLSDev has created 200+ projects for clients globally. MLSDev is directed to provide a tech solution and resolve the business issues of the client. The applied software development process consists of an elaboration phase, detailed planning, and high-quality delivery operations.

Contact MLSDev to create the next great IT product

Get in touch with MLSDev to get free advice on project planning and completion process with an approximate cost and timeline estimate.

Get your free consultation & project quote

2. TechMD

TechMD Logo
TechMD Logo

Details
Services Cloud Integration & Migration, Strategic Consulting and CIO Services, Network Security and Data Protection, User Education and Training, Dedicated Help Desk and On-Site Support, 24/7 Monitoring
Key Clients Newport Pacific Capital, CASA of Los Angeles, Delta Pipeline
Offices South Coast Metro, CA/ USA
Founded 2003
Size 63 employees
Rates $150 – $199 / hr
Industry Expertise Any specialization for architecture planning and setup
Awards Clutch review - 4.9 (33 reviews)
2020 Winner MSP 501, Inc 5000 Fastest-Growing Private Companies, SSAE-19 Certified IT services provider, Top Cybersecurity Consultant in 2021, Top IT Services Firm in 2021

TechMD is one of the best IT outsourcing companies that has won multiple awards. The company is an SSAE-19 Certified IT services provider that specializes in cloud solutions, infrastructure management, and cyber consultations.

Portfolio: The team has worked with over 7,600 clients around the world and ensures that small and mid-sized organizations have top productivity, proper scalability, and high-end security for their infrastructure.

Reach out to TechMD for more information in terms of architecture planning and setup.

3. EPAM Systems

EPAM Logo
EPAM Logo

Details
Services Brand & Marketing, Experience Transformation, Organizational Enablement, Platform & Product Strategy, Enterprise Technology & Operations Transformation, Data & AI-Powered Transformation, Agile App Development, Cloud Services, Cybersecurity, Data & Analytics, Smart Connected Devices, Quality Assurance & Test Automation, VR & AR, Architecture Solutions, Enterprise IoT, Design, etc.
Key Clients more than 280 Forbes Global 2000 customers
Offices USA, China
Founded 1993
Size ~1,500+ employees
Rates $100 – $149 / hr
Industry Expertise Diverse, mostly Business Services, Finance, Tourism, Consumer Goods, High-Tech, Media & Entertainment, Life Sciences, Healthcare
Awards Clutch review - 5.0 (1 review)
25 Fastest-Growing Public Companies in Technology by Forbes, Fortune magazine's "100 Fastest Growing Companies" list of 2019 and 2020
Tech Stack Swift, Kotlin, Ruby on Rails, Node.js, Go, HTML5, CSS3, Vue.js, AngularJS, React, MySQL, PostgreSQL, Redis, Flutter, React Native, GCP, AWS, Docker, Ansible

EPAM Systems is one of the oldest IT companies offering product development, digital engineering, top-notch digital product design, and working with Agile methodology. EPAM is a globally-distributed company that has had its roots in Belarus since 1993.

Portfolio: The company has delivered solutions to clients from 35+ countries from the mid-size and enterprise sectors. The company uses a unique culture and well-settled engineering flow for continuous high-quality delivery.

You can contact EPAM for more information on building large-scale projects.

4. Sphinx Solutions

Sphinx Solutions Logo
Sphinx Solutions Logo

Details
Services Mobile App Development, Web App Development, Custom Software Creation, E-commerce Solutions, Staff Augmentation, Dedicated Dev Center, Business Intelligence, Blockchain, Chatbots, UX/UI Design, Launch ICO Services & Development, Amazon Alexa Skill Development
Key Clients Disney, Nissan and Daiichi Sankyo, Vivino, Dahmakan, Seekmi
Offices Pune/India, USA
Founded 2010
Size ~80+ employees
Rates $25 – $49 / hr
Industry Expertise Diverse
Awards Clutch review - 4.5 (2 reviews)
Clutch Top Developers Company in India 2019, GoodFirms Top Development Compnay, Indian 500 Most Promising IT Company, Top B2B Company on Clutch 2019, ISO 9001: 2015 company
Tech Stack Spring Boot, AWS, AngularJS, Fabric, Swift/Objective-C, Kotlin/ Java, PHP, Magento, Ruby on Rails, .NET, Java, Perl, MySQL, and more.

Sphinx Solutions is one of the best IT outsourcing companies offering app and mobile app development globally. The company is based in India, has an office in the USA, and has created award-winning applications listed in the top 10/100 best apps on Google Play Store and iTunes - all of which generate revenue for their clients.

