Is Offshore Outsourcing Dangerous For A Young Software Development Company?

Is Offshore Outsourcing Dangerous For A Young Software Development Company?

Building a dedicated offshore outsourcing software development company – – offers multiple benefits to a business. It’s a cost-effective way to hire the best technology experts and create tailor-made software solutions. A KPMG study concluded that cost savings are the main reason for outsourcing for 26% of decision-makers, followed closely by quality improvement (21%) and access to scarce skills (19%).

However, young software development companies, before initiating cooperation, should take into account the main risk factors and potential dangers associated with offshore outsourcing.

Cost risk

Businesses often run the risk of going over budget when they outsource software development. It is strongly recommended to take into account the additional costs of management, travel and other related expenses. In addition, it is essential to choose the right pricing model that suits your type of project and your needs. Basically, there are three options: the fixed price model, the time and material model, and the cost-plus model. The fixed price model is the least flexible but the most transparent because everything is fixed in advance. The budget, timelines and scope of a project are defined before the start of the project, with no further changes allowed. The model of time and materials is better suited to companies that do not have a clear vision of the end product. It allows you to add new features during the work process and make the necessary adjustments. The final budget is highly dependent upon the materials, tasks and the resources that are used within the process of development. To avoid a considerable increase in prices, it is preferable to define the upper limit of the budget before launching the project.

The cost-plus model, also known as a dedicated development team, is most suitable for long-term and large-scale projects. It provides a high level of control because you can make all the adjustments you need during the process. The price includes the developer’s salary and the service provider fee, so you know exactly what you’re paying for. Determine which pricing model will be best for your project by weighing the pros and cons of each beforehand. A transparent pricing system is an essential part of a risk-free work process.

Performance risk

You must be confident that your future software solution will work as well as if you had built it in-house. The dedicated development team should be able to deliver high-quality services and that too without any constant supervision. The code must be well structured, tested and optimized for a specific environment. So, you need to choose a trusted offshore outsourcing software development company that meets your technological requirements. Explore case studies of a potential business partner to find out if the company has ever worked on similar projects or in your industry. This ensures that the code will work well, that it will be easy to manage, and that it will be followed by accurate technical documentation.

Risk of Misunderstanding

Your software development partner should clearly understand the requirements of your market and your target audience. In order to avoid any delay in bringing a new product to market, unmet requirements of the end user or bad decisions during the project, take these preventive measures. Explaining particular goals as well as end user preferences to the web programming company is important. Share the vision and processes of your business. Focus on the operational results you want to achieve. Presenting the product requirements document with the stated objectives and timetable will allow you to obtain targeted software that is executed according to your expectations. For example, if your target audience prefers a specific browser, make that clear before you begin product development. This allows you to provide a user-friendly interface and solution. Create a well thought out and structured plan with your supplier to ensure that your project will reach its final goals.

Risk of Mismanagement

Managing a team from a distance can be difficult, but you can achieve an organized workflow by combining several effective tactics. Well-established management is a basic strategy for avoiding risks in the software development process. Your external and internal teams must remain in constant contact. You can use messaging, email, Skype calls and project management tools to achieve this. Scrum and Agile are two most commonly used tools in the web development industry. With their help, you can effectively manage multifunctional teams and provide them with the necessary feedback. Get bug reports, monitor tasks, and answer questions that may be critical to your project. Stay informed about the status of a project and communicate with your team members remotely.

Taking into account the different time zones, make sure to hold regular meetings with your team and make real visits are some crucial features of a dedicated offshore outsourcing software development company. This reduces misunderstandings and allows for better coordination of the whole project.

Data Security Risk

It is estimated that the number of security breaches will reach 25% by 2020. The protection of privacy is even more important for companies that have important data (bank accounts, intellectual property and patents, social security numbers, etc.)

This is why it is strongly recommended to sign the security protocols before starting cooperation. Opt for a company which has a clear security policy and security certifications. This helps protect your business, ensuring the complete confidentiality of your information during collaboration. Make sure your business partner protects your valuable information.


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