15 Risks of Outsourcing Software Development You Must Consider

Outsourcing business processes requires a lot of research and complex decision-making before choosing the right outsourcing model to suit your business objectives. With all business operations, outsourcing comes with certain risks too, regardless of the business process you’ve decided to outsource.

1. The Vendors May Not Be As Reliable And Trustworthy As They Claim

Many outsourcing vendors constantly update their websites with relevant experience of working in their target industry. This is a great business practice that promotes transparency and professionalism, helping business owners make the right choice during researching potential vendors.

However, some vendors aren’t honest or transparent about their services, and their official websites barely offer any information. If you see a vendor with these signs, it’s evident that they don’t offer good services, or their services aren’t on par with modern requirements.

Without proper research, you have a higher probability of pairing with one of these vendors which will only result in wasting your resources.

2. Domain Expertise Is Questionable Without Proof

Many outsourcing vendors claim that they have expertise in certain industries, but do not present enough proof to back up their claims. Partnering with a vendor that doesn’t have any proof of their claimed expertise is always a big loss for your business.

As the previous section mentions, reliable ones always put up the relevant expertise on their website for complete transparency. They also add client testimonials and certificates from industry veterans to signal their authority on the subject matter.

If you ever come across a vendor who isn’t displaying their expertise up front, the claim is highly questionable and you should avoid signing any contract with them.

3. The Team May Not Have The Right Tools Or Knowledge Proficiency

Most outsourcing vendors don’t just provide team members, they also offer the right tech stack and proper training for all outsourced team members so they can adapt faster to the client’s requirements.

However one single vendor cannot solve all the problems in the world at the same time, so there are times when a vendor might not have the right knowledge or the tech stack to support your development process.

This can be avoided by thorough research and communication with the vendor to ensure they’re a good fit for your business.

4. Time Zone Adjustment Can Cause A Lot of Setbacks

Time zone adjustment is a double-edged source in the world of outsourcing. On one hand, time zone differences can help one or more employees stay online around the clock, improving business operations by serving or developing 24/7.

On the other hand, time zone differences also cause regular delays in conversation, since not everyone is online at the same time.

Delays in communication also cause delays in information exchange and feedback implementation, and the delay causes a higher time to market through a longer development cycle.

If time zone difference is the biggest concern you have regarding outsourcing, the best way to mitigate the risk is to leverage the nearshore outsourcing model where you can outsource your project to nearby regions that have similar time zones, or time zones with little differences.

5. You Have A Chance of Losing Control Over The Project

Outsourcing is usually done for non-core business processes while the internal team takes care of business operations like sales, marketing, infrastructure management, etc.

But still, when you’re delegating software development tasks to an enterprising third party, you are dependent on the vendor team and their expertise. You can offer constant feedback and instruction to the team so the product aligns with your vision.

But even with constant collaboration, you’re dependent on the outsourcing team and their operations. Aside from that, outsourcing teams are usually remote, providing even less governance and control over the entire project.

6. Privacy And Confidentiality of Project Information Can Be Jeopardized

Data privacy is a big concern among all software development agencies, and one of the big risks of data leak occurs when third-party individuals have access to said information. An outsourcing vendor has complete access to product information, as well as client data that the complete product deals with.

Without proper security regulations and data confidentiality contracts in place, the data has a high risk of getting either leaked or jeopardized. In an act of corporate espionage, confidential company information can also be sold to competitors for profit.

7. There Might Be Hidden Costs

A standard practice for outsourcing vendors is to list their pricing models with details about each model and the services they include. However, vendors who aren’t completely transparent about their pricing can add hidden charges that aren’t mentioned in the pricing models.

The vendor might come up with various tasks that have a chance of rising in the future and charge them in advance. These will include

• After-hour services
• Redeployment
• Relocation
• Troubleshooting
• Upgrades

You can avoid the vendors bringing up hidden charges by being completely clear and concise with your business and project requirements.

8. The Service Quality And Performance May Not Be On Par With Your Requirements

Certain outsourcing vendors specialize in specific business operations, and they will always ensure you that they offer the best quality deliverables regardless of the objectives. But here’s the thing: no one can guarantee the best quality in the world, and it applies more to vendors who are already vague about their services.

In cases like these, you will see constant fluctuations between the promise and the delivery. You have no idea how to determine who’s telling the truth about delivering as high quality as possible, and the best you can do is hope your research has led you to the right vendor.

