f you’re partnering with a tech company that promises to make your idea a reality, remember that you need to protect your software. Your startup will become valuable once people start using your software. It’s your software that will gain your brand recognition. Treat it as a valuable asset and prepare yourself before signing an outsourcing partner.

Here’s everything you need to know before striking a deal with a software company.

When to sign an NDA agreement for software development?

Many people are afraid to share their idea before signing an NDA. But sending a potential outsourcing partner a contract that stipulates excessive fines for the violation of its various provisions is a mistake.

Your idea is unique, and you should guard it at all cost. But that doesn’t mean submitting an NDA including harsh financial fines at the early stage when you’re just asking for pricing. You can just rely on an NDA that doesn’t stipulate such penalties but only protects the rights to your idea. That way you won’t be discouraging potential partners.

What you need before negotiating the contract

When approaching a development team, you probably already have ample documentation such as user stories, project requirements, and other relevant documents. You should attach it to the agreement together with the men-hour estimation prepared by the company previously.

Before negotiating the contract, you need to know what your hourly budget for developing an MVP will be, the number of sprints during which the application will be made, and the total number of hours allocated into each sprint. I’m assuming here that the development team you choose follows the agile methodology in software development.

Now, a development team might go on about this in two different ways:

●     Option 1: They offer you a team of people as you pay for the time regardless of what tasks they complete – the only important factor is the time spent on tasks not delivering functionalities.

●     Option 2: They offer you a product owner, scrum master and a team that handles all the functionalities that are part of your evaluation.

Depending on which option you choose, your contract will need to include different elements. For example, if you choose the latter option, make sure that your agreement includes a provision where you specify that each sprint needs to contain an attachment that lists all the tasks to be completed.

Should you worry about copyright?

Make sure that all copyright is transferred to you. If you’re not going to own the code, don’t sign the contract. And make sure that your copyright includes a provision that if the contract doesn’t stipulate the particular field of use to which the copyright is transferred, the development team is required to transfer it to the new you upon request and at no additional cost.

What about the non-competition clause?

It doesn’t make sense to introduce such a clause if it specifies the technology or modules used in your startup. The only thing you should cover is the purpose of your application. For example, if you came up with an app for garden design, you can add a clause where you state that the company may not create any applications for designing gardens for the period of X months from the commissioning of the project in a given market.

I hope all this information makes it easier for you to enter into a successful partnership with an outsourcing software company. If you have any questions, don’t hesitate to contact us.

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