Outsourcing Software Development Risk and How to Avoid Them


Introduction: Software Development Outsourcing

As digital transformation is becoming a competitive advantage and a necessity for existence, software development outsourcing is becoming an essential component and engine of advancement and growth.

Companies all across the world, from start-ups to large businesses, are using the approach of software outsourcing services to meet the need for technological competence while staying within budget and completing more work in less time.

Outsourcing a software development project or a portion is essentially engaging a vendor organisation to deliver software development services following client specifications. The outsourcing partner will offer specialists that have hands-on knowledge with unique projects.

Why You Should Outsource Your Software Development?

Outsourcing web and mobile development projects broaden business owners’ horizons by allowing them to access and hire top talent from around the world.

Here are a few advantages of outsourcing Software Development:

Price Quality Ratio: When it comes to software development, one of the most important factors to consider is value for money. Availing software outsourcing services are the best option to get high-quality results at a low cost. In most circumstances, vendor companies’ charges are explicitly mentioned and fluctuate according to a specialist’s seniority level. There will not be any need to hire additional personnel, purchase equipment, or spend money on insurance and training.

Access to domain expertise and cutting-edge technology: Almost all software development outsourcing vendors from around the world offer specialised services such as web and mobile development, e-commerce development and the design of other industry-related software tools. Outsourcing software development allows organisations to work with experts that understand their industry and are up to date on the newest technologies.

The Changeability of Strategy: Outsourcing software development projects saves time on hiring, training, and housing professionals that you currently lack. Furthermore, it eliminates your concerns about growing your staff if the amount of jobs varies from project to project.

Developers are with project implementation experience, resulting in flexibility and adaptation to changing needs and technological stack.

Project work and productivity are accelerated: When outsourcing a software development project, the time to market is considerably cut down. Outsourced technology suppliers are knowledgeable about the tools and frameworks that aid in the development process. Improved performance of software developers and project managers can assist in obtaining the ultimate solution on time or even ahead of schedule.

Risks in terms of resources and technology are kept to a minimum: Taking on responsibility for a project with little to no experience can be stressful. Indeed, by outsourcing software development to professionals, there will be an assurance that it is thoroughly tested and is fully functional and stable.

Outsource Software Development or Use an In-House Team?

Once you’ve decided to construct software or an application, you’ll need to figure out how to structure the development process. So the dilemma is whether to recruit an in-house or outsourced team of software developers.

Finding qualified specialists who can provide software development services can be difficult, especially if you are short on time and money. As a result, an increasing number of businesses are opting to outsource software development to reduce administrative costs, taxes, and the overall cost of product development.

If you’re seeking long-term collaboration, you may also recruit a local team of developers. But due to time-consuming interviews, on-boarding processes, and training, this alternative normally necessitates more time and money.

Let us understand the advantages associated with both in-house team & outsourcing software development.

Firstly, let’s take you through the benefits of working with a software development vendor:

Cost flexibility: There are many outsourcing companies all around the world that provide low-cost services. Asian Countries, Central and Western Europe, Eastern Europe and other regions are among the most popular for outsourcing. Asian Countries are becoming increasingly popular as a result of a plethora of talents, low taxation, and government support for the IT sector.

Huge talent pools: As previously stated, the IT outsourcing sector has a large pool of technical specialists with both knowledge and experience. As a result, the employment process can be completed in a matter of days rather than months. Outsourcing gives access to an infinite number of hiring opportunities.

Scalability: Another reason to pick a dependable vendor is the capacity to scale up and down. What does it imply? You can expand your team if you need to accelerate the development process or can reduce the number of professionals if there are no tasks for them to complete.

Faster project delivery: By outsourcing software development, you can save time on hiring. You can always slow down the growth of your project by collaborating with extra specialists, as a result, both time to market and costs are reduced.

Below are the benefits of working with an in-house team:

Cultural fit: Developers who work as permanent members of a team tend to pay considerably more attention to the company’s specific needs. It indicates they are driven to provide the best results and add the most value possible.

Communication in person: Having the same working hours and being in the same workplace allows a much more comfortable and straightforward communication approach. Direct talks reduce misunderstandings and boost effectiveness.

Rapid Changes: Changes are made quickly with the in-house team of software developers. It is always easier to update project features, add new ones and debate their technical background. Furthermore, in-house developers typically process defects more quickly.

Expertise on the job: Internal specialists hone their abilities in the course of completing the project you started and they quickly become highly focused professionals of the greatest calibre.

Top 9 Risks Of Outsourcing & How To Overcome Them

Everything comes with a risk associated with it, so does with outsourcing software development but with risk comes the remedies to overcome it. Let us understand the risks of outsourcing and also how to overcome them.

Reliability, Uncertainty and Trust:

Most outsourcing firms boast about their huge knowledge and top-tier staff, but do their claims hold any weight? You may be concerned that the software contractor may fall short of your expectations. Worse yet, they may go out of business amid development.


