Questions

What strategy should I take to connect my clients to development partners?

I run small software development company which normally works on outsourced projects. Experienced developers have mentality to select big firms. So to maintain quality of the work, I normally subcontract project to my development partner companies who are big firms. I have the following questions: 1. Is it advisable to directly connect my clients with development partners for smoothly running project? 2. Should I mention my development partner name in Service level agreement with client? 3. Because of local taxes foreign direct income is always more beneficial. In total project cost, major share is of development partner. What is option where I will ask client to directly transfer specific amount to development partner directly when service agreement is with my company?

3answers

It would run more smoothly if there were fewer people in the communication chain HOWEVER do not connect your client direct to the developers.
1) clients will casually "remember" things that need to be added and go direct to the developers with their requests, which will cut into your margins
2) developers that you don't have air-tight contracts with will negotiate direct with the client and cut you out - make no mistake about it, you could have a great relationship with the client but business is business

Do NOT mention the development partner name anywhere. The client is not signing an agreement with, or contracting with them - it is with YOU so the agreement needs to be with you.

Unless you are planning to reverse the relationship and become an affiliate of the development company, you need to touch all the money. Why would you allow your valuable clients (assets) to be managed in any way by someone that isn't your company?


Answered 6 months ago

in any case not only in software development, if the operation is out sourced then disclosing the client to the out source is risky


Answered 5 months ago

I'll answer these in order but keep in mind that, though I have contract experience having run a digital agency of my own where I subcontracted work to developers, I'm **not* a lawyer or accountant in any country so you'll want to check with either one of those before taking advice that could affect your business outcomes.

1) It depends on the laws where you are and if the client wants you to manage the project and any subcontractors like developers or if they're open to directly connecting to the developers. It also depends how the developers you choose prefer to work. But, it makes sense for developers to get instructions directly from clients. Just make sure whatever you do you build the process into both your client contracts and any project plan documents where that information is necessary.

2) This also depends on the laws where you are and on what your contract with your client (and subcontractors) says. If the SLA requires you identify any subcontractors, of course you should. But, if you're taking all responsibility for the quality of the developer's work (as well as the liability), then it's not necessary.

3) Once more, that depends on the laws in your country. You don't want to get into trouble with taxing authorities. But, this would mean referring clients directly to developers and letting the two parties create their own contract, meaning the client pays the contractor directly. Know what the implications for your enterprise will be, though. Will you lose money if you refer developers directly to clients? Will you get affiliate or referral fees for developers you refer to clients instead of subcontracting? How will this arrangement benefit all parties and will there be any financial (including tax) or legal drawbacks?

It sounds to me like you're looking for ways to separate yourself from your developer partners. That might be a good strategy for a variety of reasons (not the least of which is reduced stress of having to manage them).

Just carefully consider what effect it might have on your business and get everything in writing. Make sure your contracts reflect how you intend to work with your clients so you won't have more responsibilities than you planned to have. Review every detail of those and project plan documents for gaps.

Please feel free to set up a call for follow up questions.


Answered 5 months ago

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