Global Outsourcing Problems Business Encounters and How to Solve Them

Global Outsourcing Problems Business Encounters and How to Solve Them

Outsourcing a software project for business owners is confusing at first. They are overwhelmed with the options, elaborated details, and the constant search for an ideal partner. 

But still, there are plenty of reasons why big companies, early age startups and even small businesses are opting to outsource their digital software needs. Access to world-class expertise at cost-effective prices is the primary attraction for outsourcing software development, along with quicker time to market, high-quality services with 24/7 connectivity and the ability to focus on enhancing core competencies.

The numbers tell a similar story. As per Statista, the global outsourcing service market size in 2019 was $92.5 billion.

Outsourcing is a blessing for businesses that can’t afford a full-fledged IT department. They can find the vendor from any corner of the world whose service prices are suitable, trust them with the project, get a product and reap the revenues.

Even though the outsourcing business model is fairly simple, the ground realities are different. At first, outsourcing seems like the perfect solution for businesses whose core products and services have no relation to technology.

Companies do encounter a series of problems with offshore software development. As the saying goes, you can know the true flavors only after tasting the pie. The outsourcing process is not flawless and does pose some risks.

Here are the top 7 problems of outsourcing software development and their specific solutions.

Problem #1: Dealing with delays & lack of understanding

According to research, software development projects have a 222% overrun of the original delivery deadline.

When clients and software development teams work from different places, there is a lack of understanding. Software development experts state that this is one of the main reasons for project delays.

Business owners with no experience in outsourcing have little knowledge of the software development process and how long it will take to complete a project. They often ask to deliver the project in the quickest timeline possible with the highest quality product, setting unrealistic expectations from the beginning.

The problem with first-time customers is that they don’t know how the new software integrates into the organization’s digital ecosystem. And when the clients ask to complete the project at the lowest price possible, the outcome is often disappointing for both sides. The quality standards do not meet the basic standards, and the project is labeled a failure.

Solution:

We understand that part of the problem is that the decision-makers have gaps in their understanding of the software development lifecycle on the client side. And their decision based on incomplete knowledge results in a disconnect between expectations and reality.

A straightforward way our software development company eliminates these gaps is to lay down a clear path with best practices and checkpoints so that we deliver on time. We keep it real in terms of deadlines and budget, updating the client during development.

Also Read: Offshore Software Development Trends For 2022 (One’s You Can’t Miss)

Another beneficial practice we follow is not waiting for the “to go” on every little thing. If developers working on the project are not allowed to make decisions fast, there will be inevitable delays.

We ask the team members to decide rather than wait for the green light before making a move to keep things going. Instead of asking what decisions to make, developers should make decisions and take an action-oriented approach because any decision is reversible in a 12-hour timeline.

This strategy has made closing projects faster and delivering innovative products to clients worldwide. Our action-oriented approach also keeps the creativity thriving which is very important to stand out in the crowded software space.

For complex projects, we plan extensively, talking to the stakeholders on the client-side and our team engaging everyone working on the project in the planning process.

Problem #2: Lack of focus & productivity

Outsourced teams don’t work with clients for 8 hours every day. Unlike in-house staff, clients don’t have the constantly changing context of project development, and sometimes this makes customers think that the project is not going as they wanted.

Lack of focus & productivity

The shortfall of communication is among the most common reasons for the failure of outsourced software development projects. Lack of transparent communication may also confuse developers as they are unclear about the customer’s thoughts, feedback about the latest feature update or speed optimization.

The absence of communication can bring down focus and productivity for the offshore software development team in just a week.

Our expert recommended solution is to keep the context clear and keep productivity thriving throughout the development lifecycle.

Solution:

Constant communication between customer and developer eliminates the risks of projects going off track. Our software development teams have a clear communication channel for every project phase, from planning and development to testing and delivery.

We keep the customer involved in every new development for successful project completion, sharing the updates regularly. We involve the clients in every step to meet their expectations and identify issues before they evolve.

Our project managers discuss the project with clients every couple of days and overlook that everything is going as per planning. Daily communication makes it possible to speed up the development and build the project as fast as possible.

Problem #3: Intellectual property & privacy concerns

How often have we had clients who are scared to dive into outsourcing because they think someone will run away with their IPs or steal all the payroll.

Indeed, there is the risk of stealing and running away with remote teams more than the brick and mortar employees. But this can happen with brick and mortar employees as well.

Once a third party is involved, you compromise the security of data and software ownership of your company. And it is not just project data; other information like passwords, data of business activities, and assets are also at risk.

The absence of a standard hiring process worldwide is the main issue when hiring offshore companies. Most of the legal process is according to the vendor’s location, which is different from your country. There can be various legal documents or contracts to sign that are not a part of your country’s hiring process.

So how to ensure that the critical information about your business and intellectual property won’t get stolen?

Solution:

While selecting an outsourcing partner, be extensive when it comes to data and IP security. Prepare an NDA for the potential partner along with other software regulation documents.

Discuss every aspect of the development process, including where the offshore partner fails to deliver or messes up the product. Plus, don’t forget to include the intellectual property clause to secure your digital assets.

In addition, you should keep systems in place to secure your company data once the project is over. For example, you need to share passwords and login access to specific platforms while working together.

