TOP 10 HIGHEST RISKS OF SOFTWARE OUTSOURCING AND HOW TO MITIGATE THEM
As someone who has never outsourced software, you may worry that remote collaboration will take an excessive amount of time and money. If the development team has not won your trust, these concerns are natural. All the risks of software outsourcing can’t be avoided. However, most of them are easy to repair. In this article, we list down the top 10 outsourcing risks as well as the solutions to mitigate them.
Face to 10 Risks of Software Outsourcing
1. Broken promises
Most software outsourcing companies speak of great-experienced, talented and skillful developers, but do their words show credibility? You may fear that the software contractor will not fulfill your vision or, worse, go out of business in the middle of development.
- Check out the company’s website: If they can’t make a beautiful site for themselves, then is there any hope that they will improve it for you?
- Review their case studies: Credible companies proudly showcase their most successful projects by listing the client’s background, their problems, and their solutions. While case studies are not a panacea, they can demonstrate the vendor’s expertise and point out their former clients.
- Look beyond the case studies: Check out independent review platforms like GoodFirms and Clutch. Customers to evaluate IT outsourcing companies and provide details on how to work with them.
- Talk to your customers. It’s always worth asking for references, even if the vendor is tied to an NDA or the customer is too busy to answer your questions.
- Check the vendor’s activity on social media. Do you share your knowledge with other developers? Do you take part in international conferences and local IT events?
- Get to know the team face to face. If possible, visit the contractor’s office. Your everyday life and allows you to talk to the people who are working on your solution.
- Exercise due diligence. Add a clause to your contract that describes contingency plans in case the development partner goes out of business. about critical infrastructure and all resources used to build your system. Find out if local laws and political instability can jeopardize your long-term partnership.
Hire a pilot or MVP to assess the vendor’s technical skill, attitude, and people skills. A small amount of work ensures you don’t waste too much time and money on incompetent contractors.
2. Unsatisfactory Quality
If you ask a dozen people who have stopped outsourcing, most of them will tell you a similar story, they all wanted to save money, they all went for the cheapest deal on the market, they all have a rookie in the thick of it -Team nowhere and a bunch of communication problems. If the result is undocumented code clutter, all potential cost savings are lost.
- There can be no compromises when it comes to quality. Make sure the software contractor meets the same high-quality standards as your own company. Check that they understand the role of QA in the project and use code review.
- Look at the technology stack of the software outsourcing vendor (e.g. frameworks, libraries, test and monitoring tools). Do they just focus on manual UI testing or can they offer the full range of QA services including performance testing, API testing, test documentation creation, and extensive QA automation?
- The contractor uses cutting-edge DevOps practices to accelerate development and maintain high quality (e.g. continuous integration and deployment, containers, source control systems, build automation tools, etc.
- Having a technology expert by your side: You must have at least some technical knowledge. Accept this responsibility and you will have a sophisticated solution that meets your business needs.
3. Lack of domain experience
If the vendor is inexperienced in your niche, you will need to spend more time analyzing your needs. While many solutions are generic enough to apply to different niches, a lack of domain knowledge during development and release can cause numerous problems. in a product that deviates from industry standards.
- Gain insight into the contractor’s domain experience. You can find this information on their website or request it directly (along with case-studies as evidence of your experience).
- Add a product discovery phase/workshop before development begins. Wireframes, use cases, and business processes – a blueprint for your technical product specification. In addition, any gaps in the technical expertise and soft skills of the provider are revealed in the workshop. If you notice red flags, just keep your blueprints going from competent developers. This way, with a small initial investment, you can be protected from many risks in the future.
4. Unanticipated Costs
Obviously, the first time you outsource, you need to be concerned about unexpected costs that may arise during development. While most issues are easy to spot before starting the collaboration, some may be hidden from your eyes.
- Make sure that you have clear requirements before starting the collaboration (alternatively, organize a workshop to collect requirements). This will help you define the scope of work and reduce the possibility of unexpected costs.
- Familiarize yourself with the provider’s pricing models. Different companies can have different ideas about fixed-price contracts and non-fixed-price contracts. Choose a participation model that best suits your project.
Sign a Service Level Agreement (SLA) that lists the services provided by the web development outsourcing company and their costs. They know all of the hidden costs like integrations, hosting, site visits, overtime, and buying the add-ons/hardware/software required.
View more: Hidden costs of mobile app development
5. Out of control
Losing control of a project is every manager’s nightmare. You know your business. You know when your employees need supervision and when you can trust them to make their own decisions. Working with a software outsourcing partner is similar: You have to build trust in each other
- Ask yourself which aspects of development you would like to delegate before starting the cooperation.
