5 Software Development Outsourcing Risks and How to Mitigate Them

 

“Software outsourcing has risks of its own. One has to look out for red signals to remove barriers to successful software outsourcing.” 

Outsourcing software development is a global trend. And this trend is here to stay. According to the GSA report, 70% of buyers plan to increase their use of outsourcing, with 35% planning to significantly.  

The traditional reasons for offshore software development outsourcing are also changing with time. Cut to a few years back, companies mainly chose software outsourcing to reduce the cost of software development. But with the world becomes more open, the reasons motivating organizations to outsource are also changing. 

 

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Also read: Why outsource software development? 8 reasons it works!

 

Companies now look to outsource a software to find talent and technical skills that they don’t get internally. This makes software outsourcing more collaborative as well as competitive. Both software vendors, as well as clients, are more keen to take risks to reap greater rewards.

We, in this article, give our readers a heads up about the risks associated with software development outsourcing and how to mitigate them. 

 

Why Software Outsourcing?

Outsourcing is like task delegation. Companies need it because some tasks have a steep learning curve and if not executed properly, can mean lots of struggle for their business. And if the existing in-house staff is over-packed with other stuff, hiring experts in the field costs both money and time. 

IT Outsourcing help businesses focus on the core components and the processes they are best at. Focus on your strengths and outsource the rest. But again, like any and every decision in this world, the decision of outsourcing software development has risks involved! 

BinaryFolks is a software outsourcing company with 8 years of experience in successfully mitigating the challenges and risks of software development outsourcing. We, in this article, have pointed out a few of the red flags in software outsourcing. We also provided solutions to avoid them so that you can use outsourcing to draw an increased return on investment as well as a competitive edge for your business. 

 

 

Challenges To Software Outsourcing? Why Software Outsourcing Fails?

1. Unrealistic expectations 

2. Ever-changing requirement spec

3. Communication and management 

4. Quality of Software 

5. Confidentiality of information 

Let’s elaborate:

 

[1] Unrealistic Expectations  

User story - Hey! My name is so and so and I have a great idea on my mind. It’s going to change the world. I want to build an app like Facebook but better! And, my budget is 1000$.

Well, see what happened there - This is unrealistic. If someone agrees to build this revolutionary app in 1000$, it will have disaster written all over it! 

Unrealistic expectations are a huge barrier to success in software development outsourcing. As software companies, we are often asked to submit time and cost estimate without any prior discussion or evaluation. We have no idea of the complete picture in that case. 

You cannot expect an architect to let you know how much your house will cost without giving him detailed specifications, right? So, why keep the same expectation with a software development firm? 

Like I mentioned above, there is always someone who would nod their head to a 1000$ Facebook app development. And this is where you are taking a risk, even before your project starts. 

 

Solution:

[1] Make a proper list of all the features that you want to include in your software application. 

[2] Share this with the potential software vendors. 

[3] Let them come back to you with the questions and doubts (I’m sure a good software firm will have plenty)

[4] Sit and discuss every aspect of this project with them and leave no place for confusion.

[5] Once you both agree on what to do, go ahead with the development. 

This process is lengthy and time-consuming but we guarantee, this will reduce the risks of software outsourcing by almost half. If your budget doesn’t fit all the functionalities that you are looking for, divide it into phases. This will reduce your software development costs as well as make sure your outsourcing flows smooth. 

 

Read: How to reduce custom software development costs? 5 effective solutions!

 

[2] Ever-Changing Requirement Spec

User story - Hey! The development is going very well. Kudos. But, we were thinking if we could maybe introduce a totally new permission access control and scrape the one that’s already developed. It’s not suiting us! 

Two problems with this: First, you paid a whole lot of money for a very important functionality that you want to completely scrape. And you will have to pay a whole lot more to re-develop this. Second, this will increase the development time significantly. 

Remember, your software developers are not Superman! They have two hands and that’s all they can spare for you.  

The risks with changing software requirements are that you will go a lot to and fro and that will hamper the whole process. The estimates, both in terms of cost and time will significantly increase and risks of failures will start dooming on the project. 