One simple tool to share all the login access while onboarding a new offshore partner is to use a password encryption tool like:

  • LastPass.
  • BitLocker.
  • VeraCrypt.
  • FileVault 2.
  • DiskCryptor.

Problem #4: Dealing with scamming accounts and fake people

Suppose you are hiring from platforms like Upwork or Freelancer, which are both fantastic marketplaces for both sides in outsourcing. Often, you’ll find accounts saying they are john, but on the other side, they are john incorporated.

For you, you hired a freelancer, but in reality, he is delegating your project to a bunch of developers he hired. Such scam accounts promise clients high-quality work at the lowest prices but fail to deliver the promised value. Beware of such fake accounts and people selling promises at minimum charges.

Finding the right vendor is crucial for your software project. You might face many difficulties searching for an offshore development company with the relevant experience, the right team size, and a portfolio that shows results.

Solution:

The way to solve this is by jotting down where your company is now – its size, no. of employees, specialist requirements, brand recognition, growth potential, earnings, expenditures, etc., compared to where you want to get with outsourcing. How big is your project, and how much can you spend on it? What is the team size required to build and implement the project?

Once you know all the specific details of your project, hire a reliable offshore development company. To see whether they are john or john incorporated, dig deep. Visit their website, check their profiles on review sites like Clutch and Goodfirms, tap on social networks like LinkedIn, etc.

A well-established software development company with dedicated employees like us is easy to identify. They have a genuine internet presence with verified profiles on google, social media networks, and review sites. The most convincing way to determine whether a company can deliver on their promise is to find out its clients and talk to them.

Problem #5: Running multicultural teams

In offshoring, you hire an outsourcing team from a different part of the world. Every country has a different style of conversation, and coming from different cultures, your in-house employees and the outsourced team will have communication issues, language barriers, understanding gaps, etc.

Running multicultural teams

The use of words, sentence formation, formal and informal language all can differ, which, when interpreted in the wrong context, creates dysfunction within remote teams.

For example, the French criticize more directly than South Korea and Japan, where team members point out mistakes in a more subtle tone.

Communication is the underlying requirement for project success during outsourcing. Working together with such opposite cultures can cause unnecessary misunderstandings.

Solution:

The simple solution is to understand the importance of cross-cultural teams. It is proven that global teams drive more innovation and financial success. Some other methods to minimize the cross-culture differences and language barriers –

Hire software development companies from a country with a similar culture to your country. For instance, if your company has most US-based employees, hiring remote developers from India is very feasible. They have an above-average working knowledge of English, and developers are available at affordable rates.

You can also take a language test if you are hiring for a managerial or customer representative position where they have to interact with people constantly. It will reveal how well their command of English is and their communication skills.

Problem #6: Paying extra & hidden charges

Although outsourcing is to access world-class expertise while saving a good part on software budgets, it might go the other way if not executed well.

According to McKinsey, most large IT projects run 45% over budget.

And you can’t put the finger on how much the project will cost without setting precise goals, timelines, and resources. One way to predict the cost is to choose the fixed price model for paying the offshore vendor, but this is not suitable for large projects.

So how can you predict the correct cost estimation for the offshore software development project?

Solution:

The cost of software development projects depends on many factors like engagement model, team size, product features, etc. to have an accurate estimate, it is best to consult an experienced firm who knows how to map the territory better. They also know about the various pricing models and how to avoid extra charges during and after development.

Be clear about your budget and spending limitations with the development company to avoid future disagreements and confusion.

Problem #7: Problem with communication and team management

It might sound redundant, but communication is the main ingredient to outsourcing success. a communication system must be in place to create the best product with your vendor.

As you are not working side by side, you might think others understand what you are saying exactly as it sounds in your head. But offshore employees come from different educational backgrounds, cultures, language understanding, etc., so there is a high probability of misinterpretations among clients and offshore companies.

If you agree that communication barriers can ease outsourcing IT jobs, here is the solution.

Solution:

Continuous communication is the key to establishing a smooth workflow. Schedule daily calls with the team for updates and feedback and discuss new ideas.

You can also use project management tools to adapt a standardized communication format to escalate project development.

Also Read: How to Choose the Best Web Application Development Company?

We have discussed the most common outsourcing challenges and how to escape them. But wouldn’t it be better if you avoid them altogether? Here is a checklist to ensure that your offshore issues are reduced to the minimum.

Checklist to Avoid Problems of Outsourcing

  • Lay down clear goals, business requirements, product details, cost and duration before starting the project.
  • Conduct in-depth research before selecting a vendor.
  • Prepare an NDA with clauses for risks.
  • Keep track of the technical documentation.
  • Set up communication channels to schedule daily team meetings, weekly updates, etc
  • Educate team members about cultural differences.

Takeaway

Outsourcing is a brilliant solution for large companies and growing enterprises. The business model is futuristic and highly sustainable, which the pandemic has already shown the world.

If you are new to the outsourcing business ecosystem, you will meet some challenges, and that is why it is crucial to select a reliable software development partner. Their experience and expertise should be able to help you walk the new terrain every step of the way.

know more about our services

Imenso Software is an offshore software development company with a decade of experience in web app development, mobile development, ecommerce development and others.

For any query, contact our team of specialists who are always happy to help accelerate your outsourcing process.

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