6 Require evidence of best practices.

Find the vendor best equipped to propel your business forward. According to Wipro's Ramamurthy and Infosys' Yellavalli, companies should look for evidence that the vendor will bring best practices and productivity gains to the table via reusable software modules, knowledge management systems, and SOA frameworks. "Looking at cycle times [and] how to bring down the cost of an implementation -- these are key things the client should look for in the evaluation phase," Ramamurthy says.

It's vital that vendors abide by industry standards, Cincom's Paul says. High levels of IT process experience and certifications and frameworks such as CMMI, ISO, and Six Sigma are also important. Everest's Bendor-Samuel, however, says certifications are useful only as evidence that a vendor has process discipline, not as ends in themselves. "It's a hygiene factor. If you don't have it, then you stink," he says. "But it can be overblown."

7 Write talent into the contract.

One nightmare of offshoring is to be promised the A team up front, only to get the junior crew after the ink dries. The leading offshore vendors are growing so fast that they can't recruit, train, and retain nearly enough rock-star developers, analysts say. "Some of these firms have developer turnover as high as 20 percent a year, so you're in a fight for talent," Everest's Bendor-Samuel says.

Aside from standard provisions such as security, compliance, and data privacy, it's crucial to structure the contract to address make-or-break issues such as project staffing. The contract must specify that you get the best-quality people working on your account and as much personnel continuity as possible, Bendor-Samuel says. "You've got to develop incentives and penalties that ensure not only that they initially put that high-quality team on but [that] they keep it on," he says.

There are no limits to creativity when it comes to structuring offshoring contracts. One company wanted a clause that gave incentives to their offshore vendor to surprise them by surpassing expectations, recalls Yisrael Dancziger, CEO of Digital Fuel, a software company. So the client company created a survey process through which its employees could rate the offshore vendor's "wow factor" each month, and it included a contractual requirement that "the wow score [had] to be above 8", Dancziger says.

8 Investigate pricing models.

Select the pricing structure that offers the biggest bang for the buck. Traditionally, offshoring contracts for staff augmentation were written on a time and materials per-hour basis, Gartner's Karamouzis says. As projects have become more complex, though, and long-term, contracts are shifting toward fixed fees, fixed scopes -- deals that focus on deliverables rather than inputs such as cost per-developer-hour.

"Indian vendors want to be measured based on output of deliverables rather than allowing the clients to manage the people," Wipro's Ramamurthy says, noting that fixed-fee contracts encourage vendors to become more efficient. "Fixed-price [contracts] could be lower [cost] as time progresses because of increased productivity," he adds, advising clients to fortify such contracts with service-level specifications such as turnaround and response times.

Gartner's Karamouzis thinks it's even possible to hold an offshore vendor accountable for the successful delivery of an entire IT process. "It depends on how well you define the end points," she says. "Where it begins and ends and where the handoffs are must be contractually clear."

9 Acclimatize to cultural differences.

Bridging cultural and communications differences -- the human side of offshoring -- is perhaps the trickiest issue to navigate but presents the biggest potential payoff.

"Dealing with confrontation and consensus building is very different from culture to culture," says Alsbridge's Trowbridge, who notes that western management teams are used to conflict, whereas Indian companies have a tendency to avoid it at all costs. "They'll try very hard to comply and listen, but you've got to say no at various points to be able to get the thing to work," he warns. "I this case, 'no' means 'I love you' -- by saying 'yes, yes, yes', you're not helping the client."

Establish a precedent of open, honest communication at the start and spend extra time with potential vendors. "If you just write a set of bid requirements and they come in and give their three-hour pitch, they're going to say what you want to hear. You're not going to pick up the cultural differences, and you start off with a fraction of difference that becomes miles wide a year later," Trowbridge says.

Building personal relationships can bolster the institutional relationship. Experts urge regular visits to offshore vendors and investing time to get to know individuals in both business and social settings. "Once-a-year visits to the India or China development centres by key members of the client IT office can create a lot of understanding," Infosys' Yellavalli says. "It can help them understand how this offshore engine works."

10 Get your feet wet.

Last but not least, companies should stick their toes in the water before plunging in headfirst. "Small projects you can micromanage," Everest's Bendor-Samuel says, but not large-scale projects and long-term relationships.