Software Partnerships: An outcome-driven approach to maximize investments in software outsourcing

Eduardo Lopez De Leon
Jul 24 · 7 min read

What’s the real meaning of a software partner and the opportunities that exist to make all relationships and projects successfully.

There’s a big gap between the necessities from current organizations regarding software development and the offering anyone can find in freelancing platforms. The world is changing, there’s no question about it, and since these changes will impact every industry and company, all leaders should be aware that digital strategies are going to be part of the daily operation for every business. Due to this fact, and some trends the 2020 pandemic has forced to happen, one evident trend is the decentralization of talent, seek a flexible workforce and operation, and maximize investments in every element of those digital strategies.

There’s a wide variety of platforms offering single talent, engineers and people to cover tasks and transaction is quite simple and straight-forward: you pay for the number of hours the talent will invest in your project or business. However, this not necessarily solves all potential challenges when someone is looking to smartly scale her workforce, depending on the challenges and complexities involved, even the type of industry a company is operating.

The need for better and capable talented people is imperative, and it is not enough to just say that someone knows how to code or design. These skills have just been another commodity available for anyone in the world. The current world demands people capable of wearing multiple hats, collaborate with other individuals, and produce valuable outcomes for whoever is the benefited entity of those efforts. When you analyze the challenges with such factors into consideration, finding the right individual becomes a monumental task, interpreted as multiple functions depending on the scarcity of expertise, the number of hours and recruiters involved within the sourcing process, and talent required for the final activity.

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When you think about business leaders and companies exploring new digital projects, one of the core aspects of success is being focused on their business and all strategic matters to really thrive in such a competitive world. When we talk about software outsourcing, (I really hate the word) I can feel something sour on my tongue, but the reality is that there’s too much potential still not being explored in outsourcing strategies and doing it correctly, with the new normal, there might be high calibered results.

Software Outsourcing: A leveraged business model that allows any business flexible use of the most appropriate resources from external software services companies or IT vendors for a particular software requirement, function or project.

I have seen this on my own. I started in the software services business and worked with many organizations — from solo entrepreneurs, 2-pizza-size teams, startups, scale-ups, and also, Fortune 500s. Challenges vary and depend on the strategy, pace, and necessities of each organization. The nature is pretty different, so adaptability becomes crucial with a VUCA type of world. Even more, scaling the hiring and recruiting efforts, considering the company culture in every evaluation of each individual, thinking on a way to scale geographically and seizing where is better because of the conditions of that region, just to mention a few, is a hard job for anyone willing to really focus on growing and impacting as organizations. To be honest, not all of the projects we have developed with those organizations have been successful, and there are plenty of lessons learned that I always try to share, but when I think about the most benefited ones, those are the experiences I would like to share and scale as much as possible. That’s when the relationship between a Company and a software services vendor, becomes a partnership.

A full alignment in terms of cultures, expectations, and clarity about the outcomes to pursue, become lasting relationships that can make both organizations grow and thrive. That’s the opportunity, mix and match the best of both sides and explode in the best sense possible all potential that can be seen from those relationships. Researching on the web is impressive to see that almost 67% of software vendor relationships end in M&A transactions. It is interesting to know that saving costs is not the most important factor for organizations nowadays. With the fast evolution of industries, all companies are seeking to acquire new capabilities, fortify current competencies, upskilling their workforce, and extend their bandwidth so companies can smartly confront all challenges they are facing.

Comparing this model of engagement with an employee-freelancer(s) schema, the advantages can be plenty. Just to mention a few from the client standpoint:

  • Cost-benefit: The main factor considered when deciding to outsource. Adding all other benefits there should be a cost incentive and value-added that enables the decision to work with a partner a feasible opportunity.
  • Accountability delegation: Selecting qualified software partners means they will own a broader involvement in the project or requirements to be worked. This is part of the pieces that will allow decision-makers on the client-side to be focused on their core functions.
  • Know-how acquisition: Selecting a specialized partner will follow a process and practices that have been perfecting throughout multiple engagements, retaining value and packing time invested into a particular engagement, where the client can be benefited by acknowledging the steps followed, practices and even tools they follow to perform the work.
  • Accessibility to costly expertise: Part of the services you should acquire is the cumulative knowledge not only in software and technology but also in specific solutions, infrastructure, which is a compendium of many projects and experiences the software company has encounter. Some times these roles have strategic positions within this software companies, making them valuable and desirable in any engineering team.
  • Organizational flexibility and responsiveness: Having an internal team and talent not always aligns with the market needs and demands, requiring any business to scale or reduce on a demand-basis. Additionally, counting on software partners will allow making the scalability process easier, delegating the possibility of extending on top of their infrastructure the required talent and resources.
  • Operational resilience and scalability: In the case of having multiple partners, the resilience is evident, having multiple companies to distribute the workload and reducing depending again on the pace of the business.
  • Legal protection: When dealing with freelancers or contractors there’s a chance they can miss the agreements and clauses. I have seen many industry leaders regretting hiring people that in the middle of the project have disappeared, or have faced challenges due to external factors outside of their hands. A company will most likely be able to handle those requirements within the legal framework used for the beginning of the engagement.
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Why do companies outsource? — Deloitte’s 2016 Global Outsourcing Survey

Behind all those aspects, is where the cost-saving factor predominates but is implicit when you sum all of the above. Imagine open risks such as slowing down a company’s time-to-market capacity due to the lack of hiring capabilities; that’s a missing opportunity cost factor. Thinking in future time horizons, beyond a transactional model between both parties (client-vendor), there are opportunities along the lines of collaborating with end-clients together, building business plans in conjunction, sharing higher risk stakes and even covering expenses and costs for a higher benefit in the current relationship, consolidating the partnership mindset.

There’s a lot of work to do when you want to achieve a successful relationship with a software partner, and presume real outcomes. It takes time to generate the real expectations from the company willing to outsource, prepare the engagement mature the relationship, multiple tests to de-risk any affecting elements, and most importantly, trust between both parties to scale the outcomes. It is basically the outsourcing lifecycle, and applies perfectly for any aspect of IT Outsourcing, especially, software development.

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Software Outsourcing Lifecycle Chart — by Think180

Ironically, in a discipline completely oriented to create digital and intangible value, but not able to trace every single digital effort, it is difficult to understand if we are really leveraging a relationship and start thinking as a partnership. 65% of companies don’t know how to define, measure and track innovation in software outsourcing agreements (Delloite), and 77% of B2B buyers in software services and vendors confess it was a complex and difficult process (Gartner).

An opportunity in sourcing, engaging, and developing this type of relationship for the benefit of any type and size of organizations both in the supply and demand side of the software services industry, is clear to me and we want to properly address it in a simple, fast and affordable way.

That’s when the traditional outsourcing process becomes a disruptive outsourcing science, and we want to take protagonism on it with DevShore.co — an experiment to start connecting interested clients with qualified and vetted software partners depending on their conditions, requirements and business objectives. It is just the beginning to start connecting all elements within the software outsourcing ecosystem and scale every potential benefit in a software partnership.

Eduardo Lopez De Leon

Written by

Co-founder at Icalia Labs. Software, my career. Ambivert, Progressive and Vehement. Bilingual [EN|ES].

Icalia Labs

Where we share with the world our experiences, knowledge or anything in general that can help others building tech products.

Eduardo Lopez De Leon

Written by

Co-founder at Icalia Labs. Software, my career. Ambivert, Progressive and Vehement. Bilingual [EN|ES].

Icalia Labs

Where we share with the world our experiences, knowledge or anything in general that can help others building tech products.

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