15 Most Common Challenges of Offshore Outsourcing

1. The Cost Can Go Up Unexpectedly

One of the core benefits of offshore outsourcing is the cost saving that can help you save valuable resources and money in case of a limited budget. However, offshore outsourcing can sometimes become an expensive ordeal as well.

In the case of more complex projects, you will need to hire offshore specialists with niche skills to work on highly sophisticated features of your product. Though offshore outsourcing costs more than employing a full-time employee, it can still cost you a pretty penny to onboard a niche specialist through offshoring.

2. Data Privacy Can Be At Risk

Data privacy has become the biggest concern in a world where more and more software is now cloud-based. Hackers and malicious actors can easily access cloud data storage with the right tools and leak confidential company information. They can also install malicious software on the server to interrupt business operations.

This risk can increase when you’re offshoring since you’re handing over your product data, business plans, and other internal information to a third-party organization.

NDAs and security compliances can help you out to an extent, but ensuring vendors have proper security measures in place can’t hurt.

3. The Quality Benchmarks May Not Be Met

We’ve often mentioned how offshoring can help you pair up with a great team that can help you create a high-quality product. But is that always the case? The realistic answer is “no”.

While offshoring gives you access to better professionals, other factors like cultural differences and delayed information exchange can cause the creation of an inferior product.

Another reason can be the constant search for cheaper options. While countries with lower living costs can provide affordable options for offshoring software development, the options may not always deliver quality.

The cheaper options are often vendors who don’t have enough experience in product development and aren’t good at following instructions. This can result in the final product being underwhelming and far from the true product vision.

4. Cultural Barrier Can Cause Issues

Cultural barriers are very real when you have a team of people worldwide. Cultural barriers can frequently cause miscommunications and misunderstandings.

While English can connect all team members, there will still be differences in expressions and wording that can cause frequent misinterpretations. Aside from these, other cultural gaps like differences in pronunciation, accents, religion, and social activities also affect individual behavior and levels of collaboration.

If you don’t have a team that’s culturally compatible with one another, it can cause communication issues and increase overall development time.

5. The Communication May Not Be Transparent Enough

Communication between offshore team members relies heavily on texts, calls, and collaboration tools. While these tools and technologies can increase convenience for information exchange, communication may not always be as stable and fluent as one might think.

In an offshore team, only some team members are online all the time due to the time zone differences. This can cause delays in exchanging feedback or any other development-related information and causes a lack of transparency in communication.

Also, when the team is busy with product development, not everyone has the time to be constantly online to update everyone about the progress or answer every question the product owner or other stakeholders might have.

6. Poor Technical Knowledge Can Halt Development

Not all offshore developers come in with magnificent, out-of-this-world skill levels. While looking for cheaper options, most product owners often pair up with vendors with a team that can be considered less qualified for the modern market.

As a result, the team may not often know the required tech stack or programming language needed for development. While the team trains to complete the project, the project itself can come to a complete halt till the team is ready to work on it again.

7. You May Have Limited Authority Over Your Product Development

As a product owner, you hold all the rights and control over your Intellectual property (IP). Even then, offshoring takes away most of the governance and control over your product development because the team is in a different part of the world.

Another reason for losing control is the developers’ collective opinions interjected within the product. With offshoring, you’re partnering with developers with experience and opinions of their own, and they might try to insert features that they think fit the product.

Unique solutions may be a great idea, but often, the insertion of such unplanned features can lengthen the development time and result in a final product far from the original vision of the product owner.

8. Government Legislation Can Create Issues

Certain industries take more security measures than others to protect their internal data. These businesses comply with government legislation to expand overseas and perform cross-trading.

While some companies are very strict about their policies and law governances, others might not be so sincere. When you’re offshoring to a vendor not abiding by all the security compliances, you’re supporting companies constantly performing dishonest business practices.

9. Time Zone Differences May Cause Scheduling Conflicts

Time zone difference can be both a benefit and an absolute pain for your offshoring team. If utilized through proper planning, you can create a schedule where one or more team members are constantly working on the project around the clock.

But for all members and their timelines to align perfectly requires nothing short of a miracle, and there’s a high chance your scheduling will never be as perfect.

While overlapping schedules can be an issue where every member has a general time to be present for a meeting, collaboration still gets much tougher where the time difference is more than 6 hours.

10. The Team Members May Lack Mutual Trust

Different cultures perceive other cultures uniquely and differently, and it’s human nature. People always fear what they don’t understand, and not understanding the cultures or the actions of someone coming from a different culture can cause a lack of trust.

The cultural barrier also plays a role here. Lack of trust issues can appear due to miscommunications and misinterpretations.

11. Geographical Distance Is A Big Obstacle

The biggest issue geographical distance creates is logistics difficulties. While these difficulties have been mostly solved by implementing advanced logistics systems and hiring culturally sensitive employees, the problem persists.

12. Project Management Tasks Are More Challenging With Offshore

While project management can be challenging when leveraging offshore outsourcing, it isn’t impossible. However, a seasoned project manager can have trouble managing an offshore team efficiently without proper collaboration tools and guidelines that include team objectives.

Most vendors offer a project manager along with their teams who oversee all progress made by the team on behalf of the client, and it’s a great way to reduce project management challenges.

13. Ownership Is Much Harder To Address

It’s much tougher to address complete ownership of one’s work in an offshore development environment, eventually leading to attrition. It’s easier for organizations to assign tasks to the right people without worrying much about a lack of ownership when all team members are equally professional and highly responsible.

14. The Organizational Structure May Not Facilitate Offshore Properly

While offshoring is a great idea, an organization needs to have a sound supporting structure to support the idea of offshoring in the first place. Factors like proper internet connection, the right collaboration tools, online workplace facilities, etc., matter a lot when proving the organization’s viability and feasibility of offshoring.

Unless all the preconditions of offshoring have been met, it’s best not to take the route.

15. The Team May Be Unable To Hit The Deadlines

An offshore team may face frequent delays due to all the other challenges mentioned above, resulting in constantly missing deadlines. In software development, releasing the right product at the right time can differentiate between success and failure for a business.

With constant delays and missed deadlines, it’s simply impossible to release the right product at the right time, and it can cause a huge loss or a product that hits the market when other similar products on the market have already fulfilled the need for that product.

To Wrap It All Up

Now, you might be thinking, “If there are so many issues with offshore outsourcing, why use the model in the first place?”

Before we answer, we ask you to consider that despite all these issues still being present in certain degrees in the market, offshore outsourcing is still the most popular method worldwide for product development or project management.

While the challenges can be hair-pulling levels of frustration, the final result of a high-quality end product is always worth the trouble.

FAQ