Application Development Outsourcing

Following are the issues to be taken care of, for successfully striking a deal for offshore software development.

1. Insurance
Outsourcing organization or agency should have public liability insurance, in case of loss or liability through injury or damage. The need and quantity will depend on the use of the software.

2. Third party suppliers (purchase of supplies)
It must be agreed upon as to which party will administer the terms of any agreement going on between the purchaser and 3rd party supplier.

3. Software licenses
While a 3rd party software supplier is involved, care must be taken to get appropriate license.

4. Ownership of information
Issues like the ownership of information and data should be made clear, in order to avoid disputes. Generally, the developer is the default owner. Almost all contract explicitly state that the person paying for development will own it.

5. Contract duration and commencement
It's in the benefit of both parties to decide the duration of the outsourcing contract, and more importantly time of commencement.

6. System specification
The system specifications should be defined for function, performance and availability as part of the RFI and RFP phases. The service specifications such as response times and system reliability should likewise be defined at the RFI and RFP phases.

7. Service level agreements (SLA)
Service level agreements are made to confirm the minimum service that an outsourcer would provide to the purchaser. SLAs will typically be included in the contract schedules and cover a number of areas of service including system availability, response times and quality standards.

8. Reporting and review
Closely linked to the SLA effective management includes reporting and review of the performance of the outsourcer, through consultation between both the outsourcer and the purchaser.

9. System access and security
This is one of the most crucial issues to be dealt with, when a contract is to be signed. Problem of security and vulnerability of ones system creates disputes.

10. Warranties
The warranty must contain service quality and compliance with specification. Warranty of authorization and title - does each party have the right to transfer ownership of all pieces of the product, arbitration of any disputes.

11. Disaster recovery
Agreement should be reached between the purchaser and the outsourcer concerning business continuity, should any of the outsourcer's facilities fail. What measures will be taken to backup data and software, alternative work sites, etc.

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