Navigating software development outsourcing comes with its share of challenges. The global IT talent pool explosion has made outsourcing popular and lucrative, constituting 72% of global outsourcing contracts. It's praised for its efficiency, cost-effectiveness, and the vast talent pool it provides access to. But let's be real, outsourcing software development brings hurdles you wouldn't necessarily face with in-house solutions.

At Svitla Systems, we've been in the offshoring and nearshoring game for two decades, helping clients sort out issues they've faced with other vendors. We get it – outsourcing software development isn't a walk in the park. So, based on our experience, we've outlined the significant challenges you might encounter when teaming up with a third-party vendor and, more importantly, how to dodge those obstacles. Let’s start! 

Top-7 Software Outsourcing Challenges

Despite the benefits of outsourcing software development, several challenges are inevitable. The good news is that most of these issues can be acknowledged, analyzed, and proactively addressed in future collaborations. Here, we'll delve into some common outsourcing problems and explore ways to avoid them.

Challenge #1. Delays and Missed Deadlines

Picture this: sudden market twists, a hazy product vision, and the general chaos of a startup. Time slips away, and the clients often stress the importance of getting things done on schedule. Time is like gold in the startup world, and investors are tapping their feet, wanting results as fast as possible. 

So, why does this happen? It's a mix of unclear communication on timelines, the ever-shifting scope of work, miscalculated task evaluations, and clients playing hide-and-seek with feedback.

Solution: The fix depends on the root cause, so let's break it down:

• Set deadlines for critical features and be open to the possibility of time shifts.
• Simplify the scope when the plan detours. Push those nice-to-have features to the next release – no harm, no foul.
• Cut the scope, simplify where you can, and get back on track if a task's turning into a month-long saga instead of the estimated two weeks.

Challenge #2. Underestimated Costs

Money can be a real headache, no matter what project you dive into. One of the big culprits behind those unfinished software projects? Underestimating costs. And you know what makes it worse? As the project rolls on, these surprise expenses can throw a wrench into everything, causing delays and messing with the software's overall quality.

Solution: Before you start the project, clearly define what you need. Spell out all the deliverables you're expecting so there are no surprises down the road. Talk it out with your outsourced team – are you just getting developers, or do you need a project manager or quality assurance engineers, too? Get it all on the table before you sign anything. Having a solid breakdown of costs lets you budget and plan without any nasty surprises.

Challenge #3. Data Security

When diving into the world of software outsourcing solutions, it's crucial to be aware of the potential risks tied to data security and protecting intellectual property rights. To keep your data safe when working with a service provider, you've got to take a thoughtful and ongoing approach to assessing and managing risks. It's key to break down these considerations individually as you evaluate a service provider.

Data security tends to be a heavy factor in the decision-making process for outsourcing. Look for a partner who understands security and has solid contingency plans to deal with potential issues.

Solution: Before you bring an outsourcing company into the picture or spill any confidential details, it's wise to set up a non-disclosure agreement (NDA) with the vendor and follow the intellectual property laws in your locale.

Check independent review platforms before sealing the deal with a vendor. This involves looking into the vendor's reputation, past breaches of their clients' intellectual property rights, and internal risk management measures. Find out how well they can safeguard your intellectual property and their game plan in case of a data breach in their organization. It's all about making informed choices to keep your information safe and sound.

Challenge #4. Different Time Zones

Working with software developers across different time zones poses challenges, especially when the time overlap is extensive. Take, for example, the collaboration between partners in the US and India, with a staggering 12-hour time difference. While it may seem like the project is constantly developing due to the time zones, it introduces technical and communication hurdles. The number of hours available for productive collaboration between the resource partners is significantly reduced, elongating the outsourcing process. Conversely, collaborating with development partners in regions with smaller time zone gaps is more efficient for day-to-day work.