9. Communication Barriers May Arise

Cultural and language barriers have been a long-standing issue when it comes to outsourcing. Even in a world where there are 1.35 billion English speakers, you would think the language barrier would become less of a concern.

In the case of offshore outsourcing, it’s crucial to ensure that all the team member including the vendor is fluent in English. Language barriers become an issue when you’re discussing business requirements with your vendor or providing instructions to your team.

When everyone’s not on the same level of fluency, your instructions or requirements can be misunderstood or misinterpreted as a lot can get lost in translation. If the whole team continues to work on misinterpreted instructions, the final deliverable will not be with the business vision.

10. Vision of The Final Product May Be Misaligned

Outsourced team members come with their range of expertise and prior experience of working with your industry. When you’re outsourcing your software development, there’s a chance that the team will improvise in certain places and it will not align with your final product vision.

Outsourced teams, even though working on the feedback and information provided by the product owners, have a certain freedom due to not being on-site. As a result, the whole team can take a certain extent of freedom to implement their ideas on the product, causing the final product to differ from the original vision of the product owner.

11. The Vendor May Not Be Committed To Delivering Quality Products

Not all vendors are committed to providing the highest quality possible when it comes to software delivery, and there is a chance that your partner vendor might do the same.

Not all vendors are committed to quality and are more focused on the paycheck received afterward. As a result, these vendors don’t work with full integrity on the projects of their clients, and the final deliverable does not meet the client’s expectations.

To mitigate this risk, only partner with vendors who have verified client testimonials previewed on their website assuring the quality of their deliverables.

12. Task Management by The Team Leader May Not Be Very Efficient

Outsourcing vendors provide an external project manager or team leader to reduce the hassle of management for their clients. However the task leader may not always be experienced, and less-experienced leadership leads to ineffective task management.

When you’re working with a team whose workflow isn’t optimized or streamlined the right way, the development project can consume additional time and resources, while the result is underwhelming. Of course, this counts as a neat loss.

13. You Might Choose The Wrong Country To Outsource Your Software Development

Choosing the right location to outsource your software development is vital to the success of the final software product. When choosing a location for offshore outsourcing, there’s a lot to consider.

To err is human, and it’s perfectly reasonable that you might outsource to a location that can interfere with your product development in a lot of different ways:

• The location may not have enough vendors who are fluent in English
• The time difference might be too high for an efficient overlapping schedule
• The region may not have the right specialists for your development
• The difference in currency value might drive the pricing higher

14. The Code Quality May Suffer

Not all outsourced team members are professional programmers, and this can affect product development over time. While a good UI/UX is highly important, it’s only a fancy visual unless there’s proper working code behind it.

When you leverage software outsourcing, you might have a team full of great UX/UI designers, but not enough programmers. Without working codes, one or more of the features of the product may not function properly, and reduce customer satisfaction rate.

15. Constant Delays Can Occur Even With Agile

Agile methodology is the best way to achieve fast software development while ensuring complete functionality and resource optimization. But even if you get lucky and manage to partner with a distributed agile team, your development can still get delayed.

Even when you have an agile team working on your project, time zone differences between offshore locations can cause delays in information exchange. It causes feedback to be implemented at a bigger delay compared to on-site development, and constant delays can occur.

Why Outsource Software Development If There Are So Many Risks?

The first question that can appear in your mind after learning about all the risks is “If there are so many potential issues, then why bother with outsourcing in the first place?”

To answer your question, allow us to point out some key benefits of outsourcing:

• Lowers development time
• Reduces overall development cost
• Increases efficiency by allowing to partner with experts from a larger talent pool
• Grants better team scalability
• Globalization allows you to bring in a fresh perspective on the team
• Outsourcing different operations to different vendors allows to manage higher expectations
• Allows more freedom to focus on core business functionalities

How Impala Intech Approaches Outsourcing Services

With multiple project completions and years of experience under our belt, here’s how we deal with high efficiency with all of our clients:

• All our libraries are always up-to-date
• We streamline all client processes and prioritize tasks with detailed analysis
• 24/7 project tracking
• Secure environment for all regulated industries
• Three-phase reviews for all clients
• Clear terminology
• All changes are reviewed by our professional team of engineers
• Constant access to senior engineers in the case of an emergency
• Constant consultancy from business analysts regularly
• Our knowledge base covers all possible project-related information
• Development task specification and assignment is completely transparent

FAQ