Working With an IT Vendor: Where to Find and How to Select a Reliable Provider

We are starting a new series of articles dedicated to IT vendor management. We know that this question remains critical for many business owners and, as a software provider, we understand the main concerns that a client might face when making a decision. 

The first article in this series will walk you through the process of finding, shortlisting, and selecting an IT vendor to work on your software project. We hope you’ll find this information useful and it will help you make an informed decision.

Where to look for IT vendors?

In order to shortlist vendors, you’ll need to find them first and, contrary to a common misconception, it’s not simple. You’ll need to dedicate a certain amount of time and effort to go through available options and make sure that selected vendors align with your business goals and required standards. Here is a quick checklist that might help you.

Do not just Google them

Of course, it’s tempting to type “best US IT companies” and enjoy search results but this approach has several flaws.

First, chances are high you’ll come across companies that got on top because of investing too much in the advertisement. While there is nothing wrong with self-advertisement, you can never be sure about the quality of services in this case since advertising is the primary reason behind the company’s top position.

Second, google search is great for gathering general information – but you’ll want a bit more expertise and reliability in case of choosing an IT vendor. This leads us to the next point.

Check recommendations platforms

There are many recommendation platforms like iTRate, Tech Behemoths, Tech Reviewer, or Selected Firms that provide a detailed overview of software development companies based on the feedback collected from real clients. These platforms also sort companies by their areas of focus (i.e. web development, mobile development, IoT) so it’s easy to go through the selected list and see which companies have the best scores.

Ask your network for recommendations

Last but not least is the word of mouth aka personal recommendations from your network. We highly advise addressing your business partners or colleagues and asking them about their own experience with different IT vendors. In this way, you’ll be able to learn about possible hidden rocks, little things to pay attention to, and the level of trust towards a specific company.

Screening process: how to shortlist IT vendors

Now that you know how and where to look for software providers, it’s time to talk about the selection criteria. We provide these recommendations based on our own experience of working with international clients from different domains and we hope they will help you as well. As a result of the screening process, you will most likely have a shortlist consisting of 3-5 companies to choose from.

Clearly define your goals and prepare a comprehensive project description

Before selecting the vendors, you’ll have to do a bit of a preliminary job aka defining your business goals and preparing a detailed project description. You’ll use this information as a reference to see whether a company corresponds to your requirements and can efficiently meet them. Plus, a company needs to know what you have in mind and what kind of project you need so a project description is an absolute must.

Check out Clutch for reviews

If you want to go into more detail about the company’s projects and methods of work, Clutch is a great place to find them. In addition to ratings, Clutch also posts detailed reviews from the clients that usually describe how a company works, the pros and cons of its approach, transparency of communication, and other factors that might impact your decision. As well, these reviews often describe projects so you can immediately see whether a company has experience in the needed domain.

Look at the vendor’s size

One of the factors that you need to look at is the size of the vendor’s company. We highly recommend going for a company that equals yours in terms of size and here is why.

If an IT vendor is much smaller than you, chances are high they won’t be able to provide a sufficient level of services, won’t be able to scale up, and they might simply lack the needed resources. If a vendor is much bigger than you, they might put you at the bottom of their list and assign “low priority” to your project. Hence, try looking for a vendor with a team size similar to yours.

Pay attention to vendor’s location

When it comes to software development, a vendor’s location actually plays a big role. First of all, it’s the question of timezone and convenience of mutual work. If a vendor is in the same timezone as you are, it will be much easier to communicate and close any appearing gaps. Second, you’ll want your vendor’s team to sufficiently speak the language of choice (in most cases, English) – once again, it’s important to keep up transparent communication and avoid misunderstandings. There is also such thing as the compatibility of mentality: if you and your vendor have opposite (polar) mentalities, it may cause communication issues.

A vendor’s location also plays an important role if you plan to take frequent business trips to meet the team and discuss the project in person. If a flight takes only a few hours and you can arrange a meeting with the team at any convenient time, it instantly takes communication to the next level. 

Why do we pay so much attention to communication? Simply because the efficiency of communication directly impacts how well a team will understand your vision and requirements. This, in turn, will impact whether a project will be delivered within set deadlines and in correspondence with your expectations.

Look at the price tiers of different vendors

Another factor that helps choose an IT vendor is a price tier. You’ll have to decide what’s the most comfortable price range for you and whether vendors within this range provide sufficient quality of services or you need to look at a different tier.