Portfolio: The company has implemented over 500 IT solutions in distinct domains and tech specializations, including Android, iOS apps, websites, and custom websites. As well, the team creates Blockchain-based projects and offers ICO services.

Contact Sphinx Solutions for details on creating the next successful application.

5. Intellectsoft

Intellectsoft Logo
Intellectsoft Logo

Details
Services Technology Strategy Consulting, UX/UI Design and Ideation, Full-stack Mobile, Web, and Desktop Application Development, Turn-key IoT System Engineering, Re-engineering of Legacy Products & Applications, Process Consulting (QA automation, DevOps, CI/CD)
Key Clients Mitsubishi, Fleet Nurse, Harley-Davidson, Jaguar Land Rover, Eurostar, E&Y, Universal Pictures, Pocket Dentist, XMed, Holmenkollen, Sumitomo
Offices USA, UK
Founded 2007
Size ~50 - 249 employees
Rates $50 – $99 / hr
Industry Expertise Diverse: Medical, Financial Services, Utilities, Retail & eCommerce, Sports, Travel & Hospitality, Insurance, Construction
Awards Clutch review - 4.9 (36 reviews)
B2B companies in 2021 by Clutch, Ranked No. 244 by Inc. Magazine’s Annual, Inc. 5000 Regionals 2021
Tech Stack Swift, Objective-C, C++, C#, JavaScript, Titanium, React Native, Unity 3D, Phonegap, Java, Kotlin, JavaScript, SQLite, Realm, Redis, MongoDB, Elasticsearch, Microsoft Azure, etc.

Intellectsoft provides full-cycle software development services focusing on digital transformation and accelerating tech innovations for businesses of any size. The team is a highly-ranked IT provider and a global leader in software development.

Portfolio: The company has worked with clients and Fortune 500 companies globally including Jaguar, Guinness, Eurostar, etc.

Reach out to Intellectsoft once you require digital transformation or the improvement of your existing product.

IT Outsourcing: Easy 3-Step Process & Checklist

Even though IT outsourcing may seem like a daunting task, a company can easily ensure that everything will run smoothly and that a vendor will deliver the needed results in accordance with your requirements.

IT Outsourcing in 3 Easy Steps
IT Outsourcing in 3 Easy Steps

Below, you will find a short checklist that will help you choose the best technology outsourcing company.

1.Define your Exact Goals

Having a clear understanding of what your company wants to achieve with IT outsourcing will help you determine what type of help you need and what skills are required to bring your project to life. You need to have answers to the following questions:

  • What is your product concept?
  • What timeline do you need to adhere to?
  • What is the budget you are ready to spend on web or mobile app development?
  • What expertise do you need to bring it to life?
  • What is the size of the team you want to hire?

2. Shortlist Potential Service Providers

There are thousands of companies providing IT services and outsourcing and you need to choose the best fit, as the future of your project directly depends on your choice.

Create a shortlist of potential service providers. You can rely on word of mouth and choose a provider that other companies in your field have chosen. Alternatively, you can use online resources such as Clutch, The Manifest, GoodFirms, etc, for reviews from other companies.

The following questions will help you narrow the list down to 2-4 companies:

  • Do companies follow the latest IT outsourcing trends?
  • Are they among the top providers in their field of expertise?
  • What is their reputation and ratio of positive vs. negative reviews?

3. Evaluate your Prospects

Now that you have narrowed down the list of companies to 2-4, you need to further evaluate each of them. The following list will help you perform a thorough investigation and make a final decision regarding your software outsourcing company.

1. Background Checks

This stage implies the collection of basic information regarding a company you may be considering for technology outsourcing. Find the answers to the following questions:

  • How long has the IT outsourcing vendor been on the market?
  • What is the main specialization of the company?
  • What expertise the IT outsourcing company can offer to your business?
  • Does the portfolio of delivered projects contain cases similar to yours?
  • What is the pricing model and how does it align with your budget?

2. Client List and References

A review of the client list and references are other important steps in the evaluation process. During this stage, you need to find answers to the following questions:

  • How many projects has the company completed?
  • With which companies does the IT outsourcing provider mainly work?
  • Which countries and regions does the vendor operate in?
  • Has the company handled an IT outsourcing project similar to yours?
  • Which references have former clients provided?

3. Capabilities of an IT Outsourcing Company

At this stage in the evaluation process it is important to look deeper into the operations of prospective vendors. You need to have a comprehensive idea of their company and what skills and technologies they can offer you.

