Challenges in Outsourcing Software Development and How to Solve Them

Hire Remote Developers
Fred Monnier
Fred Monnier
Chief Staffing Operations Officer

Table of Contents

Outsourcing software development is a viable option for many companies but doesn't come without its own issues. Find out what they are here.
Published on
August 8, 2022
Updated on
June 26, 2024

With the global market size of outsourced services reaching $92.5 billion, it's evident that the business world has warmly welcomed the idea of outsourcing various business processes.

One of the most popular services being outsourced today is software development. Outsourcing constitutes 13.6% of the IT budget of enterprises.

After all, there are many benefits to outsourcing this particular process, such as lower costs, access to a larger pool of talent, and quicker turnaround time. However, like any other business venture, outsourcing software development also comes with certain challenges.

Here's an overview of the challenges companies face when outsourcing software development, along with possible solutions to these problems.

What Challenges Should You Expect When Outsourcing Software Development?

Software development outsourcing can be helpful for enterprises that need to supplement their internal development resources or get access to specialized expertise.

But it doesn't come without some issues. Here are some potential challenges you may face when outsourcing software development.

Project Delays That Increase the Time to Market

When outsourcing software development services, a common concern is a delay in project completion. This subsequently leads to an increase in the time to market for your product.

Here are some possible reasons for project delays in this regard:

  • Lack of communication: Often, there is a communication gap between the client and service provider, which can lead to delays.
  • Lack of transparency: Without clear visibility into the project's status and progress, it can be difficult to identify potential risks and issues that could cause delays.
  • Unclear project requirements: If the requirements are not well defined from the outset, it can lead to scope creep and delays in project completion.
  • Inadequate resources: If the service provider does not have adequate resources to work on the project, the project may not reach completion on time.
  • Unrealistic deadlines: Sometimes, the fault does not lie with any party but with the unrealistic deadlines set for the project. No matter how efficient your outsourcing partner is, if there's not enough time to finish a project, they won't be able to do it in time.

Project delays translate to increased time to market. Additionally, they can disrupt the whole timeline. For example, if the project is delayed, the post-release activities, such as marketing and customer support, might have to be put on hold, which can further impact the business.

Project Management

Another possible challenge during software development project outsourcing is the lack of control that the client organization has over its management.

The provider company is in charge of the project and manages it according to its own methods and tools, which may differ from those used by the client organization. As a result, the client may be unable to monitor progress and ensure that the project is proceeding as planned.

In most cases, the software development project is linked to other projects in the enterprise. Therefore, a delay, disruption, or mismanagement in the outsourced project can jeopardize the entire enterprise.

Besides causing monetary damage, it can also lower customer confidence and tarnish your company's reputation in the industry.

Communication Due To Potential Language Barriers

You may face communication difficulties due to language barriers if you outsource software development to a foreign company. Here are a few ways in which language barriers can impact your software development projects:

  • Delays: Communication barriers can cause delays in your project since your team will have to take extra time to communicate with each other. This can impact the project timeline and cause delays in the delivery of the final product.
  • Inaccurate information: Miscommunication can also lead to erroneous information being passed on from one team member to another. A lot can get lost in translation, especially regarding technical terminology.
  • Lack of understanding: Team meetings and collaborations can become problematic and unfruitful if team members don’t understand each other. This can impact the overall productivity of your team and cause a lot of frustration among employees.

Productivity and Time Tracking

Software development project outsourcing can sometimes impact an organization's productivity negatively. Since your outsourcing partner may be in a different geographical location or time zone, it can be challenging to manage the project and ensure everyone is on the same page.

Similarly, time tracking can also be an issue. Again, if you're not careful, it's easy to lose track of how much time has been spent on a project and whether or not everyone is billing for the correct number of hours.

Suppose the software vendors you've outsourced the project to are in a different geographical location. For one, organizing meetings can be a pain since it will be tricky to find a time that suits every team member. Additionally, there might be a language barrier, which could further complicate communication, affecting productivity.

