All you need to know about Software Outsourcing risks

All you need to know about Software Outsourcing risks
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The outsourcing development market is getting bigger every year – the spending is expected to reach 1 trillion dollars. As an outsourcing development team, we confirm – the scope of responsibilities of the software outsourcing team is increasing all the time.

Business owners contact offshore teams to build MVPs, create and support large-scale software, refactor existing projects.

Increased demand inevitably leads to the entry of new providers of development outsourcing to the market. It’s a great thing if teams are motivated to build successful products, but not so much if they are just following the trend.

This is why businesses and product owners have reasonable doubt about software outsourcing risks (especially since there are quite a few horror stories online). 

What do product and business owners expect?

Statista defined that the main reasons for hiring software developers is the need for skills, cost-efficiency, and better focus on core business processes. With this motivation, business owners have certain expectations, too.

I want a great product but can’t hire an in-house team right now

In this case, software outsourcing is a way of delivering software quickly without facing issues connected to hiring, onboarding, sustaining an office, and development infrastructure. Development relies on more than a team – you also need hardware, servers, software. 

  • A product owner is moving wireframes to MVP and needs a team to roll the product to the market;
  • The team raised first investments, which are not enough for establishing an in-house team. To get started, they are looking for cost-efficient options, including software outsource. 
  • The company doesn’t want to onboard new people. They already have a small in-house team, but eventually, there’s a need for new skills and expertise. 
  • The local market is either expensive or doesn’t possess the right skills/knowledge, or developers aren’t familiar with software outsourcing trends and practices. 

In these and similar cases, software outsourcing helps business owners build new products faster and beat competitors. 

I need experienced outsourcing developers with experience in my industry

A significant benefit of working with a software outsourcing company is that developers, project managers, and testers are constantly exposed to different domains and software outsourcing trends.

Unlike engineers that come from conservative, corporate environments, outsourcing developers get to experiment a lot. 

  • A product owner needs a specific innovation, and a local market can’t offer enough expertise. It’s a common situation with technologies like blockchain, AI, big data. A software outsource is a way to get this expertise.
  • Local teams don’t have experience in a specific industry. If you have a clear idea of your outsourcing software’s business model and intent, it’s easier to work with people who understand the specifics. For instance, if you want to build a peer-to-peer marketplace, you likely wish to hire the team who’ve built several of those. 
  • You want to cooperate with experienced teams. Not all outsourcing development markets are known to be equally skilled and innovative. However, we often see that people want to hire Ukrainian developers because of the excellent reputation of local coding education and expertise.

Obviously, for companies that are located in tech hubs, finding local developers shouldn’t be an issue. However, even if so, the competition is fierce. In tech hubs, established companies are always hiring, too. This is why software outsourcing is also relevant for businesses in tech-populated cities like San Francisco and New York. 

I want established practices

Software outsourcing has become increasingly popular lately. Business owners understand that even if they hire local talents, they still need to think of management, communication, infrastructure. It would be difficult to get started immediately. This is an especially important consideration in the following cases.

  • Competing with large companies: if a startup wants to enter an industry with established competitors, who have an infrastructure and experience ready-to-go, the business owner has to compensate. Software development outsourcing companies  offer management and communication expertise, outsourcing software, methodologies.
  • Lacking technical expertise: if a business owner doesn’t have the in-depth technical knowledge, managing a team of developers will be a challenge. software Development outsourcing companies have project managers and business analysts who connect the dots. 
  • Issues in the in-house: sometimes, product owners hire an offshore or nearshore software development outsourcing developers because they want to learn practices for their processes with in-house teams. Our team is always open about our methodologies and software. 

Most business owners weren’t exposed to outsourcing software development practices and software outsourcing trends for their entire life. Working with software development teams, where people operated as a unit for years, is an empowering experience. 

outsourcing development risks

Expectations – reality: software outsourcing risks

The potential for cooperation with a software development team is incredibly high. However, just like with everything in life, you don’t always get what you want. The bigger the reward is, the more risks come with it. 

