6 Outsourcing Software Development Risks and Tips to Offset Them

Are you comfortable with delegating tasks? Especially when it comes to crucial business milestones, like software development, legal process (LPO), etc.

In today’s connected world software development outsourcing is a dynamic trend. Affected by globalization, outsourcing agencies become more reachable and open for customers who are looking for talented experts that they don’t find internally. Hiring a dedicated team with extensive tech expertise and having the ability to scale as the project grows is both time and cost-effective. In the subcontracting pros and cons debate, the benefits seem to outweigh the cost.

Here are the heads up about outsourcing software development risks and tips to offset them based on our first-hand experience.

outsourcing software development risks

Being a web & mobile development company, Apiko knows all the pitfalls upside down. When cooperating with a customer, we always strive not only to concentrate on code development but take into account unique needs, peculiarities, the overall nature of the industry and respond to them quickly.

Besides, unexpected happens. All these risks presented below aren’t experienced by default, so we decided to describe 6 milestones of the software development lifecycle, define possible damage and sketch out how to avoid their harmful impact.

Missing out on proper vendor evaluation

The bidding process is no longer just another buzz-word. The concept of your prospective project should be deeply thought-out and embedded into the RFP. Not even plan on shoving your visions and abstract ideas into someone’s head.

How could a third-party company accept your request if you can barely draw it up even in your own mind? Let alone additional requirements, must-have features, budget or deadlines.

Be clear and to-the-point, as everything will be done on your terms. What is your first priority? Do you have short time spans and need the project to be done ASAP, no matter what the price is? Are you focused on premium quality and put everything else on the back burner? Or maybe your tough budget forces you to go with what’s available?

Either way, quality, budget, and timeline are the key points of any outsourcing project, but actually, there are many more details you have to bear in mind.

Hint: Identify your priorities clearly. Don’t kid yourself, a screenshot of an application you’ve liked can’t convey the concept of your order. Every tiny aspect has to be accurately discussed and all spendings need to be calculated beforehand.

Concept development is a starting point when you’re hiring a dedicated team. This stage sets the course for your future work and helps to avoid misunderstandings from the very beginning.

Reality vs Expectations

Have you ever been frustrated that the result doesn’t meet your expectations? Of course, you have. Due to the incompatibility between reality and an idea, customers often become disappointed. First of all, a client has to evaluate his tech expertise to understand how feasible the requirements are and what to expect at the end of the software development process. Validate your idea due to the current baseline (such as budget, timeframe, distinctive features or concerns).

Introduce your company, its previous experience and specify the necessary entity information. For a better understanding, the prospective software development agencies have to know what they’re dealing with. Describe the project and what you’re aiming for, set up your expected qualitative outcomes and quantifiable goals, solidify intentions, but don’t get carried away.

Sometimes it’s needed to analyze and tweak prerequisites at the stage of concept development.

This is especially important for long-term partnerships, since the scope of work may change with time. It helps to avoid any additional corrections subsequently, that slow down the whole development process.

Hint: Discuss, analyze and adjust inputs as needed, whether requirements, deadline, budget, technical complexity of certain solutions at the beginning of the collaboration. If the customer’s requirements are far from being feasible, such cooperation should be abandoned. Any respectful company will always be sincere with clients. To lose a customer is an extremely unpleasant outcome, otherwise, in the long run, you will avoid worse consequences - failed project and irritated customer.

software development risks and mitigation

Outsourcing Software Development

Oddly enough, some customers do not know what they want to get in the end, they often provide vendors with a general idea or poorly thought out concept. Without a sufficient knowledge base, non-technical customers are sure that their idea is detailed enough for turning it into reality. This approach is nothing common with professional web & mobile development agencies, what’s more, even a design prototype or a specific document with specifications does not guarantee that the project idea is well-worked and ready to go.

