# Business development
11 Red flags in development companies – How to choose a vendor?
Red Rocket teamAug 13, 20246 min read
In This Article
Inadequate price formation Slow response High level of specialist turnover Conveyor system Many promises Unexpected discounts Strong desire to sell a service Disclaimer of liability Poor quality website Not meeting deadlines Disorganization Final thoughtsFor any business, there eventually comes a time when implementing new software into the operation of the company is a necessity. Creating a website, mobile app, corporate program, CRM, and many more - all these products can increase the efficiency of your business and allow you to earn more money. When entrepreneurs are faced with the need to create a digital product for the company, most of them turn to outsourcing development company. However, how to choose the right development vendor if you are doing it for the first time?
Businesses from all over the world hire a development team from other countries to get the software ready. Today, most of the IT companies are located in the USA, India, Ukraine, Estonia and others. However, unfortunately, among professionals, there can be amateurs who just want to make money but not to help you. Choosing a development partner is a responsible process that requires careful attention from you. In this article, we have collected common red flags that indicate a poor level of work for an outsourcing development company.
11 Signs of a Bad Vendor
You can save a lot of money, time, and effort if you contact professional software developers. Sometimes it can take you about 10 minutes to realize whether an outsourcing development company is good or bad. Our experience and expertise helped us to collect 11 signs of a bad vendor in this article. You should learn these mistakes to avoid when hiring a development company.
1. Inadequate Price Formation
The first red flag that can stop you from working with a service vendor is unclear price formation. Digital products or software is not a physical product that has a fixed price. That is why development agencies determine the price of services on their own. Moreover, the price is mostly calculated individually for each client because of custom features.
By «inadequate pricing» we mean both low and too-high prices. To understand whether the price is normal, you need to assess the complexity of the work and see what prices are offered by the nearest competitors. You should also pay attention to the geographical location of this company because it can also affect the cost of services provided. For example, IT specialists from the USA or Western Europe charge more money than developers from less developed countries. If you think that a high price is the key to success, this is not always the case. It is best to study in more detail the reviews of real clients about the work of the company.
2. Slow Response
What to look for when choosing a software development company? Actually, you should check a lot of things, including the responsiveness of the company's employees. When selecting the developers to help you implement the solution to your software needs, communication is crucial. It’s noteworthy that if representatives of a certain vendor continuously take more than 4 hours to respond within working time – it is a sign of problems. If the responses are slow, then it could be due to many reasons, such as the team being overwhelmed with work and not having enough people to manage the amount of work that they have. This will probably mean that during development, you will encounter more delays.
You can say that maybe they are just engrossed in their work and forgot to respond. To disprove the fact of the slow response, try contacting their sales team to order a service. If they respond quickly, then they are a bad service provider who only aims for a quick sale.
3. High Level of Specialist Turnover
The famous Formula 1 racing driver Nico Rosberg said that stability is the key to success. These words can be applied to the stability of a company's human resources. If employees are working long hours, it can mean that things are going well for the company. Fortunately, there are many services on the internet that allow employees to leave reviews about working for a particular company. This can be an advantage for you, as you can see what people are saying about their experience working for that company. This way, it is easy to know the weaknesses of the organization from the inside.
Many organizations with such an unstable and demanding workplace end up with a high turnover of employees. The remaining workforce is overwhelmed and barely able to meet the demanded productivity levels and provide high-quality output. Moreover, consequent loss of organizational knowledge due to employee turnover results in a lack of consistency and productivity. Select a partner that cares for creating a healthy work environment, supporting career advancement, and offering acceptable wages. This means that one is able to have loyal and content employees who deliver their optimum performance within a convenient condition.
It is also very important that the team is fully formed, with no gaps in positions. This means that everyone, from developers to project managers, should be in their place. Otherwise, this can affect the quality of the final product and the motivation of the vendor's team to work properly. As our CEO, Mykyta Osaulenko, has mentioned in the latest interview.
Having a fully staffed and well-coordinated team improves efficiency by about 30%.
4. Conveyor System
As a rule, each company has its peculiarities and uniqueness. It means that the solutions should be individual for each company, depending on the goals, the range of products or services the company offers, the approaches taken, the features, etc. Regardless of the type of software application it is – whether it is a website, an application for a smartphone, or a tool for an enterprise, it should not be conceived as just one of the out-of-the-box solutions.
If a vendor is not willing to listen, discuss, and analyze your specific needs and ideas but offers you cliché solutions – this is the red flag. That probably means that they do not wish to spend time and do not want to go the extra mile in trying to understand your needs more specifically. The best partners will take time to understand the situation and work jointly to find the right courses of action.