As software outsourcing providers, we talk a lot to product owners. A lot of them come to us after experiencing some of the outsourcing horror stories first-hand. This is why we won’t state that it doesn’t have pitfalls and issues – that’s simply not true. Instead, we’ll share the stories and offer advice for preventing the software outsourcing risks. 

software outsourcing fails

Risk 1 – Hiring an oversold team

Sometimes, hiring an offshore or nearshore software development outsourcing team turns into buying a cat in a sack. The exterior looks promising – the team has a lot of expertise, bonuses, transparent methodologies. A sales manager or business analyst highly praises developers and managers. The deal seems excellent. 

However, as soon as an owner signs an SLA, NDA, and all the necessary documentation for development outsourcing, the team doesn’t seem to deliver anymore. Communication is irregular, unclear, and uninformative, and the team doesn’t share the process and practices. The result ends up entirely different from what you envisioned while consuming the entire budget. 

Solution

  • Trust reviews published on verified platforms like Clutch – the platform has a strict moderation system.
  • For portfolio, request actual links to websites and app stores. 
  • Try using the outsourcing software, developed by software development outsourcing companies, to see if you like the look and feel. 

Also, request as much direct communication with the team as possible. You’ll be able to see their motivation, technical expertise, and soft skills. We at Syndicode do it by removing intermediaries as much as possible. Business owners can talk to everybody on the software outsource team, directly catching up with developers and testers. 

Risk #2 – Team members are handling multiple projects at the same time

 Not all software outsourcing development teams are equally dedicated. Often business owners face irresponsible providers who keep their developers, designers, and testers, involved in multiple projects simultaneously. Even if they end up delivering assigned hours, a busy schedule affects motivation levels and creativity. There’s no way to assure commitment. 

Solution

  • Discuss outsourcing development agreement conditions and state openly that you would like developers to be engaged only in your project. 
  • Work with developers directly: you’ll be able to establish a lasting relationship and ensure understanding. 

It’s possible to hire a dedicated team that will work only on your product and even hire developers as a part of your in-house team. Syndicode developers often join remote and office in-house teams of our clients. 

software outsourcing models

Risk #3 – Miscommunication

A common fear among product owners who consider software outsourcing is a language barrier. You need to walk the team through your business’s specifics, explain the challenge, and understand their vision of the problem. It’s difficult to do if your team’s English is incomprehensible. 

It’s not just about language, however. Even if the offshore or nearshore software development outsourcing team has a native proficiency, the lack of established communication practices can sabotage cooperation. This where an experienced project manager comes in is a professional who connects the project’s technical and business aspects. A PM also gets everyone on the team on the same page. If the project manager isn’t experienced or transparent enough, the project might be heading towards failure. 

Solution

Discuss the communication process and deliverables right away on the discovery stage of development outsourcing. Ask questions about your industry and type of services. The team should be able to discuss their previous cases, show playbooks, client reviews. 

Right away, you should be looking for software development outsourcing companies who conduct data-driven communication – this implies:

  • documented practices – an experienced team will send you templates, metrics, outsourcing software, flow charts for each stage of the project;
  • deliverables for everything: teams that don’t promise any specific development artifacts, usually don’t have enough data;
  • they are the first to talk about metrics: if you should initiate the conversation about KPIs and real-time tracking and not the team, it could indicate the lack of transparency;
  • standard opening procedures: experienced providers always defined the activities that should be performed immediately. Even before you started development outsourcing, the team should present you with an outline of their plans.  

Good teams start with excellent communication immediately. Work with companies ready to schedule calls, send numeric data, provide visual dashboards, etc. 

Risk #4 – Wrong choice of location for offshore or nearshore software development outsourcing

With software outsourcing, you are not just choosing a team, and you are opting for the market. You should be looking at the country, its local prices, tech market, education, English proficiency, development expertise, and IT companies’ rates. 

How do you know that the choice of location was right? First and foremost, statistics should indicate the clear benefits of hiring outsourcing developers there. All markets have their proven advantages and drawbacks. Ukraine, for instance, is known for low rates and high development outsourcing expertise, but English proficiency is often said to be a problem. Does it mean all developers in Ukraine don’t speak English? Far from it, but now you know what to pay attention to. 