In case your concept wasn’t aligned, the following risks become more realistic:

⦁ Additional sunk costs

⦁ Unstable, fragile code development and lower quality of service

⦁ Mounting tech debt

The risks of unplanned expenses are typical for the stage of direct cooperation with the outsourcer and include additional, previously unintended financial costs, primarily related to the need for initial contract revision.

They are also associated with the cost of services, which usually does not involve different market developments and corresponding changes in the goals of the enterprise. This leads to the need for finding new core solutions and accordingly new features of the marketing service.

Hint: Before moving forward to design, you should pay sufficient attention to the configuring certain widgets and potentially problematic places. And make sure that you have clarified all daunting points with a client before embarking on MVP development. This methodological, cohesive approach de-risks the outsourcing software development process.

All-round Analysis

Outsourced software development is a complex process. To analyze and predict everything is extremely difficult, let’s say that’s rather impossible. Nevertheless, as a customer service company, we need to foresee, specify and address all the aforementioned factors and offer customers a solution to reduce the potential negative effects of certain software development risks and mitigation.

Here’s the golden rule of successful, clear-cut outsourcing - nothing should go awry. That’s why third-party solutions need an agile strategy that can be pivoted at any time without inconveniences for the customer.

Hint: A risk analysis should be carried out before signing a contract. If some weak points were detected, it is recommended to inform the customer and suggesting him a few alternatives.

Lack of competence among the outsourcing enterprise to fulfill the existing customers’ tasks, as well as the relevant tools and methodologies, are the main threats to the choice of a service provider that does not meet their needs. That’s the reason to approbate your prospective outsourcing companies carefully and turn exclusively to certified, experienced companies, that provide the highest-quality service.

outsourcing pros and cons

Cost Estimation

Any customer wants to know what he is paying for, and that's fine. In order to ensure that customers do not worry throughout the entire process, the practice of evaluations was introduced. Thus, the price for a particular project should be estimated beforehand, without supply chain disruptions.

The undetectable exceptions, the workarounds and the embedded business logic in applications that culminated overtime must be identified upfront. Conduct experiential workshops to understand the experience of all those involved - people, processes, assets, and technology.

Hint: The expected but unpleasant appearance of expensive change orders - a contractual device that allows outsourcing providers to renegotiate in midstream - has ruined more than one business relationship. Bring up this sticky subject early in the negotiating process. Interrogate the service provider. Ask them to describe, in detail, how the processes work.

Communication and Reporting

When providing outsource services, communication is extremely important. Software development isn’t an exception. Discussing a particular issue it’s strongly recommended not to be annulled and to clarify a specific point once again than overlook certain solutions instead of asking. Also, in the process of communication, some misunderstandings are possible, for example, clarifying a certain point, you may not receive a clear answer or an off-topic answer if the customer misunderstood you. In this case, it is worth asking again, clarifying again until everything is thoroughly disassembled and understandable. Unresolved misunderstandings can lead to additional costs or complications that are of course undesirable.

Hint: Make sure your business objectives fit the appropriate collaborative outsourcing relationship you enter into. It's critical to acknowledge there's more to outsourcing than driving down costs and recognize that potential innovations and opportunities will come from the embedded knowledge and insight of some of the outsourced processes. Both are important considerations for defining the outsourcing relationship.

supply chain disruption

"At its core, the outsourcing industry rests upon an old business
model based on inflexibility and cost reduction that doesn't account
either for the predictable patterns of technology adoption or for the
demands customers face for providing more 'value' and 'service' rather
than simply reducing costs for their customers."

Ralph Welborn

Based on extensive experience in outsourcing software development, we’ve covered the most common question, issues, and tricks for a successful process, our customers usually face. From the current tech ecosystem analysis to launch, we’ve carefully guide you through the rough spots.

As mentioned above, the software development process is a fairly broad and complex subject, a lot of books and guides were devoted to the topic. Making conclusion, we can say that all these basic tips we’ve shared are both simple and important. These pieces of advice should help reduce the negative impact on your project development and help you complete it on time to achieve the highest possible quality.