Partnership with technology services company. Why is it always a good idea?

Both enterprises and ISVs ask themselves a question: "Should we hire engineers in-house or partner with a technology services company?". It very much depends on company size and overall maturity. In most cases, rational reasoning boils down to what is only the tip of the iceberg. "We don't need to pay costs with additional margin and it is better to hire engineers in-house."

Why is the answer to this question deeper than it seems to be?

Today, it is not only about cost savings by hiring a vendor in a region with lower labor costs and cutting on other operational expenses. Even when it is possible to afford to hire talent in-house, usually it takes months and even quarters to fill those vacancies. Great engineers are like diamonds. They are rare to find and very expensive. Moreover, demand is continuously soaring. As a result, recruiting costs and related expenses are steadily growing. Proper skills and experience validation processes are also not easy to develop and maintain.

To motivate talent to stay, companies should build tech employee's retention capabilities. Career growth maps, training programs, mentorship processes and other incentives e.g bonus programs, health insurance, learning compensations, concierge services. It requires focus shifts and significant investment that not every company could afford and manage to implement successfully. It is a domain that requires significant expertise. Of course, it is better to concentrate on core business and rely on partners to handle these parts.

Another aspect is that solely hiring strong engineers doesn't guarantee you would succeed. Software engineering is a comprehensive discipline that requires leadership and methodology, engineering culture that should be formed. This is magic and that is what differentiate world-class engineering teams from mediocrity. Technology vendors spent six-figure budgets and years of time to build those technology capabilities.

Software services companies are like cloud computing. It brought significant innovation to the market by giving the ability to provision computing power by demand. You could leverage expertise in different domains of software development e.g. domain-specific technology consulting, software architecture, business analysis, experience design, quality engineering, engineering management to name a few. The benefit of this is that you don't need to hire an expert for one month and fire him straight after, but relatively quickly access a pool of talent for a required period of time.

Technology vendors usually provide very unique insights on how to use technology in a specific domain. Extract a better understanding of what your competitors are doing and how. This helps exceed competition and even navigate technology strategy into a new direction.

Along with that one of their main priorities is to be digital natives by experimenting and adopting the latest technology. This could help to identify new revenue streams in your business model. As we are explaining in our article on "How could enterprises prepare for the adoption of exponentially growing technology?" it is not as trivial as it sounds.

What else to look for when making a decision regarding a technology partner?

Everything mentioned above is pretty much operational stuff that almost every outsourcing vendor is doing. Bigger companies do it better, smaller companies are still learning, but it is something that industry has been doing for years. Most vendors are good at it.

In TageSpot, except for the effort mentioned above, we are doing our best to provide another layer of value on top of that. We are investing a lot in our technology consulting capability. That helped us to create a methodology of bridging business and technology in the most effective way and continuously extracting the highest value technology could bring to solve the desired business case.

Today's market of software services is basically divided into two segments. Companies who do strategy best and companies who know how to deal with technology properly. In TageSpot, we've managed to find a solution for a disconnect between business and tech. That is what differentiates us from most of our peers. This is a "Tacit skill" that can't be bought or learned overnight. More details on how we are structuring our value proposition could be found in our articles: "Service offering: Technology Strategy Delivery" and "Service offering: Frictionless Delivery Support".

As a closing note, it is worth mentioning that even technology giants like Google, Microsoft, and other rely on technology partners to facilitate and streamline particular parts of their technology business. All that despite having infinite budgets and world-class expertise.