Software development outsourcing is a global trend. Gone are the days when companies outsourced software development to offshore outsourcing companies with the sole purpose of reducing costs. As the world becomes more open, global talent with outsourcing is more reachable and companies are in need of talent and technical skills that they don’t find internally. But, Software outsourcing also fails. We, in this article, give our readers a heads up about the risks associated with software development outsourcing and how to mitigate them.
Outsourcing is like task delegation. Why companies do it? Because some tasks have a steep learning curve and if not executed properly, can mean struggle for your business. And if your existing in-house staff is over-packed with other stuff, the only door open to you is hiring experts in the field, which will cost both money and time.
So, the other easier option to hire skilled software developers fast and at lower rates without too much trouble, i.e turn to offshore software outsourcing! Outsourcing help businesses focus on the core components and the processes they are best at. Focus on your strengths and outsource all other things. Take a quick read to know more details on outsourcing and why businesses should outsource.
Not every day is sunny when it comes to outsourcing. Along with global skill access, superior quality of work and effective cost savings, this strategy brings along its own set of challenges as well as risks. After almost 8 years in software development outsourcing, we’ve noted down a few red flags in outsourcing and how to avoid them so that you can use outsourcing to draw an increased return on investment as well as a competitive edge for your business.
 Unrealistic expectations
A huge barrier to success in software development outsourcing is unrealistic expectations. You cannot and I repeat, absolutely cannot expect to build Facebook with a 1000$ in your pocket.
Companies are often expected to submit bids without the complete picture. You cannot expect an architect to let you know how much your house will cost without giving him detailed specifications, right? So, why keep the same expectation with a software development firm?
A lot of outsourcing companies will nod their head to any and all requirements, in any time frame and under any budget. This is where the risk starts. Draw up a proper scope of work and don’t keep any scope of assumptions. Make a detailed business requirement document and share it with your potential custom software development firm. There will be loopholes and breaks in project flows in the doc, and that’s okay, you are not a pro!
See whether your potential firm can point out the issues and are inquisitive. Make changes in the document and when both parties agree to a certain solution, go ahead and start with the development.
 Indistinct leadership Project managers are often assigned to projects based on their technical skills, but leadership and communication are sometimes not taken into concern. A project manager is like the backbone of a project. He/she is critical to the failure or success of the project. He/she has the responsibility to ensure business needs are addressed at the same time the cost and schedule are on track.
It’s their responsibility to provide clear instructions to the team, distribute tasks and resources, track overall project progress and then communicate the necessary details to the required party. Poor leadership can have some devastating effects on outsourcing. In the world of iterative development, global team and multiple time zone, make sure that your chosen communication channels are effective and not a distraction with unnecessary automated interruptions.
 Confidentiality of information
You are discussing your business ideas with 5 different outsourcing firms, each one having complete knowledge of your business requirement and process flow. But, venting the entire valuable information to unfamiliar people that you don’t know and don’t trust is a risky ask! The best way out is to have the potential firms sign a non-disclosure agreement (NDA).
An NDA is a legal document that binds two or more parties in a contract where they can’t share confidential trade secrets about one’s business that has been revealed to them. The main idea behind this is to convey the required information to some third person about a business idea without the fear of the other side stealing the information or use it without your approval
 Quality of Software
The quality of your software is the bottom-line of everything. All that you worked so hard for is the software quality. There can be a significant impact on your business in case of software glitches, starting with delaying your project launch as developers will need to go back and work on your software to fix those glitches. If the glitches are discovered after launch, it might result in a huge blow to your reputation and might not last long in the marketplace.
So, before your software is made available to the market, carry a thorough code review to be assured that it has quality code implemented. You can also carry out functionality testing on your own(even if you don’t have a dedicated tester), after every milestone, to avoid discovering all the bugs at the ending phase of the project and re-developing the whole thing. Bugs can creep in at any stage but regular testing will make it cost-effective to fix them in the earlier stage than at later stages.
 Inadequate technical skills
It is very important that you choose a software vendor that has previous proof or work in your industry and vertical. This to some extent avoids skill mismatch. Risks often arise when technical architecture and framework of your project doesn’t match with that of your software development firm.
Clear work experiences and references are of utmost importance in demonstrating core technical competency. Ask for client references and take some time out to directly communicate with the clients to know how capable the potential software firm is w.r.t technical skills as well as all-round development.
As Mark Zuckerberg often quotes, the biggest risk in this ever competitive world lies is not taking any risks. Take risks, but strategically. Software outsourcing forever is an arena where there are examples of failure but with proper planning, clear business objectives, and communication, it can turn out to be a decision in favor of your business.
Originally published at www.binaryfolks.com.
5 Software development outsourcing risks and how to mitigate them was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.