The Dao of Outsourcing

This post discusses best practices for evaluating financial stability of an offshore software outsourcing company.  I will focus on evaluation of midsized vendors which are not public.  These  are best practices for choosing vendors, based on my experience with Chinese software outsourcing companies.

There are advantages choosing small or midsized software outsourcing vendors along with increased risk.  One risk which is difficult to evaluate is the financial stability of the vendor.  Outsourcing companies under financial pressure can endanger the buyers offshore initiative if they become interested in clients IP for increasing revenue, change business strategies, or shut down operations.  When selecting an outsourcing company the buyer needs to consider internal and external pressures on the vendor and cross check any information provided during due diligence.  This will save significant time in the long run and increase the likelihood of a successful offshore outsourcing initiative.

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