- Write a detailed management plan. Identify key stakeholders, their responsibilities and contacts; Establishing processes to cope with changing requirements.
- Manage the project together with your partner. Appoint a Product Owner who is responsible for communicating with the development team and prioritizing their work.
- Set up the appropriate communication channels. Daily emails are great, but regular video calls, on-site demos, Slack channels, and access to bug tracking/project management software are very important.
Follow the development process. If you abandon your project, the end product will likely differ from what you expected. Feedback on the various phases is essential for success.
6. Lack of Communication
According to Grant Thornton’s, International Business Report, 88% of respondents believe that communication is the key to successful outsourcing. Different time zones, language barriers, cultural differences and the lack of face-to-face meetings can all affect the outcome of the project.
What’s more, if you go for short-term cooperation, the contractor has little time to understand your needs and adapt to your communication style.
- Check the team’s English and understanding your requirements during the negotiation phase. Always insist on face-to-face communication or online meetings. Direct communication can indicate language problems that can later lead to misunderstandings.
- Find out if the software provider is familiar with your time zone. While the difference in 24 hours is negligible, more than 8 hours require significant adjustment for IT outsourcing companies. For example, you can deploy the code overnight and then report on it in the morning.
- Ensure that the IT service provider has an established procedure for capturing requirements and employs professional business analysts.
- When working remotely, some sunscreens will last for many days. They arise during the team’s workday, last until you can read your email in the morning, and finally dissolve the next day. To avoid such situations, you can ask the team to change their working hours so that at least a few hours overlap. Regular morning syncs can go a long way towards solving blockages.
- Take cultural differences into account. Different countries can have different traditions, norms of behavior, intonations and gestures. India, China, and Southeast Asia, for example, prefer precise instructions and processes. They often opt for waterfall development. Latin America and Eastern Europe, on the other hand, are similar to Western Europe and the USA appreciate the flexibility and initiative of Scrum teamwork.
7. Lack of experience with remote teams
You may be reluctant to outsource because you have never managed remote developers. In such cases, the contractor’s experience plays a crucial role, because an equally inexperienced developer is the recipe for disaster.
- Choose a partner who knows how to work remotely. Well-known software outsourcing IT companies usually base all of their business processes on the overseas location of their clients, which means that they already know how to work across multiple time zones, they understand cultural differences and skills for a successful collaboration
- Ask your partners to train your employees to work with remote teams.
8. Intellectual property problems
Working with software outsourcing companies usually means exposing your intellectual property. It’s natural to feel uncomfortable sharing sensitive information about your employees, business processes, and IT systems.
- Find out if the IT outsourcing company has experience in handling sensitive data (especially in the financial, medical and government sectors). Ask about their privacy practices.
- Sign a non-disclosure agreement (NDA) before cooperating. Check local intellectual property laws. If necessary, hire a legal advisor with experience in software outsourcing.
- You might worry that the vendor will use the knowledge of your system to develop a competing product. This risk can easily be mitigated with a non-compete clause.
9. High turnover at the vendor’s company
The sales of software outsourcing companies may be much higher than that of local companies. If a new developer is called every two months, product quality will inevitably be affected.
- Ensure that if team members leave, they can find qualified replacements among existing employees (you can also include clauses requiring contractors to issue such loss warnings).
- Visit the contractor’s office and make sure they hire their own developers instead of relying on many alternative freelancers (or, ask the contractor to take a video tour of their office).
10. Technology dependence
Many companies worry that, over time, they will become so dependent on one outsourcing supplier that it is almost impossible to switch to another supplier.
- Sign an agreement that guarantees your ownership based on your code and database.
- Understand how easy it is to find developers with similar technologies. Calculate the cost of switching to another provider.
- Insist on recording the development process..
If you have enough foresight, you can mitigate most of the risks associated with outsourcing. Following these tips can save you a lot of remote work time and money:
A small initial investment in the form of a discovery seminar can protect you from the many risks associated with the use of remote control bandages. You continue to participate in the development process.
This simple rule will make your life easier and ensure the success of your project.
If you have some questions about working with remote teams or if your next project requires well-known developers, please feel free to contact InApps – the Top software outsourcing company in Vietnam and Southeast Asia.
There are many software outsourcing companies in Vietnam offering offshore development center services to provide international tech talents and InApps Technology is proud to rank:
- 1st for Top Mobile App Development Companies in Vietnam 2021
- 2nd for Top Software Development Companies in Vietnam 2021
- 4th for Top Web Development Companies in Vietnam 2021
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