  • Make a list of your top locations: narrow down the possible choices to 2-3 countries;
  • Analyze cities where teams are located: it’s best to opt for units located in tech hubs because they have access to local talent. It’s an advantage if the city has known educational institutions. 
  • Learn the advantages and disadvantages of your software outsource market. You will be able to discuss these concerns during the discovery stages. Our clients, for instance, can talk to outsourcing developers to confirm their high English proficiency.

A professional software outsource team knows the weaknesses of its market and resolves them. Understanding the challenges of a local market helps you from precise requirements to your future software outsourcing vendor. 

Risk #5 – Outdated expertise

We mentioned several times about the importance of experience. Indeed, choosing an established tech partner with reputation prevents many issues. However, the number of years under the belt isn’t always proof of development outsourcing skills. 

Some business owners that we worked with told us stories about hiring experienced companies that turned out to be outdated. They relied on reputation and having well-known clients, and stopped investing in hiring new experts. The lack of influx of new specialists inevitably leads to lack of adoption of software outsourcing trends and stagnation.

Solution

  • Check the company’s LinkedIn: it’s a simple solution but often gets overlooked. The team should have a percentage of new hires and junior outsourcing developers. If all team members are working for the team for 5-6 years, something could be off. 
  • Portfolio dates: software development outsourcing companies should be able to send you a rundown of their latest projects to see new developments rather than outdated legacy.
  • Company’s web page: innovative teams often have modern, lightweight, well-design sites. It’s not a bulletproof assurance, but usually, it works. 

Software development outsourcing companies should be focused on the latest innovations – AI, blockchain, big data. It’s great if a team has experience working with large companies and startups since it assures a varied background. 

choosing a software development company

Risk #6 – Code ownership

By hiring outsourcing developers, you essentially entrust them with your functionality, technical concepts, and confidential data. This is why you need to discuss the conditions on which documentation, code, business data, logs are stored and used. 

Some untrustworthy providers can sign a questionable NDA form, leaving room for error, or bypass signing it altogether. Some business owners even complained that their vendors reused the code on other outsourcing software

Solution

  • Signing a valid NDA: the outsourcing development team should offer a detailed non-disclosure agreement that describes all aspects of handling business data, codebase, project documentation, business assets, and others. 
  • Discussing ownership openly: you can ask all copyright-related questions to the team, and they should be able to provide you with practices and documentation.

Developers should specify what code they wrote custom and where they simply reused an open-source tool or API. It influences the cost of development and customization options of your codebase. 

Risk #7 – No clear timeline

A common concern about software outsourcing is the lack of a defined schedule. Some business owners even end up disliking Agile and flexible methodologies altogether. Agile itself isn’t to blame, but it’s indeed often misused. Teams lack understanding of the project, essential to provide estimates and call their lack of organization flexibility. 

The consequences of these risks are harsh. Outsourcing developers are usually paid for hours, and business owners end up paying for extra time. Delays give competitors spare time and lead to wasted market opportunities. Sometimes, teams have to move marketing and advertising projects into hiatus, causing bottlenecks in other business processes.

Solution

  • Requesting detailed time and budget estimates: even if the team positions itself as Agile, they should still predict the duration and stages of the project;
  • Working with timeline-conscious teams: the company should ask specific questions about project schedules. At Syndicode, we ask about delivery timelines, urgency factors, and objectives before starting a discovery stage. 
  • Requesting outsourcing software development and testing plans: these are documents where the team states a timeline for each project stage, describes deliverables and risks. It’s not the same as the software specification document, as that one focuses on the product, and plans target the process. 

The outsourcing development team should show initiative about understanding the overall business timeline. A good development team understands the impact of other business processes (design, marketing, communication) on the product’s success and moves in sync with those. 

Risk #8 – No cooperation within the team

It’s important to remember that outsourcing developers  don’t work in a vacuum. The project’s must-have components are also UX/UI design and testing. We recommend hiring a single team that can take responsibility for all three. Otherwise, you are risking responsibility shifts and miscommunication. 