Finding Developers That Have the Range of Skills You're Looking For

A critical component of outsourcing software development services is finding developers with all the skills you need. Finding developers with a broad range of skills can be challenging, especially if you're looking for specific skill sets.

For custom software development outsourcing, you need developers who can meet your specific needs. Suppose you want to create a customer loyalty program. In this case, you'll need developers who have expertise in the following areas:

  • Understanding business objectives
  • Defining user requirements
  • Designing the loyalty program's workflows
  • Coding the software
  • Integrating the software with your existing systems
  • Testing the software
  • Deploying the software

Although there's a diverse and extensive talent pool of developers to choose from, finding developers with all the skills you need can be difficult.

You may have to contact several development firms before finding one with all the skills you need. Even then, finding developers who are a good fit for your company culture and in the same time zone can take a long time.

Although the compatibility of company culture is often overlooked, it's a significant factor in the long-term success of a project. Over half of executives say that company culture impacts growth, productivity, and creativity in the workplace.

Time Zone Differences

The time zone difference may be the most pressing problem during software development outsourcing. Time zones can present a significant challenge when companies in different time zones have to work together.

For one, it can be chaotic to organize meetings where one party doesn't have to wake up at 3 a.m. Time zone differences also present difficulties for tasks that need to be completed in a timely manner, such as customer support.

It can be hard to manage expectations when half the team is working while the other half is asleep. Likewise, your internal teams may have a hard time collaborating with offshore developers due to the time differences.

Best Practices for Software Development Outsourcing

Facing challenges during software development outsourcing is inevitable. However, you can avoid or mitigate those challenges by following some best practices.

Invest in Project Management Tools

If you want your software project to be completed on time and in the best way possible, investing in project management tools is crucial. Project management software is a great way to keep track of the project's progress, communicate with your team, and ensure that everyone is on the same page.

Here are some benefits of project management tools for your in-house team and offshore developers:

  • Improved planning and scheduling: A project management tool facilitates better planning and scheduling of tasks. For example, you can assign tasks to specific team members, set deadlines, and track the project's progress.
  • Better communication and collaboration: Project management tools improve communication and collaboration between the in-house team and the offshore developers. In addition, the tools help avoid miscommunication and misunderstanding.
  • Efficient resource management: You can efficiently manage human and material resources using project management software. For instance, you can redistribute the workload to other team members if you suspect underutilization of resources.
  • Easier file sharing: When working with an offshore team, it can be difficult to share files securely. Project management tools make sharing and managing files easier since you and your team members can use built-in features to share files, manage access control, and work on the same document from across the globe.

Using a project management and time tracking tools allows you to appoint project managers as project owners. It ensures that your project managers have the final say in all decisions related to the project.

Identify Your Needs and What You're Looking For in Tech Talent

When scouring the talent pool for your next software development project, you need to identify what your company is looking for in a candidate.

The best way to do this is by first identifying the skills required for the project. Once you've done that, you can start looking for candidates with the right skill set.

For example, do you want the developers to know specific programming languages? Which core competencies do you require? Is experience with particular tools or platforms necessary?

Knowing the answers to these questions will help you find suitable candidates efficiently. Here are some basic steps to finding the right talent for the project.

Step 1: Identify the Skills of Your Internal Teams

Your house developers will surely have different skills than the ones you're looking for. Knowing your internal team's skill set is critical to finding the complementary skills required for your project.

For example, if your internal team is primarily experienced in Java development, you may want to look for a .NET developer with experience building web applications.

Staff augmentation is a useful outsourcing strategy in this regard since it allows you to evaluate your existing staff and decide whether they are up to the task of taking on additional responsibility.

Step 2: Look for the Right Skills in Candidates

After you conduct a skills audit of your internal teams, you'll be able to see which skills your team lacks. These are the skills you need to look for when hiring talent.

As mentioned above, you'll need a developer with .NET development experience for your software project.

Step 3: Consider the Candidates' Experience Level

It's also important to consider the experience level of the candidates. You don't want to hire a junior developer with no experience for a complex project.

The key is to find a balance between the skills required and the experience level. For example, if you're looking for a .NET developer, you should consider a midlevel candidate with four to five years of experience.

