How to Set KPIs to Assess the Performance of the Outsourced Software Development Team?

Why are KPIs so important?

Establishing and monitoring performance metrics allows you to manage the progress of your business projects properly.

  • Manage the project workloads effectively
  • Identify problems on time
  • Prioritize the work accurately
  • Reduce overtime

Key project KPIs for IT outsourcing


Regardless of the industry and project specifics, one of the most important metrics is cost. By establishing this at the beginning of the project, you will avoid going over budget.

  • Actual costs — which will allow you to regulate ongoing expenses;
  • The budget needed to complete — which enables better estimation of all potential budget deviations.


Another important determinant is team effectiveness. It will monitor how much work is done and measure the effectiveness of software development teams. This issue is significant for Project Managers who watch over the team’s efficiency and make sure that the project is delivered on time.

  • Cycle time — the number of hours/days required to complete the task;
  • Lead time — time in which the task will be completed, taking into account other tasks the team is working on;
  • Team execution speed — which will help estimate the number of iterations the team needs to complete each task (in this case, we recommend using code churn — a measure that shows the rate at which code is evolving);
  • Deployment frequency — that is how often new functionalities are added into production. This metric should be maintained at a similar level for the project duration)
  • Schedule compliance — allows measuring the ability to schedule and complete work on time.
  • Sprint burndown — showing the speed at which work in a particular sprint is completed and how much work remains to be done.

Customer satisfaction

Another critical KPI for IT outsourcing is attention to customer satisfaction. How to measure it? The most important issues include:

  • Scheduling (on time/deadlines)
  • Quality (service & deliverable)
  • Satisfaction working with the team (taking into account their willingness to be helpful, proactive and good communication)
  • Transparency (providing feedback)
  • Overall customer satisfaction

Working with the customer

Customer satisfaction is one thing, but effective customer collaboration can also be considered a KPI. You should pay attention to:

  • Customer engagement — for example, the time spent by the customer in meeting the supplier’s requests.
  • Delay time on the customer side — monitoring this factor helps to explain possible delays in the project.



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Aga Babicz

Aga Babicz


Marketing Specialist at Next Technology Professionals - IT Recruitment | IT Outsourcing