Updated: Jul 12
Yes, there is also the wrong way.
Building a startup business brings along many important decisions, many failures and wrong steps before you learn how to walk properly in the industry.
Maybe you have a unique business idea, enough savings or a credit you took to make your dream come true.
Dreaming and imagining the perfect scenario is great but we are here to walk you through the real business situations.
You can’t do everything alone. Sooner or later you will need help, people who are in charge of different tasks that you are not able to do because of lack of time, lack of professional knowledge etc.
Nowadays, in the digital world building software is an essential part of many businesses. And this is usually the part where many companies require a professional team to develop their IT solutions or products. Many have their in-house teams, but others are just getting started and this is why you are here, right?
(To learn more about outsourcing companies, we recommend you to read about benefits and challenges of the outsourcing process.)
When you decide to search for a software outsourcing company or a freelancer, you will need to deal with the selection and hiring process of an IT contractor. This can quickly become complicated and overwhelming.
Don’t worry! We are here to help you.
We have gone through what you are going through now. We want to share our knowledge and experience to help you succeed and achieve your goal.
Finding and hiring the right IT solutions company for your business is a hard task that comes with many risks.
We would like to guide you through the hiring of IT Service Providers so you can have a successful hiring experience without pressure and stress.
The following steps will help you avoid wasting time or regretting your choice:
1. Make a list of all the desired functionalities as detailed as possible
Make sure you know exactly how you want your product or solution to behave. Making a detailed list of requirements and functionalities will definitely help you later in the hiring process to see clearly which IT contractor is able to meet your requirements. It helps you to discard teams or companies who are not qualified enough to fulfill what you require. It is also very important for you to know what skills your project requires to hire the right person for it. Depending on your project, maybe you need to look for web developers, or mobile app developers, or IoT developers, or something else. You have to make it clear from the beginning.
2. Set an objective release date
This is tricky because it’s not always easy to consider all implications of building a software product. Just like with everything else, there are tasks that require some time to be completed, and there are others which depend on the previous ones to be concluded before work can start.
A good example of this would be the set up phase of a project. This is often ignored and not considered in estimates but it is essential. Depending on the particular case, a set up project may take anywhere from a few hours to several days. And without this initial setup - where the environments are configured, maybe some servers are put in place, accounts are created, access is granted etc. - none of the work related to your product’s functionality can begin.
Setting a fixed date on which your project or product is due to become available for the public is an important step in the hiring process. It will help you understand how long you need to support development without generating any sales. Obviously, how can you sell something if you don’t have it (...with investors of course, but that’s a topic for another post).
Depending on your budget your deadline can be extended - giving room for some experimentation - or it can be tight with little margin for error. Whichever the case, your prospects for becoming your IT service provider should be aware and clear on said deadline and hopefully they can all find ways to meet it.
3. Define acceptance criteria for agencies
When you start your search for an outsourcing provider, you can feel overwhelmed very easily by the huge amount of IT companies on the market.
This step is crucial in the hiring process. Selecting the right contractor is one of the most difficult tasks. Make sure you know what you expect from your potential business partner and define the criteria with clarity.
References, experience with past projects, technology stack, location, price, size, etc. … These are the central criteria you need to consider to find the perfect match.
4. Research between 3 and 5 possible agencies
Selecting a contractor is a huge responsibility which only becomes more complicated as you engage with more contractors. Reading through nearly a dozen proposals from possible outsourcing agencies can be frustrating and time consuming.
Take some time to research options but use your criteria to limit the number of agencies you invite in your selection process to between 3 and 5, not more. It is a perfect amount to help you keep a better overview and stay focused. Remember to keep it simple.
5. Prepare an Non-Disclosure Agreement
Businesses with a new and profitable idea can be successful only if they keep their secrets and plans undercover. Before you invite the top agencies to make a proposal for your project, make sure you prepare a non-disclosure agreement (NDA). An NDA is a legal document between two parties agreeing what information is considered confidential and how each party may or may not use that information. It also includes the penalties for infringement, etc. Having a signed NDA protects sensitive information and helps prevent stealing an idea. Without one, it can be difficult to prove that an idea has been stolen should the case occur.
6. Choose the top 3 agencies and invite them to make a proposal for your project
You could invite all 5 finalists to your bid if you like, but really you should pick the top 3 only in order to keep your selection process simple. At this stage we recommend you to narrow down your list of candidates to three. Deciding between three potential business partners is much easier and clearer than having to pick from 5.
Now send to each of them an invitation to your Request for Proposal (RFP) and ask them to sign your NDA. Set a deadline for accepting the invitation and sending you the signed NDA. After you have received confirmation from your prospects that they will participate in the proposal process, send them your RFP.
An RFP is a document issued by a hiring company (that’s you) that describes in detail information about the project (see steps 1, 2 and 3). It also covers terms and conditions of a contract, budget and other specifications of the project that may be relevant.
The process should have a deadline for submitting the proposal - usually 5 to 10 days after the acceptance deadline and the initial briefing meeting you hold for all of them which will kickoff the project.
7. Analyze the proposals
After receiving all proposals it is time for you to analyse. This is the last and the most important stage of the hiring process, so don’t rush it. Take your time and look into the background of every candidate. Proposals of various companies give you different perspectives which help you select the most suitable contractor for your project. Review the organizing of each document, portfolio and references from previous customers carefully. Very important is to compare prices, especially if the agencies are located in various countries. Take in consideration the quality-price ratio. Lower prices are attractive but not always the best choice. Usually the exact opposite. You can come across many bugs, poor support or unprofessional behavior.
On the other hand, more expensive doesn’t always mean better quality. Make sure to understand the tradeoffs and find the right balance for you.
8. Pick an IT provider for you
At this point you should have enough information to make an educated decision regarding your IT provider. After all, it’s not like picking a cookie from a box of assortment. Hopefully you get it right the first time and you will have a long and satisfying relationship with the IT agency you picked.
Unfortunately, there is no silver bullet or 100% guarantee you have made the right choice from the start, especially when you are engaging with a vendor you haven’t worked with before. So make sure you set some objectives early on and keep a close eye on their deliverables. Usually, you can tell if a vendor would likely not be able to deliver within budget and timeline if they start failing to meet objectives and milestones early in the process.
Should you be unfortunate enough to fall under that category, act quickly and cease work with that vendor. Invoke the escape clauses in your contract and rapidly move to the runner up from your selection process, hopefully they will be able to do a better job than your first choice.
If you have an idea or project you are looking to build, and you are in the process of looking for your trusted IT contractor, please contact Hristov Development for a consultation.