The Pitfalls of Outsourcing Development to Foreign Countries

Description: Outsourcing your development activities to another country can save you money and speed up your software projects. However, you should watch out for many potential problems that can exist. 

Table Of Contents:

  1. The Trend
  2. 5 Reasons You Should Not Hop on the Bandwagon
    1. Communication Issues
    2. Cultural Differences
    3. Security Issues
    4. Low-Quality Work
    5. Lack of a Management Structure
  3. What To Do About It
  4. Wrapping Up

The Trend

Outsourcing can be an excellent opportunity for business owners and organizations worldwide to increase efficiencies and boost their work, only if done correctly and strategically. However, this does not negate the fact that outsourcing development to foreign countries has many drawbacks. Outsourcing isn’t suitable for every situation, so consider your options before devoting any time and resources to it. While you’ll probably get a decent deal, many factors like coordination and consistency will determine the final result. 

Outsourcing can only succeed where a certain amount of control is given to an outside entity, and this distribution of power can either be beneficial or detrimental. Finding a reliable and trustworthy firm with the ideal management structure is the first real obstacle that businesses may face – and likely have trouble overcoming.

While it’s nice to keep costs down, there’s a good reason why some of these outsourcing firms’ rates are so low. These future risks can harm the company’s reputation and cause important programs to come to a halt before they can even get started.

5 Reasons You Should Not Hop On the Bandwagon

A GSA report in 2018 shows that 70% of the companies surveyed are going to outsource more in the upcoming years. According to Technavio, “the IT outsourcing business size will rise by $98 billion between 2020 and 2024.”

However, through its rapid expansion, outsourcing to foreign countries has a high failure rate. “20 to 25% of all outsourcing partnerships end before two years, and 50% end within five years,” according to Dun & Bradstreet’s Barometer of Global Outsourcing. Delays, expense overruns, low-quality work, and even contract termination affect many businesses that outsource.

It’s not easy to develop apps for a team that’s half a world away and operating in various time zones. Furthermore, outsourcing to people/companies in foreign countries will surely fail if you do not collaborate with an experienced and skilled offshore team, regardless of the methods you try to use.

Below listed are the top 5 causes as to why outsourcing development to foreign countries may not work out:

  1. Communication Problems

The outsourced team may not complete the work you task them with if they do not precisely understand what they are being asked to do. Differences in language and time zones can have a detrimental effect in this area. 

Communication issues go hand in hand with ethnic and social differences too. There are conflicts as a result of different points of view, and there can be many customs and traditions that, with a lack of understanding, can alienate you from your team. Software development firms in North America, for example, are more likely to do business with open and honest communication, while other firms may be a little harder to reach.

Another big communication problem comes to the surface when you start to map out different time zones. If you’re in the United States and want to reach out to your team in India, China, or Europe, you’ll need to prepare accordingly to ensure you reach them at a reasonable hour. The further you go, the longer the time difference becomes. China is 11 hours ahead of the United States, so day hours in the two simply do not coincide. That causes a big problem.

Communication is reduced to the minimum where work hours do line up. You may be required to send a message one day, wait for them to respond the next day, and then see their answer the day after. With several days needed to submit even the most simple messages, staying on top of the project and keeping up with its success will be difficult.

SOLUTIONS:

a) Frequent and direct communication with the outsourced team can prevent a lot of hiccups

b) Dashboards to keep track of the communication and progress

c) Agreeing on a clear communication schedule upfront

  1. Cultural Differences

The next stumbling block is cultural differences. Diversity is a brilliant idea, but whether we like it or not, differences between individuals while doing work will make collaboration difficult. Job ethics or practices are not guaranteed to be held to the same high levels in different nations. Ensuring adequate coordination can be challenging where work requirements are not well understood. Your organization might need to adapt to meet the cultural and social traditions of the third-party service provider.

If you hire an organization from the Philippines or India, for example, you may need to learn about their deeply ingrained cultural and religious values, which could interfere with their work schedule. A healthy work culture contributes to increased success, and you don’t want to jeopardize that in any way.

SOLUTIONS:  

a) Find familiar ground before the project begins: Learn about the culture of the outsourced company’s team and practice inclusive communication that embraces the differences on both sides rather than making them an estranging issue.

b) Treat everyone fairly, no matter of their cultural systems

c) Create detailed contracts both sides can refer to in case of cultural differences.

