Your business is growing fast and you’re thinking about how to outsource software development effectively? Searching for successful ways of building a dedicated development team? You have come to the right place. Today’s article will shed some light on the subject and reveal common outsourcing risks as well as practical tips on choosing a reliable offshore software development company.

As a rule of thumb, companies search for an offshore partner with the help of RFPs. Although sole sourcing is also used, it remains the least popular method. Whatever strategy you choose, you need to be aware of the possible pitfalls on the way.

How do companies outsource?

Source: Deloitte

Top 5 IT Outsourcing Risks to Avoid

The vast majority of CTO’s are concerned that they will select an outsourcing company, allocate money, set up a team, spend a great deal of time on the transition period only to find that their offshore partner is not reliable. Simply put, they are reasonably afraid to experience constant delays, poor code quality or, even worse, data breaches.

So, it’s better to educate yourself about the potentials risks offshore software development entails to be ready to mitigate them. Let’s have a more in-depth look at the problem and review the most common offshore issues you’d better be mindful of before embarking on a novel partnership with an offshore provider.

Lack of understanding of the big picture

Many offshore projects tend to go down the drain simply because customers fail to clearly communicate their goals and overall plans on the strategic level. When an outsourced team doesn’t have enough information on your business ecosystem, they can’t apply their experience to the full to help you innovate your product. Articulating the vision of a project would help offshore specialists contribute to formulating a winning product strategy. It often happens so that when you are looking for new solutions for your product, your offshore partner could introduce ideas you wouldn’t think of. All you need to do is to build trust and be open to fruitful partnership.

Security concerns

Data security remains the #1 pain point among those who plan to outsource software development. When evaluating a shortlist of offshore providers, companies overlook their information security policies, and what is more important, their security plans for business continuity and disaster recovery. As a result, it often leads to data leaks or unexpected company discontinuance notifications when a client is not fully prepared for such an event.

Product quality and integrity issues

The quality of the product depends first of all on the technologies which are used and the technical competence of people who are responsible for the product delivery. When choosing an offshore partner, companies undervalue the importance of interviewing the engineers they are going to hire and meeting with their potential teams in person. This would help them to better understand their strengths, technical background, and potential for success.

This problem is tightly connected with a lack of visibility caused by the communication gap between the client and the offshore software development company. People fail to communicate their quality standards at the beginning and ramp up communication only when the issues begin to arise. This causes delays as well as frequent glitches.

Cultural and time-zone differences

If you decide outsource certain services, chances are your offshore partner will be located miles away from you. Thus, you might confront language difficulties. Plus, differences in time zones often lead to miscommunication when it comes to daily stand-ups or regular planning sessions. Besides, the lack of convenient flight connections may also pose a big problem if you plan frequent visits to your offshore software development company.

At the beginning, companies always struggle to get accustomed to each other’s set of values and traditions. This relates to both large ethnic divergences as well as unfamiliar business ethics. Make sure your offshore provider’s culture is close to yours or at least you are ready to accept it.

Losing control of the bottom line

Another challenge that causes substantial misunderstandings is unclear arrangements over financial issues from the outset. According to Gartner, there are a number of pricing models you may choose to stick to, such as fixed price model, time and materials (T&M), incentive-based model, shared risk-reward pricing model, etc. The problem is that clients often fail to agree with their partners on the particular pricing model. When two sides are not transparent about overall costs, the project is doomed to failure.

Given all these possible challenges related to offshore software development, you may wonder why someone would still want to undertake it. The reason behind is simple – the benefits surpass the pitfalls. Once you settle on the provider, don’t forget to lay out a risk management plan. In the first place, you should be aware of the risks and do everything possible to avoid them. That’s basically what the following tips are all about.

6 Expert Tips on How to Outsource Software Development

Experts predict significant growth in the global software outsourcing market. According to Statista, the global outsourcing industry revenue in 2017 amounted to $88.9 billion, and it doesn’t show signs of declining in 2018. Another survey from Statistics Brain reveals that 43% of US companies outsource programming jobs and are more than satisfied with the services provided by the outsourced agents. It means that this figure will only increase in the upcoming years. So, if you want to be ahead of the game, you need to learn how to outsource effectively.

