Outsourcing software development can be a highly rewarding, but also risky move. Failure in software development outsourcing is common and can be costly. However, most of the problems associated with development outsourcing failure can be avoided with proper planning and preparation.
Thinking of outsourcing software developers and other members of your team? You’re not the only one.
A GSA report done in 2018 showed that 70% of the companies surveyed planned to outsource more within the next few years. Forecasting made by technavio supports this, saying that the IT outsourcing market will grow by a whopping $98 million from now until 2024.
These numbers aren’t really all that surprising considering how beneficial outsourcing can be for businesses in more ways than one. With these numbers and benefits, the prospect of software development outsourcing sounds pretty good, so what’s the catch? According to Dun & Bradstreet’s Barometer of Global Outsourcing, up to 25% of all outsourcing relationships fail within the first two years, and 50% fail within five years. With such a large number of failures happening so quickly, businesses are unlikely to recoup their investments.
So should you be discouraged by these high failure rates? Not necessarily. You see, many of the causes of software development outsourcing failure don’t actually come from the outsourcing companies. They can often just be the inevitable result of the clients’ unfamiliarity with software development, outsourcing, and all that these entail. By avoiding these common causes of failure, you can make sure that your foray into outsourcing is a successful one.
So what are these common causes of outsourcing failure?
- Lack of technical expertise
Software development outsourcing frees companies from having to find and hire dev staff on their own, which is oftentimes incredibly difficult because of the scarcity of local talent. In these cases, outsourcing is viewed by many companies as an easy fix. But what they fail to realize is that there are still a number of technical aspects that they need to clarify to make sure that their outsourcing venture continues successfully. These include:
- Firm and realistic project estimates – Companies should have at least an estimate of total project costs and the timeline of the project, with consideration for each feature they want to include. Adding features midway through the project or “winging it” may only add to the company’s costs and may not add much value to the end product.
- Choosing the best technologies for the project – Some companies stick with old but already inefficient technologies that do not fit their project’s objectives and timeline. In other cases, companies may choose advanced technologies that sound impressive, but are actually not ideal for their project and only add to their costs.
- Clear scope of business – Sometimes companies will overreach in terms of development goals and the accompanying costs, not realizing that doing so goes well beyond the scope of their business.
- Unsuitability of project for outsourcing
Apart from making it easier for companies to find and hire dev staff, software development outsourcing also greatly reduces a company’s overhead. Outsourcing companies would shoulder all the costs and effort of finding, training, and equipping new hires. But with this great advantage also comes limitations. With an outsourced team there will most likely be challenges in terms of communication and security. Your project may require the use of certain technologies or methodologies which would be difficult or unsafe to adapt in an outsourced team.
And there are many other things you need to consider:
- Are there certain aspects of your project that will require your team’s onsite presence?
- Are you willing to work with offshore or foreign individuals?
- Will you be able to manage the time zone difference with your outsourced team?
- Are there specific requirements or criteria that your outsourcing partner needs to meet?
- Do you need a long term staffing solution, a project-based team, or temporary dev staff? And can your outsourcing partner provide what you need?
Before opting to outsource, make sure that all aspects of your project are well-suited for it, and that you are prepared to adjust to the conditions required with having an outsourced dev team.
- Unclear goals and expectations
According to recent project management statistics, most of the top major causes of project failures involve unclear goals and objectives. These include sudden changes in the organization’s priorities (39%), a change in project objectives (37%), and an inadequate vision or goal for the project (29%).
It’s always important to set clear goals and objectives with any project, and when outsourcing it is critical to share these with your outsourcing partner. These goals are what will keep your project focused, guide everyone in your team, and help to keep your costs down and your deadlines met. If you keep changing your directives you are more likely to have misunderstandings with your outsourced team, and you will definitely have delays in delivery and cost overruns.
- Unrealistic project estimates
Another problem that could cut an outsourcing partnership short: unrealistic project estimates and expectations. While it’s good to be optimistic and even ambitious with project goals, you also have to be realistic especially when you outsource software development. Know what your project goals are, but also know the limits and capabilities of your outsourcing partner.
At the same time, know approximately how long and how much it will take to get your project to completion so you don’t fall for unrealistic estimates claimed by some outsourcing companies. If the proposed timeline and budget of a certain outsourcing company sounds too good to be true, chances are, it is and you’ll have to suffer through delays and/or an unsatisfactory end product.
- Lack of communication
Communication is an integral part of a successful outsourced development project; any miscommunication can be very detrimental to it. Language barriers, delays in communication, cultural differences, and other such issues can take a toll on your relationship with your outsourcing partner. It’s important that right from the start you can communicate well with your outsourcing partner. For many companies, that means choosing an established outsourcing firm with a long history of working well with clients, and preferably based in a good English-speaking country like the Philippines.
Since you can’t work with your team face to face, it’s important to keep in touch with them through varied communication channels. Don’t rely on emails alone, as these can be delayed and lack the context that video calls and other means of communication can give.
When you communicate with your team, make sure to be clear about what you want, and give them as much information and context as possible so as to avoid misunderstandings. Check in with them regularly, and make sure to offer sufficient and timely feedback. You don’t want your development team to have to redo a large portion of work just because your feedback came in way too late.
- Planning and security issues
Some companies think that once they have a signed contract and a team in place, then they can hand off the entire project to their outsourcing partner. But all projects, and especially outsourced ones, need management and supervision in order to stay on track.
Apart from having your project potentially deviating, the danger with letting your outsourced team have total free reign is that some of your company’s sensitive data may get compromised. To avoid these issues it’s best to plan your project thoroughly. Set your priorities straight, set clear and realistic goals, establish consistent methodologies for planning and executing your project, and make sure to keep an eye on your project’s progress. And to keep your company’s sensitive information secure, have a non-disclosure agreement or a clause included in your written contract to safeguard your information.
Outsourcing software developers and other technical staff is an economical and preferred option for many companies, but you must be fully prepared before doing so. Know what to avoid, expect, and prepare when outsourcing so you avoid failure and achieve your project goals. And of course, make sure to partner with a reliable outsourcing company like CoDev.
CoDev is an outsourcing company that’s been serving clients for over a decade, providing numerous high quality development talent at an affordable price. We make sure our clients have the best experience when outsourcing, providing a full range of services that covers vetting, training, supervising, and providing benefits to their new hires. Our proven vetting process ensures that our clients get the exact talent they’re looking for and more. Learn more by getting in touch with us today.