IT Outsourcing Vendor Selection Criteria: How to Choose the Perfect Partner

Selecting an IT outsourcing vendor? Let us make it easier for you.

At Digiteum, we’ve spent over 15 years helping clients like Lodgify, Rollomatic, and Oxford University Press achieve their tech goals. Through their experiences and our own, we’ve learned a lot about working with different IT vendors. Now, we want to share how to select a vendor for IT outsourcing without turning it into a year-long quest.

We’ll name some practical IT outsourcing vendor selection criteria (hint: it’s not all about price tags) and, more importantly, show you how to apply these criteria wisely.

Keep reading for actionable tips to make sure you land a partner who really gets you, your project, and your ultimate goals.

Before you choose the right software outsourcing vendor, let’s enlist some things you need to figure out.

Clearly outline your project’s purpose: the problems you want to solve, the goals you aim to achieve, your target audience, and other key details that explain why you’re building this product.

Your constraints are just as important as your goals. Time, budget, and other resources all shape how you’ll achieve your objectives. Understanding these limits upfront ensures the collaboration is tailored to your project.

Define your budget and how much flexibility you have for adjustments along the way.

Decide whether you want a nearshore, offshore, or hybrid model, and align this with your project goals.

Once you’ve got your starting point sorted, it’s time to work through a reliable IT outsourcing vendor selection checklist. In this article, we share insights from Katherine Lazarevich — Digiteum’s co-founder and a senior tech expert with 15+ years of experience — to bring you a practical, proven list of key factors to guide your decision.

This one’s a bit more nuanced than it seems. Here’s why.

Obviously, you want a tech partner who gets your industry. This is especially important for projects where you’re working with ready-made products that just need some tweaks — like customizing Shopify to fit your brand or integrating accounting software with your existing systems.

But here’s a pro tip Katherine often shares with clients building custom solutions: don’t get too hung up on industry-specific experience. You don’t need a partner who has delivered dozens of cookie-cutter projects in your domain. Your project is unique.

What you really need is a partner with broad tech and cross-industry expertise, plus a strong understanding of business. Such a partner will take the time to understand your needs and use their experience to find the best tech and design solutions for your goals.

Why? Because this kind of experience brings efficient solutions and fresh perspectives to your project. As a result, such a partner borrows trusted methods and innovative solutions from other industries to give your project a competitive edge.

After choosing the right IT outsourcing vendor, be prepared for regular meetings, feedback loops, updates, and back-and-forths. Basically, the IT tech vendor becomes a pretty big part of your business, so you’ll want that part to run smoothly.

That’s why it’s crucial to figure out if you’re a match in communication style and overall mindset. You’ll be spending a lot of time with your tech vendor, so being on the same page about how you handle workflows, problem-solving, and collaboration is a big deal.

Sure, you can document everything (and we’ve got a checklist on how to set up an outsourced nearshore team to help with that). But starting with shared values and a similar approach makes things way easier from day one.

We also highlight cultural alignment as a major perk of nearshore software development — check out our nearshoring software development guide for all the details.

One of the biggest differences between outsourcing and in-house hiring is the ability to scale your team up or down faster and more effectively. From our experience, we’ve brought in highly skilled experts when the project needed them most. These experts weren’t required from the start, but once the need arose, we delivered.

Once the work is done, you can easily scale down to a smaller team or even pause the partnership. All of this happens much faster and with less hassle compared to hiring in-house.

Here’s how to evaluate outsourcing companies for scalability and flexibility:

• Speed of delivering the right skills. Ask how quickly they can provide top talent. For example, at Digiteum, we’ve onboarded senior developers in under a month for clients — a pace that’s tough to achieve with local hiring.
• Attrition rates. Choose a vendor that retains its developers by investing in training, benefits, and support. This reduces the risk of disruptions caused by team changes. To stay prepared, set up clear processes and knowledge-sharing practices to keep the workflow smooth, even if someone leaves.
• Team adaptability. Outsourcing allows you to scale up or down without the headaches of layoffs, which is especially valuable in regions with strict labor laws like Europe or North America. Make sure they can handle these changes smoothly and with minimal impact on your project.

Let’s be real: with today’s job market, hiring an outsourcing vendor isn’t always cheaper than building an in-house team. But here’s the thing — it’s often more cost-efficient.

So here comes another criterion in the IT outsourcing vendor selection process: the value they can provide.