The global IT outsourcing market in 2021

Source: Technavio

#1 Focus on core expertise vs. cutting costs

A decade ago, offshore software development was an attractive option for enterprises that wanted to reduce costs in salaries and infrastructure. And it’s true, according to the recent study by Accelerance, the cost of outsourcing software development in Eastern Europe, South America, and in South Asia is much lower than in the US or Great Britain.

However, nowadays software outsourcing is also seen as an effective way to leverage the collective experience of your offshore partner to help you innovate. Because they work on different projects with a variety of technologies, offshore software development companies can easily help you modernize your product, protecting it from possible risks.

#2 Don’t overlook the technical education level of developers

When choosing an offshore software development company, thoroughly assess the technical background of developers. Do the research to check whether their technical expertise fits your requirements and overall strategic goals.

If the number of Junior developers in outsourcing business is a lot bigger than Middle and Senior specialists, it means that the country offers profound education in the IT field and invests in its budding talents. The IT outsourcing market in the Eastern Europe is developing at a rapid speed. IT companies have increased demand for young specialists. Thus, they are looking for fresh blood and initiate opening of new programs at universities. They set up innovative labs at universities and work alongside universities and government to stimulate the development of tech education. Ukraine ranks 11th with an overall score 88,7 out of 100 among top 50 countries with the best developers in the world according to HackerRank.

Which country has the best developers?

Source: HackerRank

#3 Make sure your data is safe

If you want to outsource software development with confidence, review the list of the best offshore software development companies on the market and which security standards they comply with. It is not a secret that Ukraine in Eastern Europe, Poland in Central Europe, Argentina in South America, and India in South Asia are the top outsourcing countries. What concerns their security policies, Ukrainian developers outscore all the other countries in developing the best security apps in the world according to HackerRank.

Read one of our latest articles to find out how Ukrainian IT companies ensure data protection and information security.

#4 Collect reviews and references

Before making an outsourcing decision, visit popular review platforms such as Clutch, G2Crowd, AppFutura, and others to get some real customer feedback about different vendors.

On the flip side, take into consideration the most recognized industry awards that would help you choose the best offshore software development company. Because industry recognition is also one of the vital criteria you need to consider. If a company is actively pursuing professional development and growth, you will easily find it among members of international and local business associations that contribute to the development of the IT community and in the listings of leading IT outsourcing companies.

#5 Consider location and time zone differences

If you work with an offshore software development company, distance and time differences always come into play. You need to learn how to manage a remote team. First of all, you should encourage transparency, hold regular meetings, make use of project management and time tracking tools and aim to build strong relationships between both teams. In fact, there is a significant time difference between the US and China (13-16 hours), whereas the difference in time zones between the US and European countries, including Ukraine (7-10 hours), is much more manageable. You can always find a few hours of overlap to keep processes in sync.

#6 Emphasize the importance of English skills

Although English is the universal language of the IT industry, not everyone can speak English fluently. It is hard to rate English skills among software developers, but most of them speak at Intermediate- and Upper-Intermediate levels. On the flip side, it’s not a problem if developers don’t know English if most of the communication will be done through their management. But if you want to ensure effective communication within your team, it’s better to hire developers who speak English well and can explain to you the technological challenges they face.

Conclusion

Building a dedicated software development team requires both time and money. In order to outsource software development effectively, you should be aware of the risks and know how to prevent them from happening. But if you are still hesitating whether IT outsourcing is worth the effort, discover the major benefits of software development offshoring and make your choice:

  • Keeping costs down
  • Possibility to access global talents
  • Increased delivery speed
  • Easy-to-scale dedicated teams
  • More time for an in-house team to focus on the core product

Here at N-iX, we build dedicated, full-time outsourced teams for our clients. Being on the market for 15 years now, N-iX has been listed among the top 100 global outsourcing companies by IAOP. We create innovative products and help companies implement digital transformations. Should you need any help with outsourcing software development, don’t hesitate and talk to an expert.

How to effectively outsource software development