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Top 7 Common Risks Of Software Development Outsourcing And Tips

Author: Innotech Vietnam
Date: 21/04/2022

Software development outsourcing has become a key business strategy for both small and large businesses nowadays. The question is are there any risks when it comes to outsourcing? Plus, choosing the right outsourcing company is always a challenging question.


I – Risks Of Software Development Outsourcing


Naturally, outsourcing comes with its own risks. Companies all need to thoroughly consider these risks before looking for a software development outsourcing company. 


1. Intellectual Property And Security Issues 


First, it is normal to worry about the safety of companies’ intellectual property when they delegate its execution to an outsourcing company. After all, these people come from a third party. This risk is easily eliminated by signing NDA’s or other non-disclosure agreements, which now is a fairly standard practice in such companies. 


2. Lack Of Experience With Remote Developers 


software development outsourcing


Second, as a rule, software development outsourcing developers are working remotely. This can be difficult for those CEOs who have little experience with this model of co-working. However, in 2022, there are many channels for continuous communication that will make up for this shortcoming such as video calls or corporate chats. 


3. Poor Communications 


Third, finding contact with a software development outsourcing team from the outside can be very difficult. They are employees of another company, and in general, are newcomers to the business owner. The issue of establishing clear communication falls on your shoulders and this jeopardy cannot be underestimated. 


4. Matching Requirements 


Fourth, finding a good developer is hard. But finding a good developer who meets specific narrow requirements is even more difficult. The company’s success here largely depends on the complexity of its project. Therefore, it can be a risk that companies won’t find a match among a pre-maid list of coders in a specific team. 


5. Involvement And Dedication 


Next, there is a misconception that outsourced developers care less about projects because they joined much later and don’t care about their success. Naturally, this is not so. The strict execution of projects for such employees is a priority since their image, payment, and portfolio depend on it. Therefore, their dedication to the project will not be much inferior to the in-house team. 


6. Less Control And Handleability 


Difficulties with delegation of authority can arise for any leader, especially for someone who loves control. It is difficult to get used to the fact that some unfamiliar employee is doing work for your company and it is tempting to contact the contractor every minute and check the progress of the work. 


7. Hidden Costs Of Software Development Outsourcing


Finally, the hidden cost is an issue usually associated with software development outsourcing. They include costs to find a vendor and contracting, properly transitioning to the vendor. If the project is not done on time and it’s not specifically mentioned in the contract, the cost of prolonging the hire.


However, this can be avoided by competent drafting of documents and a contract, but for first-timers, this can be a problem. 




II – Tips To Successfully Outsource Software Development 


There are a lot of things to consider when it comes to a successful software development outsourcing project. But simply put, below are some brief tips to ensure the success of the outsourcing project:


  • Taking care of communication 
  • Following processes and procedures 
  • Giving regular and detailed feedback 
  • Creating a detailed and clear software development brief that shows the end result idea and the timeframe 


tips to outsourcing


And most importantly, choosing the right outsourcing partner is a very first step of a successful project that all businesses can not overlook.


III – Tips To Choose A Reliable Software Development Outsourcing Company


Here are a few steps to choose the right suit outsourcing company for a business. 


1. Define Goal/Goals Clearly 


It is a significant step because you can’t go anywhere if you don’t know where you are going. Before reaching out to the software development company, business owners should define the goal/goals that they want to achieve in business terms. 


For example, build a better/new management system for the enterprise, add new ideas to the software product to boost business profit, integrate the IT/technology to improve service quality, or optimize the business processes. 


Besides that, some other aspects of in-house developers like the experiences, competencies, and technical skills also have to be examined. It will provide some ideas such as what technical skills are needed, whether the in-house team can handle the project or not, and how many software developers might get involved/added to the project. 


2. Decide The Type Of Software Development Outsourcing Services 


Whether choosing onshore, nearshore, or offshore outsourcing, each of those will have advantages and disadvantages. The decision has to be based on internal resources and the careful consideration of other factors such as: 


  • The different time zones
  • The pay rate per hour for each developer 
  • Communication skills 
  • The size of the project 
  • The time needed for the project (long-term or short-term). 


3. Make A List Of Potential Companies 


After deciding on types and models of outsourcing, now is the time to look for potential partners. Shortlist at least 5 to 7 prospective software development outsourcing companies. There are multiple ways to do this.  


For instance, companies can check social media tools, especially LinkedIn and Twitter. Or they can ask for referrals or recommendations from friends or partners if they were in partnership with a software outsourcing company. Furthermore, approaching B2B companies might be another choice. These will at least provide some ideas and options to sort out. 


4. Do Thorough Research On Their Background 


The next step is to check the company’s background. The following questions and criteria will help to select the right software development outsourcing company. 


  • Do they have a nice reputation?
  • Which size the company is? 
  • How professional are they? 
  • What are their skills and domain knowledge? It is an essential question because it will filter suitable companies for the project. If the company has a good reputation for particular skills/knowledge but has no online profile, the business owners should contact them personally. 
  • How about the case study? A case study will project how the company solves the problems and whether this case’s similar to the client’s project or not. 
  • The length have they been serving in the market? 
  • What is the feedback from their clients? 
  • What types of development methodologies are they using? Scrum, Agile, or Waterfall? 


Typically, when having a list of software development outsourcing companies in hand, business owners can go forward to contact the software outsourcing company. Of course, this list must be the outcome of careful research and consulting from trustworthy sources. However, this step is not redundant. It will reassure the company and help figure out who is handling the project. 


5. Contacting Potential Partner 


At this point, after completing the research, the clients can contact potential outsourcing partners. Then, arranging a meeting to discuss the project further. Explaining the problems/expectations of the project would be helpful. References from previous projects and clients can also be a trustworthy source at this critical moment. 


Finally, if that company fits the expectations and requirements, the business owners are on the right track. And if everything is going well, let’s wait for the results and see how quickly the business grows. 






Naturally, when it comes to outsourcing, there are some risks that are unavoidable. But once they acknowledge those risks and find their own solutions, their outsourcing projects will end up successfully then. Besides, this article also provides the proper process for finding a reliable software development outsourcing company.


Innotech is one of the leading firms in IT outsourcing in Vietnam. With 14+ years of experience, we’ve been assisting startups and organizations of all kinds with software solutions. We improve workflow efficiency, address business issues, and aid in acquiring competitive strategy with cutting-edge tech stacks.


We are ready for long-lasting and practical cooperation with you. So let’s contact our team of experts if you have any queries or concerns about outsourcing. We’ll be more than pleased to assist you!

We’re here to help and answer any question you might have. We look forward to hearing from you.