  1. Security Issues/ Intellectual Property Thefts

Despite the fact that the Data Protection Act has been passed in several common outsourcing destinations, breaches of security and intellectual property thefts will continue to be significant concerns. Even with strict IT networking standards and protection precautions, security issues will still arise in the absence of close cooperation.

Security risks that are outsourced:

  • There is a risk of missing consumer and project knowledge.
  • Questions over passwords, transfers, credit cards, bank records, and other personal data being hacked
  • Cyber and malware attacks
  • Data leakage and weaker security controls.

Sloppy procurement activities cause about 63 percent of data breaches. Many businesses still rely on SLAs, paying no attention to their outsourcing partners’ security terms and conditions, DLP systems, etc. It’s crucial to know whether they maintain control of the project’s code or document protection policies. Risk assessment and incident recovery plans should be well-established.

SOLUTIONS: best practices to avoid intellectual property thefts-

  • Being General Data Protection Regulation (GDPR) ready.
  •  Crucial to have a confidentiality/non-disclosure agreement in place.
  •  Establishing VPN, firewalls, and encryption services that will help to block online security breaches.
  1. Low-Quality Work

Because of the natural gap that exists in an outsourced project, you run the risk of the finished result not matching your standards. When contact is sluggish, it’s challenging to maintain creative control, and you can’t hope to capture any issue and report on it. As a consequence, quality assurance is prone to flaws, resulting in a faulty final product.

It’s important from the start to choose a team with high-quality employees that have the skills necessary to complete your projects, but that is not an easy task. It’s nice to keep costs down, but there’s an explanation why some of these outsourcing corporations’ rates are so low. If you go too cheap with outsourcing, you risk recruiting low-quality professionals to complete your work, which significantly impacts the finished product’s quality.

Business managers can monitor their staff to ensure that they are doing well. On the other hand, contractors do not work under the direct supervision and can cut corners in development or provide inadequate service. Furthermore, outsourced parties are often well away from the product’s actual customer, resulting in the product/software not being thoroughly tested.

SOLUTIONS: 

a) Don’t make the price your priority

b) Hire the team with user-experience experts

c) Perform user acceptance test (UAT)

  1. Lack of Management Structures

Workflow inconsistencies and a lack of management structures are two other contributing factors that may sabotage outsourced development activities. This can result in a lot of lost time and financial capital.

Failure to share crucial information early on could lead to problems with the project’s scope and the firm’s overall service/product vision. If there is a lack of a sound management structure in the firm that you’ve hired, the information you’re trying to share with your team may not make it to the ears that need to hear it. What’s the use of sharing your needs with the manager of this firm if it doesn’t get shared with the people who are actually working on them?

To prevent any effects of the firm’s managerial inefficiencies, your organization must provide complete clarity on all project specifications before the engagement begins. Don’t lose control of the trajectory of your relationship with this firm; give them all the information they need from the start, and be prepared to address problems you see fast.

SOLUTIONS:

a) Create a list of potential risks on your project.

b) Analyze the probability of each risk

c) Promote openness among team member and with your contractors

What to Do About It 

Before deciding on an outsourcing provider, it’s critical to consider and weigh the threats, obstacles, and potential drawbacks of outsourcing software development. Though it might not be practical to employ your own dedicated development team, there are US-based options that carry half of the baggage of a foreign team. 

Solvtopia assists companies in avoiding the significant risks and problems associated with outsourcing by providing higher quality work at a rate very similar to any foreign firm. Their nearshore business model and English-speaking teams promote flexible and effective practices by allowing smooth teamwork throughout the workday. 

Aside from avoiding the many cultural and language barriers of working with a foreign team, choosing to work with Solvtopia will give you access to some of the best in the business. Our developers have hands-on experience with countless different organizational structures, allowing you to have peace of mind knowing we can handle any problem that arises.

Wrapping Up

The allure of getting a great deal on development overseas is strong, but working with these foreign teams can cause a lot of problems. When it comes to your software, the gap between a “cheap” service and a “cost-effective” service could be the difference between your final product working, and not. Don’t risk your entire project on developers that might not even be qualified. Reach out to Solvtopia today to discuss your needs and get a small taste of the ease of working with a team that understands your language, your culture, and your needs better than the rest.