Streamline Your Recruitment Process

The key to successful Agile software development outsourcing is streamlining your recruitment process. Here are the steps to do this.

Step 1: Evaluate Your Recruitment Strategies

What recruitment strategies have you used in the past? How successful were they?

Evaluating your previous recruitment practices will help you determine what works and what doesn't. For instance, if you limit your company to outsourcing projects to developers in a particular country, you may want to rethink this strategy.

Step 2: Review Pre-Screening Processes

The pre-screening process involves reviewing the proposals of software development firms and selecting the most qualified ones. What are your criteria for pre-screening software development firms? Consider the following factors to ensure successful outsourcing:

  • The company's experience with Agile methodology
  • Past performance
  • The company's size
  • Time zone
  • English proficiency

Step 3: Conduct Quality Interviews

The interview process is critical to successful outsourcing. You need to ask the right questions to get a sense of the developer's abilities. Here are some interview questions that can help gauge a candidate's suitability for your software project:

  • What is your experience with Agile methodology?
  • Have you previously worked with a remote team on a software project?
  • How do you tackle communication barriers?
  • What is your experience with the technology stack used for the project?
  • What are your thoughts on using test-driven development?
  • What is your experience with pair programming?

Your questions should be based on the scope and specifics of your project.

Step 4: Evaluate the Contract

Once you've selected a software development firm, it's time to review the contract. Make sure that the contract includes the following items:

  • Detailed project description: This should spell out precisely what the software will do, including all features, interfaces, and technologies to be used.
  • Project timeline: How long will it take to develop the software? This timeline should be realistic and include time for testing and revisions.
  • List of deliverables: The list of deliverables will depend on the project but may include items like design documents, source code, and user documentation.
  • Payment schedule: The payment schedule should specify when payments will be made and how they will be calculated (e.g., hourly rates, milestones, etc.).

It's also imperative to have clear guidelines about intellectual property rights, confidentiality, and ownership of the final product. IP rights mean who owns the copyright to the code and whether the client has the right to modify and distribute it.

Once you've reviewed and signed the contract, you're ready to begin the software development process.

Step 5: Set Up Communication Channels

Outsourcing software development involves working with a remote team. Therefore, setting up communication channels is essential to facilitate smooth collaboration.

It's best to specify the communication and collaboration channels during the hiring process to avoid any mishaps down the line.

Start Off Small by Outsourcing Minor Software Development Projects

Instead of outsourcing the entire software development pipeline, start by outsourcing smaller tasks to help with the development process. This will allow you to get to know the team you're working with and how they operate. It will also help build trust and communication channels between you and the team.

For example, start by outsourcing the development of test cases or specific modules. You can also outsource other tasks, such as code review, testing, and documentation.

Once you're comfortable with the team, you can start outsourcing more of the development process. Over time, you can build a dedicated team of software developers who can work at a rapid pace to meet your deadlines.

Learn More:

Outsourcing Software Development to Cuba: An Ideal Nearshore Destination

Accelerate Your Business Growth by Finding the Right Development Team

Enterprise software spending reached $755 billion in 2021, making it one of the most lucrative industries in the world. Today, companies can accelerate business growth by outsourcing software development to the right development teams.

However, Agile software development outsourcing comes with plenty of challenges, such as time zone differences, inefficient project management, project delays, poor productivity, and communication barriers.

Nevertheless, companies can work around these challenges by evaluating their hiring processes, investing in project management tools, and choosing the right tech talent.

Finding the best team for the job involves assessing your company's specific requirements and searching for a team with the skills and experience to meet those needs. Your hiring criteria should also involve quality control and assurance since these are critical aspects of software development.

If you don't want to go through the lengthy process of finding, screening, vetting, and interviewing candidates, it's best to rely on a tech talent platform like Revelo to meet your outsourcing needs.

With Revelo, you can find, hire, and pay top tech talent from Latin America and leverage their technical skills at a fraction of the cost of U.S. hires. Sign up today to recruit your first software development team.

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