Top 10 Outsourcing Challenges and Ways to Solve Them

Software development outsourcing is a huge industry that provides unique opportunities for business owners. This market is constantly changing, developing, and offering new solutions. According to Grand View Research, the global business process outsourcing (BPO) market is expected to reach $525.23 billion by 2030. This growth is supported by the rising use of cloud services, artificial intelligence, and robotic process automation in the outsourcing industry. This growing demand shows how IT outsourcing has become a key strategy for companies looking to reduce costs, speed up development, and reach global talent. But while outsourcing brings many advantages, it also comes with certain risks and difficulties that companies shouldn’t overlook.

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 outsourcing problems.

IT outsourcing is growing fast and becoming a common practice among leading companies. In fact, 92% of G2000 companies now use IT outsourcing in some form. Successful companies very often turn to outsourcing partners to strengthen their business with new talents, reduce product costs without losing 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 primary advantages of software development outsourcing is the ability to delegate management responsibilities, thereby freeing up time for other strategic tasks. But there are also severe challenges 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.

Solution

Before hiring a vendor, check out the company’s experience with other partners. For example, 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 responsible 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.

Solution

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 out all unnecessary things and reduce communication to a requirement-task-result mode.

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 may appear over time, significantly increasing the software’s price.

Solution

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 will explain the full software development life cycle before the project begins and help you choose a suitable cooperation model—such as Fixed Price, Time & Material, or a Dedicated Team—based on your needs.
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 overtime and possible project scope changes.

One of the most common issues companies face when outsourcing—especially if they lack prior experience—is a mismatch between expectations and actual results. This can happen due to unclear requirements, miscommunication, or simply choosing the wrong vendor. The outcome? Delays, rework, budget overruns, and a product that doesn’t align with the original vision.

Such situations are not only frustrating but also costly, both in terms of time and resources. Businesses may find themselves needing to redo work, switch vendors mid-project, or deal with damaged client trust and lost opportunities. Setting clear goals, defining deliverables, and choosing a vendor with proven experience can help avoid this all-too-common outsourcing pitfall.

Solution

Everything is quite simple: the result is quite often a consequence of requirements. Pay particular attention to setting goals and creating requirements and specifications. Then the result will be expected. An experienced business analyst or requirements manager (can be provided by an outsourcing partner) can help with this.

The settlement of intellectual property, privacy, and security issues is an integral part of software development. Unfortunately, some companies may have poor cybersecurity practices, which make them vulnerable to:

• data loss;
• data breach;
• cyber attacks: phishing, malicious software, ransomware, etc.;
• DDoS attacks.

For clarity, data breaches can cost small businesses from $120,000 to $1,24M in 2025.
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 and is compliant with GDPR, CCPA, and OWASP. These are necessary measures to ensure our safety and protect our customers.

Solution

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.

Working with outsourcing partners across different time zones can present real coordination difficulties, especially when the gap is significant. While a 2–3 hour difference is usually manageable and can even create a slight overlap in working hours, a 6–8 hour gap often leads to delays in communication, slower feedback loops, and reduced real-time collaboration. This can be particularly challenging during urgent tasks, daily stand-ups, or when quick decisions are needed.

Time zone misalignment may also complicate project management, as scheduling meetings, resolving issues, and aligning on progress updates become less efficient. For teams not used to asynchronous communication, productivity and morale may suffer.

Solution

Agree with the software development provider on the assignment of a specific person who 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.

The choice of outsourcing model plays a critical role in the overall success of a project. Many companies, especially those new to outsourcing, underestimate how much the engagement approach—be it Fixed Price, Time & Material, or a Dedicated Team—can influence timelines, flexibility, communication, and final outcomes.

Selecting the wrong model for your project’s nature or stage can lead to misaligned expectations, budget issues, and management difficulties. For instance, a Fixed Price model might limit flexibility in evolving projects, while Time & Material may not suit companies needing strict budget control. Without proper guidance, businesses risk entering into agreements that don’t reflect their actual needs.

Solution

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 are 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.

Finding qualified engineers is harder than ever—57 % of senior tech leaders admit they struggle to hire skilled IT talent. Outsourcing can fill those gaps quickly, but there’s a catch: the experts showcased during the sales call aren’t always the same people who end up on the project. If the vendor’s talent-allocation process is opaque, you might receive developers whose skills or domain knowledge fall short of what was promised. The result is extra onboarding time, inconsistent code quality, and potential project delays.

Solution

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.

Many companies partnering with an outsourcing vendor for the first time encounter challenges due to limited experience with the model. Without a solid understanding of how outsourced collaboration works—such as project workflows, communication protocols, and delivery expectations—teams may feel overwhelmed or frustrated.

This lack of clarity can lead to confusion, misaligned expectations, and inefficient collaboration. Companies may struggle with setting clear requirements, understanding timelines, or managing remote teams effectively. These issues often stem not from poor execution, but from unfamiliarity with the outsourcing process itself.

Solution

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.

Solution

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.

Leobit is a reliable full-cycle outsourcing software development partner with over 10 years of experience delivering high-quality software solutions. We specialize in .NET, AI, and web development, supporting both technology companies and startups worldwide. With a proven track record of 150+ successful projects, our team brings deep expertise across .NET, Angular, React, iOS, Android, Ruby, PHP, and a broad set of Microsoft, web, and mobile technologies.

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 countermeasures.

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 on this matter. Just contact us in any way convenient for you.