 

Solution:

[1] Conduct market research of the features that you need in your application. See, what features are required and what is not.

[2] Make sure you discuss the whole user journey and user interaction with your software vendor before settling on the major functionalities. 

[3] Develop an MVP. Run it through your users. 

If your requirements keep on changing, you are inviting risks to your door. Never start development with half-hearted project requirement analysis. Invest time here and your project development will be successful. 

 

 

[3] Communication And Management 

Major brands projects can also fail if the project loses velocity. Poor communication and inaccurate deadlines can slow a project down to the point where it’s no longer relevant or valuable. 

When you outsource software development, you expect a project manager to take care of this. Your project manager should be your go-to person for everything. It’s the project manager’s responsibility to provide clear instructions to the team. They are responsible for distributing tasks and resources, tracking overall project progress and then communicating the necessary details to the clients. 

Modern and intuitive project managers will provide regular real-time information about the project and its progress. Leadership and communication along with technical skills are the most important attributes of any good project managers. A project manager is like the backbone of a project. He/she is critical to the failure or success of the project. Poor leadership and terrible communication can have some devastating effects on outsourcing.  

 

Solutions : 

[1] Know your team. A small team has numerous advantages when it comes to trust and communication. The biggest advantage when your software company is small is that you have direct one-to-one contact with the CXOs like CEO or CTO. 

[2] Conduct regular meetings to know the progress of the project. In the world of iterative development, global team and multiple time zone, make sure that your chosen communication channels are effective and not a distraction with unnecessary automated interruptions. 

[3] Demand updates after every milestone, if your project is divided into milestones. BinaryFolks provides video updates after every milestone is done so that the client can see first hand what is built so far and get back to us in case of any concern. 

Remember, it is better to over-communicate at the beginning rather than leaving the communication for when issues emerge. 

 

 

[4] Quality Of Software 

The quality of your software is the bottom-line of everything. All that you worked so hard for is the software quality. There can be a significant impact on your business in case of software glitches, starting with delaying your project launch as developers will need to go back and work on your software to fix those glitches. If the glitches are discovered after launch, it might result in a huge blow to your reputation and might not last long in the marketplace. 

 

Solutions : 

[1] Test thoroughly and test early. This will help in detecting bugs earlier and will be easier to deal with. Testing at the end of everything and discovering bugs means having to re-do a significant part of your work and also subsequent processes that depend on that. Bugs can creep in at any stage but regular testing will make it cost-effective to fix them in the earlier stage than at later stages. 

[2] Carry a thorough code review to be assured that it has a quality code implemented. The code must be simple and clean. 

 

[5] Confidentiality Of Information 

Let’s be completely honest here. You don’t trust the potential software vendors but you absolutely need to discuss your business ideas with all of them. But, venting the entire valuable information to unfamiliar people that you don’t know and don’t trust is a risky ask! 

 

Solution : 

Have the potential firms sign a non-disclosure agreement (NDA). An NDA is a legal document that binds two or more parties in a contract where they can’t share confidential trade secrets about one’s business that has been revealed to them.

The main idea behind this is to convey the required information to some third person about a business idea without the fear of the other side stealing the information or use it without your approval. 

 

NOTE :

And last but not least, the one factor that can make or break your software is the software development company that you choose. Your choice of the software vendor is crucial. Do your due diligence before making this choice. Take a look at some factors that you should consider before choosing a software outsourcing partner. 

 

Get a Free Outsourcing Consultation !

 

Why Does Software Outsourcing To BinaryFolks Make For A Wise Choice?

 

Signing Off : 

As Mark Zuckerberg often quotes, the biggest risk in this ever competitive world lies is not taking any risks. But taking risks without a proper strategy spells disaster in every way. 

Make sure you know your requirements and draft them down. Discuss the requirements with the software vendor in details and only when the complete flow is clear, start with the development. Communicate clearly and regularly. Test regularly and protect your ideas with an NDA. 

With proper planning, clear business objectives, and communication, software outsourcing can turn out to be a decision in favor of your business.