Solution

  • Joint standup meetings: daily catch-ups where team members discuss their accomplishments and objectives should feature all team members. You should have meetings with each team separately, but regular group conversations are essential for maintaining transparency.
  • Creating a shared roadmap: it’s great to have separate plans for software, design, and testing, but they mean nothing if there’s no unified roadmap. The team should present you with a clear, visual layout of the direction of the entire team. 
  • Involvement between in-house and software outsourcing teams: if offshore providers are expected to cooperate with your core team, they should have regular sessions and calls. Both sides should be invested in the joint success and help each other out. 

This outsourcing development risk is solved with detailed documentation, competent management, and a motivated team. If hired members are engaged in the process, they will be interested in getting to know the specifics from inside, and interacting with as many specialists as possible.

working with outsourcing developers

Risk #9 – No risk plans 

Risk management is a crucial aspect of any development project. In our experience, product owners often face two issues: 

  • the team fails to take risks into account during planning – in which case, you are unprepared for critical situations,
  • the outsourcing development team is being too careful and includes a high overhead cost or deadline in case something goes wrong – it’s safer, but you end up paying too much. 

What should a business owner prefer: being as cost-and time-efficient as possible or predicting budget with all potential risks in mind, potentially overpaying a lot? The answer, as often, lies in the middle. 

Solution

  • Describing risks associated with technological, functional, and user requirements of the software. The team should present the risks for each aspect, illustrated in SRS. 
  • Determining best and worst-case scenarios: at Syndicode, we create a dashboard where prioritizes development outsourcing risks and solutions for solving them. 
  • Determining performance benchmarks and thresholds: outsourcing developers and testers develop an action plan in case the software would be incapable of handling the workloads. They come up with test scenarios, preventive activities, and determine the likelihood of the issue. 
  • Taking organizational risks into account: outsourcing developers  should have practices for replacing team members or adding a new developer/tester to the project. These shifts shouldn’t influence the workflow. 

A professional team openly talks about potential difficulties and is always ready to provide documentation. You should know how and why the outsourcing development vendor estimated individual costs to risks and be able to influence the result. 

Risk #10 – No precise acceptance criteria

Legacy code and technical debt are nightmares of business and product owners that consider software outsourcing.

From our clients and online sources, we’ve heard too much about irresponsible teams who finish the product with good-for-nothing code. 

The problem is, most product owners understand the problem before it’s too late. They finalize the deal, try to deploy the product, or roll out an update, and suddenly, the code breaks. By the time owners understood this, code already needs to be re-written from the ground up. It could be avoided if an owner chose an outsourcing development vendor who pays attention to tech debt. 

software development metrics

Solution 

  • Work with teams that offer clear acceptance criteria: we define code quality benchmarks early on during the development project, but most importantly, we keep revisiting them through the entire process;
  • Ask teams about their tech debt managing practices: they should describe documentation, practices for clean-up sessions, metrics, team engagement, review activities, etc. 
  • Pay attention to cost estimates: good teams always dedicate a portion of time and budget to regular clean-up and refactoring. 

You want a computer programming offshore team that will build a codebase that can be sustainable long-term. As a product owner, it’s essential that you understand the importance of building readable, scalable codebase. 

Best practices for software outsourcing projects in Syndicode

We believe that a great project with the first contact with a business owner. Our team builds a long-term two-way partnership. On the one hand, we engage product owners in technical aspects; on the other hand, our team members are dedicated to understanding business objectives.

The computer programming offshore team has a deep, insightful perspective on your business, and you have an informed knowledge of our practices and outsourcing software. 

This transparent approach serves well both our clients and us. Team members are a lot more motivated when they understand the project, product’s scope, intent, business objectives. We can solve strategic solutions and follow software outsourcing trends,

Business owners, on the other hand, avoid vendor lock-in by working with reliable software development outsourcing companies. They know precisely why we are starting any development outsourcing and testing ideas and know how we do it. This wholesome approach allows us to take responsibility and deliver results that both us and product owners are proud of. 

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Kyiv Sofiivska 1/2a, 01001, Kyiv, Ukraine
Dnipro Hlinky 2, of. 1003, 49000, Dnipro, Ukraine
Kharkiv Otakara Yarosha 22, 61000, Kharkiv, Ukraine
Email info@syndicode.com