Examine the company’s website. Is there any chance they’ll do better for you if they can’t create a beautiful site for themselves?

Examine case studies. Credible businesses will gladly display their most successful projects, detailing the client’s background, issues, and solutions.

Examine the vendor’s social media activities. Do they share their expertise with other developers? Do they attend worldwide conferences as well as local IT events?

Domain Expertise:

When a vendor lacks experience in your industry, they will have to spend more time researching your needs. Although many solutions are flexible enough to be applied to a variety of niches, a lack of domain expertise can generate a slew of complications throughout development, resulting in a product that deviates from industry standards.


Discover the contractor’s domain competence. This information is available on their website or by contacting them directly.

Before beginning development, have a product discovery phase/workshop. You’ll get finished wireframes, use cases, and business processes – a blueprint for your product’s technical specifications.

Proficiency, Knowledge and Tools:

Outsourcing organisations will claim to be specialists in cutting-edge technology and to employ highly qualified developers. How can you be sure that the vendor company’s developers are as skilled and experienced as they claim? You don’t want a company that can’t meet your necessities to save money.


Examine the tools and software that their developers are using. Discover the various technologies they’ve used in their work. Examine their developers’ computer skills and knowledge.

Learn about the most recent innovations that they have used to update themselves.

Loss of Control:

Losing control of a project is every manager’s worst nightmare. You’re an expert in your field. You are aware of when your staff requires monitoring and when you can rely on them to make independent judgments. Working with a development partner is similar, in that you must build trust with one another.


Before you begin working together, consider which areas of development you are willing to delegate.

Create a comprehensive management plan. Establish systems to deal with changing requirements by listing the primary stakeholders, their duties, and contact information.
Manage the project in collaboration with your partner. Appoint a Product Owner who will be in charge of communicating with and prioritising the development team’s work.

Barriers In Communication:

According to Grant Thornton’s International Business Report, 88 percent of respondents believe that communication is the most important factor in successful outsourcing. Time zones, language hurdles, cultural differences, and the absence of face-to-face meetings can all have an impact on the project’s outcome. Furthermore, if you choose short-term collaboration, the contractor will have little opportunity to learn about your requirements and conform to your communication style.


During the negotiation stage, check the team’s communication and comprehension of your requirements. Always insist on face-to-face or online meetings. Their refusal to talk directly may suggest language difficulties that could lead to misunderstandings later on.

Time-zone Adjustment:

The Internet has united our world into a single global marketplace, making outsourcing a reality. However, there are still obstacles to overcome. Consider the following scenario: you have an important query, but your entire staff is now unavailable. As a result, the problem will not be resolved until the following day. Such delays can have a significant impact on project deadlines.


If you hire a software development service provider from a country with a different time zone, one of you will have to clock in late at night and engage in thorough discussions with their team, explaining the adjustments or suggestions on behalf of your complete team.

Hidden And Uncertain Costs:

The most appealing aspect of outsourced developers for organisations is the ability to save money while gaining a competitive advantage from the outset. It does save money, but there are still things to think about when arranging it. Outsourcing, no matter how inexpensive it appears, has possible costs to consider, such as hardware or software purchases or upgrades, staff relocation or redeployment, other after-hours services, and quick troubleshooting. These are the same costs that would be incurred with an in-house team, but they are frequently overlooked during the budgeting process.


You can dodge this one if you plan ahead of time.

Bring this question up with the software outsourcing company while discussing the details, and make sure that everything is clear so that the expenses are acceptable and no longer unexpected.

Service Quality and Performance:

Another key benefit of working with outsourced teams is the ability to save time. Time is an enormously valuable resource for enterprises in a dynamic and fast-paced atmosphere. However, one of the risks of outsourcing here is that you may be dissatisfied with the final product quality. Because of the distance and lack of control, the product may not turn out exactly as intended. Sometimes the team’s knowledge and skills are irrelevant, and the issue is just a disagreement of vision and strategy.


Check that your outsourced workforce has the essential skills.

Protocolize the processes and reach an agreement with the management on checkups. The final product will not surprise you if both parties are involved sufficiently throughout the early phases.

Service Performance & Quality:

Every business aims for excellent results. When an outsourcing company pitches you their services, they will make claims regarding high-quality software delivery. However, it is not required that a new third-party service provider with whom you have never worked would give you high-quality results. Even if you were looking for a rapid, cost-effective solution, if the service quality is inadequate, your organisation will suffer losses in both time and money.


Request from the company the whole process overview and project itinerary, including the start to end actions that they will take.

Learn about the tools, methodologies, and technologies that will be used for the project.
Inquire about how they track bugs in the system and how they plan to handle bugs and problems.


Outsourcing Software Development has both advantages and disadvantages. There will always be risks when there is a potential profit. However, the benefits of outsourcing much outweigh the risks associated with it. When you outsource your project to a software development company they can help you mitigate, handle, and manage the risks.