Hiring a Vendor for Scrum Development?

If you’re bringing in an external vendor to do Agile software development, you need to set things up so that you’re not stuck with poor performance and big bills. Here are a few practical tips I’ve learned the hard way.

1. Use a Time-and-Materials Contract with an Easy Exit Clause

Don’t lock yourself into a big fixed-price contract. Go with time and materials and include a simple exit clause that lets either party walk away with reasonable notice.

This reduces risk for both sides. You can end the engagement quickly if things aren’t working, and the vendor isn’t forced to deliver something impossible at a loss.

2. Have the Vendor Work Side-by-Side with Your Internal Team

Don’t let them disappear into a black box. Put their developers on the same Scrum team as your internal people.

This gives you real visibility into how they work, how they collaborate, and whether they actually deliver. It also helps knowledge transfer instead of creating another silo.

3. Demand Team Stability

Insist that the vendor keeps the same people on your team. Constant swapping of resources is a huge red flag — it destroys momentum, context, and accountability.

Make team stability part of the agreement. If they can’t provide it, that tells you something important upfront.

4. Insist on a Done Increment Every Sprint

This is the big one.

Even if the full Definition of Done isn’t written into the contract, make it crystal clear that the vendor must deliver a Done, potentially shippable increment every Sprint.

This is your early warning system. You’ll quickly find out whether they can actually do the work.

I once worked with a vendor who kept leaving work unfinished Sprint after Sprint. Their excuses were always the same: “Requirements weren’t clear” or “Requirements keep changing.” Turns out they just couldn’t deliver what they were hired to do.

A Done increment forces the truth out early — before you’ve spent too much money.

Final Tip

Don’t treat the vendor like an outsourced black box. Treat them like an extension of your own team — with the same standards, transparency, and accountability you expect internally.

If they push back hard on these things, that’s valuable information. Better to know early than after months of disappointment.

Have you had good (or bad) experiences with vendors in Scrum teams? Drop them in the comments.