How to create a successful IT outsourcing contract

Aleksandra Rajczyk

You have selected an IT outsourcing company for your project. You’ve come to an agreement about what the company is supposed to do for you. Now it’s time to sign the contract. Before you seal the deal, have a look at this practitioner’s guide to creating an outsourcing agreement that won’t cause you anxiety, additional costs, or the feeling that you’re wasting your time. 

Nobody likes paperwork. Perhaps even fewer people enjoy talking about the legal side of the business. Nevertheless, these two things are an essential part of every venture. Below you will find a few aspects that should be a part of your IT outsourcing contract. Please keep in mind that this is just the tip of the iceberg. 

Understand (fully!) what you’re asking for

There are different types of outsourcing contracts. The biggest challenge, especially for non-tech entrepreneurs, is to actually understand and specify what they want to buy. Without that, it’s extremely hard for the contractor to provide you with an accurate estimation. Because of this, you may find yourself in a place where your contractor asks you all the time for additional payments – it’s not because they want to rob you! No one can read your mind: if you haven’t specified in the contract what features you expect to see, don’t blow a fuse when you find out it’ll cost you extra. 

To prevent this problem, you need to really own the role of Product Owner and make a deep dive into the technology you want to get out of the IT outsourcing services. If you’re not comfortable with that kind of responsibility, search for a tech partner or ask your contractor to provide you with one – BinarApps has done that for a few non-technical clients. To further prevent any confusion, specify the outsourced team’s KPIs (Key Performance Indicators). Then you’ll be able to name every single thing you’re asking for in the contract and see how much it will cost (and that’s a great starting point for price negotiation). 

Demand that deadlines are met… and do the same

It’s understandable that you want your outsourcing company to deliver results on time. Many first-time contractors at BinarApps pay special attention to this because we know we’re going to pay a fee if we miss a deadline. We’re open to such regulations. However, in return, you’ll have to swallow a bitter pill and admit that sometimes the reason behind delays is on your side. If you’re not invested in the project, don’t respond to emails, don’t show up on meetings, or provide feedback on time, the outsourced team will have a hard time keeping deadlines. Instead of fixating on exact dates, leave a little room for everyone to breathe. Fortunately, the Agile framework that we specialize in is a great tool for organizing work with plenty of space for discussion between deadlines. 

Don’t neglect security issues

A data breach is a big hit for any company. Don’t ever hesitate to ask about the exact ways your IT outsourcing partner makes sure your project is safe. This covers not only cyberattacks, but also the protection of intellectual property. Make sure you know exactly how many people from the contractor’s team will receive access to your project’s sensitive data. If there are passwords involved, appoint one person responsible for their distribution. 

Define when the cooperation is going to end

An often overlooked but important step. Even long-term contracts should have an expiration date. This doesn’t have to mean the end of working together – if you’re happy with your contractor, you can always renegotiate the contract or simply extend its duration. 

Hire a lawyer

We mean it. Reducing project costs by not hiring legal professionals happens way too often. Don’t hesitate to spend money on a lawyer who will take a look at the outsourcing contract agreement before you sign it. That’s an investment, not a caprice. 

What else?

BinarApps has been providing various software engineering solutions for over 6 years. Located in Poland, we have a comprehensive knowledge of how to deliver outsourcing services backed up by relevant experience. Get in touch and see what we can do for you!

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