5. Many Promises
Certainly, the employees of the company must be sure that they can fulfill your software creation requirements. However, beware if a potential developer begins to assure you with unattainable promises in a bid to calm you down. When the company boasts about the quality of its work and sales and doesn’t provide references or previous experience as a backup, potential customers are advised to be wary.
Usually, dubious companies make a lot of unrealistic promises to the customer just to increase the number of sales. Another best practice is to ask vendors to provide samples of similar complex projects that they have accomplished. Their work should act as a testimony to their worth and capability. Select suppliers who show a genuine concern in your requirements and not just concentrating on the deal.
6. Unexpected Discounts
Unconditional favorable offer for customers is another vendor selection criteria. Of course, discounts are common practices for many companies. Usually, discounts are typical for online stores and other e-commerce companies. When you are dealing with a service provider, it is unlikely that you will receive large discounts. If you see a service provider offering you a 30 to 50% discount, it should make you suspicious. What could such a large discount mean?
- Marketing trick. Initially, the price for this service was artificially inflated so that a large discount would motivate you to buy it.
- Further costs. Sometimes, dubious developers deliberately lure the customer with a low price and then charge additional costs.
Such deceptive tricks are used by companies with whom it is better not to cooperate. A good service provider stipulates the full cost of the work in advance and does not assign hidden costs during the creation of the project.
7. Strong Desire to Sell a Service
It is not very hard to notice that the agency is more eager to make a quick sale rather than embrace clients' individuality. Warning signs of a hyper sales-focused provider include:
- «Selling» a product by the use of egregious phrases or applying pressure before they listen to the real needs and concerns. Customer-centric businesses enter the relationships with informed questions.
- Fuzzy designating capacities without detailing the technical skills, areas of focus and past work to the type of work. It means that reliable teams present work experience in the relevant field.
- These companies spend too much time in the marketing department when they should be paying attention to the specialist department that does the work.
Obviously, the goal of any commercial company is to make as much profit as possible. However, if the company representatives do not show interest in your project and only want to sell you a service, you should definitely continue your search for a service provider further.
8. Disclaimer of Liability
A good software company has this option so that it can vouch for its work and also offer a measure of assurance. A reliable company is always ready to stand and say, ‘I made a mistake here, or this product is not good enough, and then work at fixing it. However, some vendors attempt to use such broad clauses to shift blame on the other party or to reduce their liability altogether. They may also affirm that they are not responsible for the failure to adhere to the project requirements and the final output. Essentially, this statement means, «We’ll happily accept your millions, yet we won’t assure that you’d obtain the product you directed us to develop».
Creating business software is usually an expensive process, so you need to be sure that your money is safe. Talk to the company representative in advance about whether they take responsibility for your requirements.
9. Poor Quality Website
A good company should be well-oriented in what it offers. For example, when you go to a luxury beauty salon, you see that the premises and employees look their best. When talking about a digital product development company, the first thing you should look at is their website.
Check how well the website is done, the design, whether it is optimized for mobile devices, and how fast the pages load. A poor quality website gives a picture to the vendor that they lack the capacity to deliver a perfect, efficient application as you want.
10. Not Meeting Deadlines
It can certainly be very difficult to understand whether or not a software development company adheres to set deadlines before you start collaborating. However, there is information that you can receive even at the initial period if necessary.
First, check online reviews. The exact words used by current or past clients to express their views on delivery within the specified time give a lot of information about the vendor's time management. Secondly, due attention to time and concentration during what can be formal meetings. For instance, if the first video call is canceled severally or the team seems poorly prepared, it gives a hint of what is expected in the future concerning meeting time estimates. Choose developers who are responsible for assigning deadlines for the work.
11. Disorganization
If a partner lacks discipline and a well-structured plan, they may engage in underperformance. Check how proscriptive various processes in the company are, like requirements analysis, testing, release management, and so on. In addition, determine if employees understand their positions, roles, if hierarchies exist, and if work is properly allocated. Unorganized processes between employees and different departments of a digital product development company is another red flag for business owners.
Final Thoughts
As you may have already realized, there are many qualities of a good development company to hire. Using the tips and recommendations from this article, you will be able to recognize a bad service provider even before you start cooperating. Moreover, such approaches will help you save your investment.
A good company is always focused on customer satisfaction. We at Red Rocket Software, are well aware of the importance of individual approach to each client. This allows us to hear the customer's ideas, discuss the work plan with them to provide a vision of the project realization.
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