Top 8 challenges of outsourcing and how to overcome them

Erupting as the new business model, outsourcing has become a new gold rush that every big brand attempt to utilize, to cut down the expenses and stretch beyond the national periphery. When an organization, for the first time, involves outsourcing, the adapting phase takes time and effort to settle. And, in many cases, succumbs before the challenges of outsourcing which obstruct the plan of development. On one hand, there are countless benefits associated with outsourcing; on the other hand, it comes with its own set of risks and challenges which are bound to happen.

The outsourcing challenges kick in right from the outsourcing firm selection process, determining requirements, to project implementation and delivery. We’ll list down the most experienced outsourcing problems and how to solve them for smooth project implementation.

The challenges of outsourcing software development

These outsourcing issues often occur even for the most prepared teams. Irrespective of the outsourcing model you decide to use, you will encounter some unavoidable challenges. These include:

1: Choosing an Outsourcing Partner

From what we’ve noted, most businesses often put the price tag ahead of everything else when choosing an outsourcing firm for their development needs. Unfortunately, most executives will go for the cheapest solution.

Solution

When looking for an offshore software development partner, businesses must look beyond the immediate expense. While cost is an important factor, it should not be the main driving force behind the choice of a software development provider.

The past references of a software outsourcing provider will help to a greater extent in demonstrating their capabilities and expertise. Ask for testimonials and approach the references to see exactly what they’ve done and their capabilities.

We also believe that choosing an outsourcing partner who can deliver truly innovative software relies on others factors, including communication. Also check their experience, testimonials, and their choice of technology. Always remember that the final product that does what’s expected is the determinant of success.

2: Underdeveloped Product Specs

Another great determinant of the success of any project when outsourcing is having poorly developed specifications. This outsourcing challenge results in the outsourced firm providing substandard or a solution that doesn’t meet the objective intended.

Solution

If you can’t describe your product in detail, that’s a sign that it’s not ready. When you outsource the development of a product, you have to be crystal clear about what you want, and the consequences of that decision. You need to be able to explain the purpose of each feature and how it will impact the success of your product.

Before outsourcing any firm, you can first do a thorough analysis of your requirements to determine what you want the final solution to look like. You can do this with the help of professional product specialists to ensure the requirements are crystal clear, leaving no room for ambiguity.

3: Communication Breakdown and Cultural Differences

In a globalized world, outsourcing development is becoming increasingly common. As companies expand their operations to other countries, they are forced to communicate with people through an additional group of channels. The cultural differences between both groups and language barriers often cause difficulties in the workflow process. culture could be a challenges of outsourcing

Solution

Communication breakdown is one of the challenges of outsourcing that must be addressed before the project kickoff. Engage the outsourced firm in intensive discussion on how the services should be delivered. Discuss who will be project managers and team leaders and learn how their developers usually handle work.

Find out what tools they normally use, and how the communication will be done during implementation. If you are divided by different time zones, ensure that your project managers will keep you informed about the progress. Developing a clear flow of communication will help you avoid most other project implementation bottlenecks.

Most importantly, ensure that project management tools such as Trello, Jira, and Basecamp are used for instant chatting and video calling to ensure no communication breakdown is experienced.

4: Costs and Margins Ambiguity

cost as challenges of outsourcing Nothing deters the morale of a business when a sudden need to adjust a project budget on the higher side pops up. By not doing proper research on the project requirements, it’s possible to face the outsourcing challenge of additional costs.

Solution

You can counter this problem by devising a mechanism to manage the bills and the overtime hours which were not part of the project’s estimated costs. Ensure that such agreements are documented in the contract right before implementation begins. Also, there should be a provision for pre-notification of the changes in advance before they happen.

5: Data Security Concerns

Another serious challenge of outsourcing is data security. Entrusting your firm’s crucial data to another firm comes with security breach risks.

Solution

You need to take precautions when giving another party access to your intellectual property and confidential information. You can have an internal team of data security experts who can propose the most appropriate solutions to eliminate security problems.

Ensure the outsourcing firm is aware of your data security regulations, but most importantly there should be an NDA signed to ensure the company takes data security protection seriously.

6: Failure to Hit Deadlines

One of the major challenges of outsourcing is the deadline. Many services provider does not hit the tight deadlines set by the outsourcing organization. They do not comprehend why in the first place—besides cost reduction—a company proposes to outsource projects. This paralyzing problem cripples the sight and vision of an enterprise. It can happen because of over-commitment, lack of a long-term plan, technological breakdown, communication barriers, and not resolving issues on time.

Solution

The first step to averting this outsourcing challenge is to ensure that project milestones and deadlines are clearly communicated to the outsourced firm. You can also have them as part of the contract and discussions.

Do not take the firm’s word for it; check to ensure that they have the adequate resource, skills, and capabilities to meet deadlines. Also, you can issue incentives to motivate teams to achieve their milestones and deadlines on time.

7: Decision-Making Authority

The problem keeps rotating from one table to the other if it’s not determined in the first place where the buck stops. Often, internal employees assume, by default, that they have more rights in decision making than the service providers. The dispute that was never a spark before turns into a wildfire and jeopardizes the motives of an enterprise if, as part of the agreement, an internal employee interferes with the authoritative rights. Rights and authority could also become one of the biggest challenges of outsourcing if not taken care of at an early stage.

Solution

This challenge usually shows up when a project kicks off without categorically stating what powers both teams have in the project execution. To eliminate the conflict, ensure the roles of each team member are clearly defined. Or at least, create groups for members with similar roles are put together. Those groups should then have team leaders in charge of decision-making.

If the outsourced firm will be able to make decisions, it should also be defined in the contract what they can decide and what they should seek approval from your internal team. However, this will mostly depend on the outsourcing model you opt for.

8: Too High Expectations on the Outsourced Partner

Most businesses will produce a list of demands or expectations that they would want the outsourced firm to meet. Some will expect the development firm to understand their innovation aspirations and explore the trending technologies to better develop a modernized product.

Solution

This outsourcing challenge comes forth when the business does not understand what it takes to produce a system for their requirements. The solution is to ensure that the project requirements are clearly set and understood by your firm.

Also, it needs you to pick an experienced software development outsourcing firm that understands a wide variety of technologies and the outsourcing process. To identify such a firm, do not pick based on the cheapest price quoted but rather, rely on the references provided to understand their capabilities.

Final Thoughts

Software development outsourcing is a great way for businesses to save money. The funds can be utilized to develop other aspects of the business, such as brand marketing and product expansion.

They can implement advanced modern technologies and complex decisions within a short time with the skills of the outsourced firm. Companies getting started can achieve their software needs even without the required expertise. However, it is important to research the challenges of outsourcing before diving in.