This is a topic that is on everyone's mind who purchases or provides Software Outsourcing Services.
Companies that use external software development resources want to be able to measure performance and over all quality being delivered to gauge ROI. In some cases loose contracts (Not well defined) without defining acceptance criterion can put companies at risk. It also puts vendor at risk and things can get messy. Companies have a REALISTIC acceptance criterion baked in the MSA/SOW, need to make sure that stakeholder/staff is aware that the vendor is within described compliance framework at the end of every sprint. This is also beneficial to the vendor that complies with acceptance criterion because when mistakes are committed the first to blame is a third party. Both sides have to cover their ass and make sure the expectations are met (You can avoid a ton of conflict and improve the relationship) *Having this piece discussed openly between staff and vendor before beginning work will save everyone time and most of all meeting critical deadlines.
If everyone is clear on the rules of engagement and common language terms defined to communicate status, it comes down to the resource to execute tasks effectively within reasonable amount of time according to complexity. Though companies struggle to gauge even internal performance, the following research and formula is a fantastic guide to help both Buyer and Provider measure performance and quality output.
Source - Research Paper
Sitation Salameh, Hanadi. (2018). Performance-Measurement Framework to Evaluate Software Engineers for Agile Software-Development Methodology. European Journal of International Management. Vol.7. In spite of the marked benefits agile development brings, it has several shortcomings in quantitative quality measurement, especially in evaluating the performance of individual software engineers. The evaluation criteria for software engineers’ performance have been traditionally driven by metrics that don’t fit into agiledevelopment principles. This study proposes a measurement framework to evaluate the performance of software engineers. The proposed measurement framework aligns with agile-development core values and principles. This framework can be applied to various agile methods, although the research assumes the use of the Scrum methodology by the software-development team and organization. The proposed framework is simple and doesn’t impose overhead on the development team or organization, as it is driven by key agile and Scrum development metrics such as team velocity, escaped-defects rate, defect-cycle time, defect spill-over rate, and individual communication and social skills.