As well, we recommend not focusing on one price tier only but selecting two and comparing the quality of provided services. When it comes to software development, it’s often safer to go with a more expensive option since the provider sets up high rates for a valid reason. Also, the price range will depend on the following factors:

• Vendor’s location: different countries have drastically different rates;
• Tech stack: a company may focus on technologies that are way too niche and you don’t really need them;
• Services included in a rate: examples are QA/PM hours. 

Check vendor’s expertise, tech stack, and business domain

Last but not least – check how well an IT vendor suits you by the following criteria:

• Experience within the needed business domain: does the vendor know the specificity of the industry and what will be the best solution?
• Tech stack: does the vendor work with the technologies that you want to see in your project?
• Portfolio: has the vendor already worked on similar projects and how successful were they?

It’s always a big advantage if a vendor already has experience with projects similar to yours. First, it might mean that a vendor already has several ready components that can be used for your project (for the sake of development speed). Second, it means that a vendor can provide additional business value by advising on the best way to realize your idea or implement certain features.

The presale stage: selecting a perfect vendor

You will now be entering the presale stage where lots of communication will be happening. Let us walk you through its main stages.

Get in touch and introduce yourself

The first obvious step you’ll need to take is getting in touch with vendors and introducing yourself and your project. You can get in touch by email or by phone call (or by any other preferred method of communication). Be prepared to talk about your business and your project – here is where project description comes in handy. In order to propose the best solution, a vendor needs to understand what your business goals are and what exactly you need so project introduction is critical at this stage.

Observe how the communication process goes

We’ve already stated that communication is the cornerstone of IT vendor management. It’s critical for successful project development as it helps avoid missed deadlines and a wrong understanding of project requirements. Hence, when communicating with a vendor, pay attention to how the communication goes: whether it’s transparent enough, whether it’s comfortable for you and whether a vendor clearly expresses his ideas and thoughts. 

Request recommendations from past clients

If possible, it’s highly recommended to request references from the vendor’s past clients and talk to them about their experience of working with this vendor. In this way, you’ll learn about the way a vendor approaches software projects, possible hidden rocks, flaws, and other important things that should be considered in advance.

Check the company’s current status

An important thing to look at is the current status of the vendor in terms of:

• Retention rate
• Financial status
• Legal disputes

Let us elaborate on these indicators a bit.

Retention rate indicates the percentage of employees who remain in a company for a long period of time. Naturally, a low retention rate indicates that employees are satisfied with working conditions which, in turn, means that an employer is interested in retaining employees and business partners for a long period of time.

Financial status shows how well a company is doing and whether there is any risk of bankruptcy. It goes without saying that it’s not advisable to start a mutual project with an unreliable vendor.

Last but not least – check whether the company is going through any legal disputes. This will also save you from lots of issues and risks in the future and will add to the vendor’s trustworthiness.

Ask questions to learn about the company’s interests and best practices

In order to ensure smooth collaboration, you not only need to introduce yourself – but you also need to ask questions to learn more about the vendor. Ask how a company prefers to work with its clients (what does the working process look like?), what best practices the company follows in terms of its partnerships, and what their perfect client looks like. 

As well, it’s always an advantage when a Project Manager or a Business Analyst (or both)from the vendor’s side are present during the meetings. These specialists are usually responsible for analyzing the project, gathering and clarifying requirements, and ensuring that both sides (the client and the team) understand each other. From their side, a PM or a BA can tell you about the company and its methods of work in detail, walk you through the future development process, and answer any questions related to the project (i.e. budget, deadlines, or technical aspects). 

Expert Opinion

The process of choosing an IT vendor hides lots of significant nuances. For example, certain countries are well known for certain expertise: Eastern Europe is the home of brilliant engineers-mathematicians. Some clients look for specific requirements, i.e. a team has to speak in their native language. And for companies within a specific industry like finances, it might be challenging to hire an international vendor due to local regulations regarding sensitive data processing, management, and storage.

Therefore, a client first has to analyze all these factors and only then begin the process of shortlisting potential IT vendors. A software provider also has to understand all these things in order to be versatile and provide the needed quality of services without sacrificing a single client’s requirement.

Head of Sales at SoftTeco

Maksim Delendik