How do you assess it? Here’s what to look for:

• Check their portfolio for real impact. It’s not just about great design or clean code — look for measurable results. Did they boost efficiency or solve key challenges? For example, at Digiteum, we helped deliver a complex SaaS precision medicine platform in 8 months, built tools that helped a local photo lab become a leading U.S. photo printing service, and improved Oxford University Press’s data processing speed by 10x for their lexical data software development. When you partner with us, you’re not just hiring a team — you’re getting years of experience and proven strategies from projects of that scale.
• See how they can make the most of your budget. A good vendor knows how to stretch your budget without cutting corners — by optimizing scope, reusing components, prioritizing features, and more. For example, in a project for the DXRX precision medicine platform, we optimized data management and storage costs by gradually moving to more cost-effective tools. This allowed us to gradually reduce costs over time.
• Assess their proactive approach. A reliable partner takes time to understand your business, industry, and goals. Even if the domain is new to them, they’ll ask the right questions, provide thorough follow-ups, and continuously focus on your needs. Look for signs of genuine interest and proactive collaboration — that’s how you know they’re committed to delivering the best solution for your project.

So, while outsourcing might not always be the cheapest route, it’s often the smartest investment.

Today, there are plenty of ways to learn more about who you’ll be working with: Clutch reviews, client referrals, portfolios, and more.

As we mentioned earlier, it’s not always about matching a specific industry or tech stack. With custom development, the real value comes from a partner’s broad skillset and versatility.

That’s why we always recommend reaching out and having a conversation. In the end, booking a no-strings-attached call is pretty simple.

We’ve heard from clients who’ve experienced working with outsourcing providers only to realize halfway through that the work wasn’t what they needed.

There could be various reasons for that: unclear requests, insufficient skills, miscommunication, or something else. But regardless of the cause, it doesn’t ease the pain of spending tens — or sometimes hundreds — of thousands of dollars on a project gone wrong.

Here are some best practices to avoid that when selecting an IT outsourcing vendor:

• Be clear from the start about what you need. And start with getting specific with yourself. If you’re upgrading existing software, communicate that. If you have a bright idea, but it’s a bit vague, say that too. This transparency helps narrow down your options to vendors who can deliver exactly what you need.
• Be upfront about your constraints — whether it’s budget, deadlines, or other limitations. A reliable and responsible vendor will build their plan around your restrictions and deliver the product you need while considering your unique situation.

• Set clear deliverables. Start small — your first deliverable doesn’t need to be a full-featured product. In fact, it doesn’t even need to be coded. It could be documentation, a flowchart, or a design prototype. As you move forward with development sprints, ensure these deliverables are small enough to allow adjustments if things go off track.
• Arrange regular, frequent demos. Early on, frequent demos are crucial. They let you evaluate the quality and progress of the work and make adjustments as soon as needed. Once the vendor has built your trust, you can ease into less frequent updates.

Even though some industries, like healthcare, deal with particularly sensitive data, security and compliance are crucial for any project, no matter the industry.

So, how can you ensure no compliance or security issues arise?

• Again, check the vendor’s portfolio. If they’ve worked in sensitive fields like healthcare, chances are they know how to navigate potential pitfalls and deliver secure products for both you and your users.
• Make sure you have all the necessary documents in place. Think NDAs, data protection policies, certifications, and more. They will save you sleepless nights in the future.
• Set clear guidelines on what to do if something goes wrong. With cyberattacks and data breaches becoming more sophisticated, both you and your vendor must have clear policies in place and know how to respond. For example, you could outline steps for immediately isolating affected systems, notifying stakeholders, and implementing additional security measures.

One of the biggest fears clients have when choosing an IT vendor is losing track of progress, timelines — and waking up one day with a bill, a project unfinished, and unanswered questions.

This is a valid concern, and the key is to address it from the start with clear communication and transparency. This will save you peace of mind and prevent you from micromanaging the outsourcing company you’ve chosen.

Here are some strategies the Digiteum team uses to put in place smooth communication and project management:

• Setting up a transparent framework. From defining clear deliverables to outlining the project roadmap, we create a framework where you can easily monitor progress — what’s happening now, what’s been completed, and what’s next.
• Creating a communication plan. This includes everything from reporting schedules to communication tools. Katherine goes deeper into this step in a recent post on setting up a nearshore software development team — check it out for more insights.
• Appointing go-to persons. We always recommend assigning multiple points of contact on both sides. For example, at Digiteum, we assign a Project Manager or a Client Success Manager, alongside a C-level executive to oversee strategic decisions. You can do the same by assigning a technical lead and an administrative manager to handle respective issues. And don’t forget to clearly communicate who to reach out to for different matters.

The tips and insights on what to look for in an outsourced software development company come from real experience. Over the years, we’ve worked as an outsourcing IT tech vendor for big-name clients, large enterprises, and startups. This allows us to understand how to select the right software outsourcing partner.

And why do these clients choose us? Here are some ideas they’ve shared:

• We take communication and quick problem-solving seriously. While we value work-life balance, our clients know they can reach out — even on Christmas Eve — and we’ll respond.
• We don’t sell a ready-made package but build our work around you. Our team works within your resources and limitations to help you achieve your goals.
• We are transparent and honest. From clear time and detailed reports to realistic project assessments and expectations, we prioritize these qualities. Our clients appreciate that — that’s why they stay with us for years and even decades.