Software Development Outsourcing – How to Protect Your Business, Idea and Rights?

January 28, 2020

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When you decide to outsource software development, it’s a good idea to protect your business in case a software house doesn’t comply with the obligations or is unable to finish the project. In fact, the best companies are responsible and guard their clients’ interest with a carefully-crafted contract. Below, we present a few precautions that will protect your business.

In this article, we will explore:

  • How to protect your business in case of a software development outsourcing disaster?
  • What type of contract should you choose?
  • Contract that protects your rights and idea:
    • The basics
    • Intellectual Property Rights
    • NDA – Non-Disclosure Agreement
    • Employee Confidentiality Contract
  • Manage your cooperation the right way
  • You don’t have to worry if your choose the right partner

How to Protect Your Business in Case of a Software Development Outsourcing Disaster?

History knows a few examples of software development outsourcing disasters when clients lost millions, and a vendor delivered a poor product or wasn’t able to even finish the project. However, all these disasters had their reasons. First of all, as a business owner, you need to be very careful about choosing the right software house for your project. There are a few mistakes you need to avoid, like choosing the cheapest offer or not performing detailed research of software development companies. 

In addition, you need to make sure that your contract with a software house covers all the required details. However, there’s something more. If you want to be sure that the final product will meet your vision, you also need to pay attention to professional project management. That way, you will keep a finger on the pulse. 

Find out how to guard your business with a detailed contract and take part in the project to be sure your vision is being fulfilled.

What Type of Contract Should You Choose?

Let’s start with the fact that there are two essential types of outsourcing contracts you can choose from. And they determine a lot.

The first one, Fixed Price, means that you establish the overall cost and scope of your project in advance and any changes generate additional spendings. The second one is Time and Material. You pay for the number of working hours multiplied by a previously established hourly rate, which allows for more flexibility. In our opinion, that is the safest choice for web or mobile app development. 

With app development, it’s hard to establish detailed specifications beforehand. Your vision may slightly change over time. More ideas will emerge; you can’t foresee everything. It’s not convenient for you to have a deal that forces to establish everything beforehand.

Contract That Protects Your Rights and Idea

Now it’s time for the most crucial step of protecting your idea’s confidentiality and rights. There are a few things you should include in your agreement with a software house:

The Basics

Firstly, your contract with a software development company should describe services your partner will provide – specify the project scope and explain the procedure of making changes. You also need to put there the project’s time and cost, hourly rates, development phases and deadlines.

Intellectual Property Rights

Protecting your Intellectual Property is one of the most critical sections of an outsourcing contract. The contract should clearly state that you are the owner of a software/application developed during the project. You own the source code, documentation, all the assets and materials created by developers or designers that are related to your project. Once the project is completed, all assets should be transferred to you. Owning the source code gives you the right to use it and modify it however you want. 

Also, remember that ways of protecting the IP vary from country to country. Make sure that your agreement is valid in your software development partner’s country.

NDA – Non-Disclosure Agreement

Protecting your Intellectual Property is one of the most critical sections of a software development outsourcing contract. The contract should clearly state that you

NDA is a legal document that prohibits a software house from sharing anything to a third party. With this, you protect your confidential information like technical data, designs, pricing policies, marketing techniques or information about your customers and vendors. With NDA, you also protect your idea in general, so that no-one could use it. What is more, NDA will be valid after the end of the project.

That is why the best software development companies can offer you signing NDA before you present them anything about your vision. If you are worried, just ask your potential development partner for NDA before you reveal your idea.

Employee Confidentiality Contract

In the best software development companies, each employee should have an Employee Confidentiality Contract signed with his employer. Although, you may also ask each developer to sign an NDA with you.

Manage Your Cooperation the Right Way

A well-crafted agreement gives you security, but can’t ensure that you will receive the result you wanted. For that, you need well-organized project management. 

Let’s start with the fact that the best software development companies work using Agile Methodology and Scrum Framework. It means that they gather all the tasks and then divide their implementation into two-week sprints. After each sprint, they present you with the results and gather your feedback. You should aim for a software development outsourcing provider that organizes work that way. You will stay in the loop and keep your finger on the pulse. The final result will be as you wanted.

The second thing is communication. You want to be able to reach your software developers as efficiently as possible. There are a few tools, like Slack, that allow for the most convenient communication between client and vendor. At Appstronauts, we use Slack for communication and Jira to allow you to track the app development progress.

You may also want to pay attention if the company you would like to sign an agreement with organizes Design Sprints or workshops when you can build your User Persona together. These activities help a lot with keeping every member of your future development team on the same page and facilitate things for you. 

You Don’t Have to Worry If You Choose the Right Partner

How can I be sure that they didn’t lie about their knowledge and experience? That is the question that almost every business owner asks himself. And it’s understandable because many IT outsourcing disasters were caused by a vendor’s incompetence. That is why you need to conduct detailed research before signing a contract with a software house.

Look at B2B reviewing websites like Clutch or Goodfirms. Check out the rankings of top software development companies. Analyze client’s feedback, reviews, and previous projects of a company you’re interested in. Look at their portfolio, blog and check out if the technologies they specialize in aren’t outdated. In software development, trust is the key to success. And every professional, serious company cares about their clients opinion and comfort.

After choosing the best software development company, that perfectly suits your project, has knowledgeable developers and eagerly shares experience, you can be sure that nothing bad is going to happen to your project. However, secure contract and excellent project organization are always relevant. If you chose professionals, they would make sure you get both these things. 

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