Here is what you need to find out:

  • What is the size and structure of the company?
  • Which skills do the professionals there have?
  • What services does the vendor provide?
  • How flexible is the company?

4. Company Culture and Talents

As communication plays a major role in the future success of your project, you need to make sure that differences in language and culture will not become a roadblock on the way to the desired results.

The following questions should be answered at this stage:

  • Are there any major cultural differences between your company and prospective vendor?
  • What languages do the employees at your company know and what languages does the IT outsourcing service provider know?
  • Is there a process in place that regulates all communications?

Do you want to learn the right way to outsource web development?

Check out the article Outsource Web Development Wisely: Useful Tips, which will provide you with a few extra tips on how to choose the best vendor.

5. Processes and Tools

Internal processes in an IT outsourcing company directly influence the process of web and mobile project development. Find out as much about the behind-the-scenes life inside the company as possible and answer the questions below:

  • What are the management regulations inside the company?
  • What tools does the vendor use for communication and are they suitable for you?
  • What software development approaches does the company adhere to?
  • How does the IT outsourcing team log hours during the development process?

6. IT Outsourcing Quality Standards

Before you outsource the development process to a third-party, you need to make sure that the company you consider choosing as your service provider can guarantee the quality of their work.

To find this out, you can use the following checklist with questions:

  • How is the quality of code assessed?
  • What certifications does the team have?
  • How does the company ensure a high quality of code?
  • Does the vendor have a code review process in place?

7. Legal and Security Moments of Outsourcing IT

You also need to evaluate the prospect from a business point of view. As they may deal with your client’s sensitive data, you need to make sure that your contractor will not violate any laws and regulations.

When you finish the evaluation process, you need to have the following questions answered:

  • What agreements does the company offer to sign?
  • What types of open source software and instruments will be used during the development process?
  • Is the company GDPR compliant?
  • Do the employees of the vendor sign an NDA?

By the time you have finished this assessment, you will probably already know which IT outsourcing vendor to choose.

Bottom Line: Consider IT Outsourcing to Ukraine

Eastern Europe, and Ukraine in particular, is widely known as the primary destination for many companies looking for high-quality technology outsourcing providers. Ukraine IT outsourcing attracts companies with favorable rates, experienced teams, the professionalism of developers, the pool of talent, high quality tech education, cultural similarities, and much more.

Below you can find some general recommendations for IT outsourcing that will ensure that everything will run smoothly:

  1. Identify your business and technical goals as early as possible
  2. Plan the project budget and timeline considerations way in advance
  3. Make sure that the vendor utilizes adequate project management processes and development tools
  4. Set up the payment process clearly
  5. Sign NDAs and clear agreements
  6. Plan to be involved in the development process greatly, especially in the beginning

When you give your project up for IT outsourcing, you can start with its smaller version and, based on the results your vendor provides, later move to the development of a full-fledged solution. This way, you will mitigate risks and if the results are not up to your expectations, you can switch your technology outsourcing company for another one.

Do you want to hire an IT outsourcing company that will bring your idea to life?

MLSDev has proved itself as a leader in the IT outsourcing market. We use a modern stack of technologies and tools to deliver great results. Feel free to reach out for a consultation regarding web and mobile app development services.

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Frequently Asked Questions:

What are the current statistics for outsourcing IT operations?
The Spending and Staffing Benchmarks study for 2018-2019 found that larger companies had increased spending on nearshore software outsourcing from 6.3% to 8.7%, while medium companies increased their investment into IT outsourcing from 4.7% to 6.5%. These days, IT outsourcing has become a common practice among companies from all over the world with the global market size of $85.6 billion in 2018.
Why is IT outsourcing so popular?
IT outsourcing is the practice of sub-contracting or “farming out” some tasks related to information technologies. Companies engage external resources to perform certain operations, which helps them streamline their internal workflow, and save time and money.
What are the most popular IT outsourcing destinations and their rates?
The most popular IT outsourcing destinations are Eastern Europe, Latin America, and Asia. The rates for the technology outsourcing services on average range from $30 to $50 an hour. Asia has a bit lower rates of $15 to $40$ per hour.
Why Ukraine is the best option for IT outsourcing?
Ukraine has a great pool of talented tech engineers, and this number is growing annually. Moreover, the provision of outsourcing services is not new, as there are experts that have been working for 10+ years in this field. The hourly rate for an engineer of the top expertise is around $30-$50 an hour, meaning you could save anywhere from 20% to 60% of your budget.