Software development outsourcing is a huge industry that provides unique opportunities for business owners. This market is constantly changing, developing, and offering new solutions.
However, in this article, we will discuss not so much the benefits of outsourcing as the common challenges that customers may face. We will also try to find suitable solutions for them and ways to solve problems.
Outsourcing Problems and Their Solutions
IT outsourcing development is growing rapidly. For example, the managed services segment accounted for over $152 billion in 2020. Successful companies very often turn to outsourcing partners to strengthen their business with new talents, reduce product costs without losing the quality, decrease the workload on their own staff, etc.
However, outsourcing a project is not always an easy task. Each company faces its own difficulties related to the specifics of its activity and market features. However, there are a few common challenges worth discussing.
One of the main advantages of software development outsourcing is the ability to delegate management responsibilities and free up time for other tasks. But it is also a severe challenge here. Along with the transfer of duties, control over the process can be decreased.
There is nothing extraordinary or critical about this, as almost every company faces such a problem at some point. However, it is necessary to cope with this; otherwise, difficulties will accumulate like a snowball.
Before hiring a vendor, check out the company’s experience with other partners. As a professional outsourcing company, Leobit provides our customers with detailed reviews from other clients. You can check them on such independent platforms as DesignRush, Clutch or GoodFirms.
Discuss communication options and establish a precise level of control. Regular reporting by the outsourcing partner is mandatory. You can also appoint your project manager to communicate with the vendor and monitor the outsourcing team’s performance.
This is a common challenge in outsourcing. During the work process, the client and the vendor may face misunderstandings. Especially when the client didn’t have outsourcing experience before.
A communication barrier can arise due to language, cultural or mental differences. In addition, complications can arise because of the great distance between you and the vendor. However, everyone can deal with it. Professional outsourcing companies solve this issue in a minute: they not only set up all communication tools but also organize personal meetings as needed.
If difficulties arise after signing the contract, you should establish clear communication frameworks. Also, create an accurate schedule of online meetings. This will make it possible to eliminate disagreements and focus on specific tasks and results. Feel free to use management and communication tools like Jira to cut all unnecessary things and reduce communication to requirement-task-result mode.
Hidden Costs Challenge
Saving money is not the main but also an important reason for outsourcing. Very often, the cost of experienced developers’ services in other countries is lower, so customers are happy to sign a contract. However, unforeseen expenses and surcharges appear over time, significantly increasing the software’s price.
If you would like to outsource project development, you should ask for effort estimates and a proposal, where all expenses should be outlined. Professional companies know what the software development life-cycle should include and will explain it to you before the project start.
If you would like to get a team extension by hiring a remote engineer for your team, you should make sure that their skills and experience are appropriate for your project needs. You may ask to conduct the interview or perform the test task.
The service agreement should also be clear to you and cover all conditions of cooperation and payment terms, including overtimes and possible project scope changes.
Companies with no experience working with outsourcing partners may face the problem that the result doesn’t meet expectations. And it is always painful and costly.
Everything is quite simple: the result is a consequence of your requirements. Pay particular attention to setting goals and creating requirements and specifications. Then the result will be expected. An experienced business analyst (can be provided by an outsourcing partner) can help with this.
Leobit have been providing outsourcing services for more than seven years. Reach us to discuss your project.
Security and Privacy Challenge
Settlement of intellectual property, privacy and security issues is an integral part of software development. Unfortunately, many companies have poor cybersecurity practices, which make them vulnerable to:
- data loss;
- data breach;
- cyber attacks: phishing, malicious software, ransomware, etc.;
- DDoS attacks.
That is why digital security measures should become part of the corporate culture. And this applies to both customers and vendors. Leobit, for example, obtained ISO 9001:2015 and ISO 27001:2013 Certifications. This is a necessary measure to ensure our safety and protect our customers.
Since you are giving access to valuable data to a third party, the security policy and cybersecurity requirements should be specified in the contract. Ensure that the partner uses all possible security measures (regular database, network audits, leak-proof traffic, etc.) and pays attention to GDPR compliance.
Time Zone Challenge
The time zone difference is often inconvenient for companies that work with outsourcing partners from other countries. 2-3 hours will not be a problem, but 6-7 is already a challenge.
Agree with the software development provider on the assignment of a specific person that will be a contact point at the time you need. You can also set a specific time for online meetings. This way, you will be able to communicate effectively with your partner and receive answers to your questions promptly.
Outsourcing Approach Challenge
The outsourcing model affects the final result very much. Experienced vendors always suggest choosing an approach that perfectly suits your business requirements and needs.
There are three main models of outsourcing:
- fixed-price model: the contract specifies the deadline and a fixed price for services that can’t be changed over time;
- time-and-materials model: the customer pays for person-hours and materials, namely, licenses and software for development;
- dedicated team model: the customers get a full-fledged team at their disposal, which becomes a remote part of their company.
The first option is not flexible, so it’s suitable if you outsource some small and specific tasks. The second option, on the contrary, is flexible because you hire specific specialists for a particular time. The last one is best suited for large and long-term projects or companies that don’t have their own human resources for product development.
Leobit suggests several models. The Project-based approach is suitable for small projects taking from 1 to 6 months and having a clear scope. Team Extension is beneficial when you can use the help of our engineers on an hourly basis. Dedicated Team is recommended for hiring Leobit’s engineers for 12+ months when long-term sustainability and product knowledge keeping is valued by a client. The dedicated model is the most popular among our clients as it includes full-time involvement and a 100% focus on your project.
Talents and Skills Challenge
65% of companies hiring an outsourced developer do so because of a lack of skills and talent, not to save money. However, what the partner offers at the introduction call and what you get as a result may differ.
Specify in the contract exactly which specialists should be part of the development team and what level and skills they should have. You can also note that fired specialists should be replaced with staff of the same level of professionalism.
(Source: Harvey Nash KPMG)
Outsourcing Experience Challenge
Many companies that work with an outsourcing partner for the first time face a lack of experience and frustration due to difficulties understanding the concept and work processes.
If you don’t have experience, then you need to find someone who does. Your partner should have a clear understanding of best practices, workflow optimization, and potential risks. In addition, you can find an experienced consultant who would advise you in the cooperation process.
Outsourcing implies that you entrust the development of your product to a third party, so finding a reliable partner is already a success. Such a company not only provides you with the desired result but also becomes your support in the product development process. However, many companies face the problem of reliability and trust. And solving this issue is not so easy.
When choosing partners, pay attention to the following points:
- real company’s experience and portfolio (it’s especially important to check examples from your industry);
- customer reviews on independent platforms and company ratings;
- the average size of the projects, their complexity, and tech stack;
- transparency of communication.
Also, don’t forget that your contract is your protection, so it should be as straightforward as possible.
Customers of outsourcing services are faced with issues of trust, security, approach to outsourcing, non-compliance, etc. All these problems have solutions, especially if you pay attention to them at the first stages of cooperation and take the necessary measures. Knowing the difficulties, you are ready to face them and have the required tools and counter mechanisms.
We at Leobit have been providing outsourcing services for more than seven years, so our experience allows us to, if not avoid all problems, at least minimize their impact. We take our reputation and credibility very seriously, so we remain transparent and honest with our clients. And we will be happy to answer your questions and advise you in this matter. Just contact us in any way convenient for you.