Solution: 

• Opt for a partner situated in a time zone with a smaller overlap, enhancing coordination and efficiency.
• Prioritize clear communication to maintain output quality and ensure adherence to planned schedules.
• Foster inclusiveness within the team to uphold resource productivity and efficiency despite the time zone variations and limited face-to-face interactions. Cooperate with smaller teams and delegate work strategically to enhance collaboration, despite the challenges of varying time zones.

Challenge #5. Poor Communication

According to a recent study, inadequate or ineffective communication poses a significant challenge in outsourcing. Communication challenges with outsourced teams affect over one in five respondents, representing 21%. Interestingly, more than half of businesses outsourcing work, precisely 53%, engage with their service providers daily. Another 38% have a weekly interaction frequency, while a mere 8% communicate every month. The chosen medium can also influence the effectiveness of communication. Notably, 25% of brands prefer email for communication with outsourced partners, and an equal percentage opt for video conferences, making these the two most popular communication channels.

Various factors contribute to this issue, including cultural differences, both national and organizational, language barriers, and the dispersed nature of teams. The client/service provider dynamic further complicates matters, as service vendor staff may feel pressured to agree with clients, even when faced with unrealistic requests. This tendency to avoid challenging demands can result in disappointment when anticipated results fail to materialize.

Solution: 

• Ensure that outsourced team members possess a strong command of English, adhering to established standards like the Common European Framework of Reference (CEFR). Clearly state the minimum language proficiency required in your outsourcing contract for new resources.
• Assign leaders with excellent facilitation skills to conduct meetings, actively checking for understanding and requesting attendees to confirm their alignment.
• Incorporate face-to-face or video calls into communication methods, as a significant portion of communication is non-verbal and can be better conveyed visually.
• Ensure consensus on working patterns, mainly when significant time zone differences exist, as this can impact collaboration.

Challenge #6. Control Over Project

When collaborating with an external service provider in a different geographical zone, relinquishing a portion of project control becomes inevitable. While you can articulate tasks, deadlines, and deliverables, the challenges of distance, infrequent contact, and time zone differences make maintaining control a complex task.

Determining who remains in critical project decisions, changes, alterations, and ideas becomes a pressing concern. This struggle for project control is a prominent issue in outsourcing software development, contributing to the hesitancy of businesses to embrace outsourcing.

Solution: To address this challenge, opt for an experienced vendor with a track record of successful outsourcing contracts. The contract becomes a crucial tool for defining how outsourcing contractors can make decisions regarding your project. At Svitla Systems, we emphasize clarity in contract terms, ensuring mutual understanding and risk elimination. 

Challenge #7. End Product Doesn’t Meet Expectations

The quality of input directly influences the quality of the final product in software development throughout all stages. Challenges affecting the result may arise from insufficient planning, unclear project goals, communication gaps, a shortage of skilled resources, and a preference for cost over quality. Now that the software product is developed, the focus turns to rigorous testing and necessary adjustments for optimal functionality.

Solution:

• Thoroughly test the software and encourage the resource partner to do the same, providing recommendations and changes.
• Conduct manual testing and share findings with the development team to prompt necessary adjustments.
• Internally testing the software to prevent compatibility and performance issues with existing systems.
• Implementing a code review culture to identify and rectify human errors through effective communication with outsourced partners.
• Document in-house work and share it with resource partners to establish checkpoints.
• Maintaining a record of work done by resource partners, facilitating future changes by knowing where to initiate them.

Summing Up

In conclusion, software development outsourcing presents numerous challenges, but proactive strategies can address these hurdles. The global surge in the IT talent pool has made outsourcing popular, constituting a significant portion of global contracts. Despite its advantages in efficiency, cost-effectiveness, and access to diverse talent, outsourcing introduces unique challenges not typically encountered with in-house solutions.

By addressing these challenges head-on, businesses can optimize the outsourcing experience. Clear communication, strategic planning, careful consideration of time zone differences, and selecting experienced vendors are key factors in overcoming these obstacles. Thorough testing, effective collaboration, and maintaining control over project decisions contribute to the success of software development outsourcing.

Don't let outsourcing challenges disrupt your work. Contact Svitla Systems today to discuss how we can help you with your project!