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12 Tips For Software Outsourcing Success In 2022 [+6 Outsourcing Challenges]

Written by polyuno
Last modified Oct. 02 2021

Outsourcing is frequently the choice when you need to scale up rapidly, find specific expertise, or reduce operational costs. Did you know that an industry giant like Google also has been taking advantage of software outsourcing for years?

12 Tips For Software Outsourcing Success In 2022 [+6 Outsourcing Challenges]
Source: Pexels

According to Deloitte’s 2018 global outsourcing survey, IT continues to be the most commonly outsourced function. This technique has quickly acquired traction among businesses due to its ability to enable a competitive advantage.

However, successful software outsourcing is not that easy to achieve. Especially when IT outsourcing problems, as 20 to 25% of outsourcing relationships fail within two years, and 50% fail within five.

12 Practices To Successfully Manage Software Outsourcing

In today’s competitive scenario, software development is of crucial importance to any organization that wants to be at the forefront in today’s world of technology. The vital question that every organization faces is whether to develop software in-house or outsource its software development activities.

In case you decide to make an informed decision to outsource your software development, it becomes essential to weigh all the options before you can make the right choice. This checklist provides the right information so that you can make the right decision.

1. Define Your Goals And Objectives

Handling your software development project is not every offshore development company’s cup of tea. Therefore, it is essential that you define your goals to make your search easier.

Once you have defined your goals, your search for a software development company becomes trouble-free. If your objectives are not clear, then this can lead to choosing the wrong software development company for your job. This company may be incompetent or may just be a wrong fit for your organization.

2. Find Great Developers

These days you can find good developers just about anywhere - onshore, offshore, and nearshore. But how do you go about doing that? We’re going to assume that you do what most people do when looking for recommendations. You ask friends, family, and colleagues.

But is that the smartest thing to do in outsourcing? Not at all.

person facing computer desktop
Photographer: Charles Deluvio | Source: Unsplash

Most of your colleagues are going to be familiar with huge outsourcing firms, ones that employ hundreds of developers. But for smaller companies, you might only need maybe five, ten, or twenty developers.

You can follow Steve Mezak 5% Rule: With any software outsourcing firm you employ, the development team should be larger than 5% of the developers they employ. Your partner will be more engaged with your software, and you’ll get better results. Win-win, right?

Decide Your Budget

Every offshore software development company is different. While some offer packages, some charge on an hourly basis. Therefore, you should have your budget defined at the outset.

Look out for only those companies that can complete your software development project within your budget. Many businesses choose the cheapest solution for financial reasons. However, that proves to be a fallacy in many cases.

In the software development field, although the price is not the only deciding factor, more often than never, you get what you paid for.

Focus On Your Vision

Don’t just run headfirst into software outsourcing. Have a solid vision for your project. Developing an app just because you can is a horrible strategy. In the same vein, not having a clear vision before you write those first lines of code is equally problematic. Don’t wing it: take a pain point and focus on alleviating that pain and delight your end user.

Carry Out In-Person Investigation

Would you buy a car sight unseen? No, and you shouldn’t hire an outsourcing team that way either. Outsourcing 1.0 was more focused on cost, and companies were more focused on finding the cheapest team. Outsourcing 2.0 is about finding the best team, and how are you going to be able to judge that based on long-distance vetting?

Take a business trip to your prospective software outsourcing partner, get to know them and how they work. Face-to-face discussions can bring critical insights to light and the result will be a smoother operating engagement that is both cost and time-efficient.

Value Quality Along With Price

Old school software outsourcing seemed to be about driving costs down as far as possible, quality is damned. Frankly, this is not the right way to think.

When software outsourcing, you’re looking for value and that means putting quality matters as much as price. Does this mean you might choose a developer that isn’t the cheapest? Sure, but you won’t be spending more money later fixing issues.

Think Like A Partner And Embrace Cultural Differences

Treat your outsourcing partner like a partner, and not some kind of expendable resource. At the same time, you need to understand that people around the world have different ways of communicating.

project group
Image from Pixabay

You need to do your homework and be prepared to embrace cultural differences. When it comes to talking to your software outsourcing partners, treat them as people, not robots. By treating them with respect, you invite them to make a more personal connection with your project. They’ll feel more inclined to push out quality work if they feel like a part of the larger end goal.

Ensure That You Have A Dedicated Project Manager

A project manager is someone who is dedicated to your software outsourcing project. He or she is given the sole responsibility of looking after your project. This way, it becomes easier for you to keep a tab on project developments and progress. You get timely reports and can easily communicate with the team on a regular basis through your project manager.

Ensure That Your Project Undergoes All QA Processes

Most software companies have strong QA and testing support and protocols. They do not shy away from QA and testing their projects and even then stay within their development budget. Ensure that you don’t skip this step or else you could face a huge integrity problem later. Neglecting QA especially when you are going for software outsourcing is a major cardinal sin.

Hire A Good Outsourcing Partner For 3x ROI

Take your software outsourcing hiring process seriously. You’ll get roughly three times the time and effort you spent in looking for a good outsourcing partner. Now, this is not to say you might not luck out and find the perfect match right away. But that’s the exception, not the rule. Outsourcing 2.0 is about quality, and you should expect it from any outsourcing partner you select.

Set Realistic Expectations

Often, overambitious businesses go overboard with their expectations. Therefore, it’s extremely essential that you set realistic expectations for your project. The milestones you set for your company should be achievable.

In no circumstances do you set unrealistic deadlines since the quality of work will suffer? Ultimately your project will miss the deadlines or face an uncertain future. Your team could feel de-motivated and could face low morale in the future.

Effective Communication Is Key

Expect the same level of quality out of these outsourced developers that you would from your in-house employees. That’s really the core of Outsourcing 2.0: thinking of outsourcing as an extension of your team, and not just more bodies in front of a computer coding away.

6 Top Software Outsourcing Challenges You Might Face

Finding a Software Development Partner You Trust

In this context, “trust” means more than having an iron-clad MSA in place and making sure that your partner has the expertise to successfully complete the project. Trust also refers to finding someone who is willing to dig in to understand your industry, your company, your customers, and your goals.

Oftentimes, software developers have a reputation as people who live and breathe requirements. But for a software development project to be truly successful, your partner needs to take the time to learn about your business and the bigger picture in which the software needs to fit.

Communication Issues

Communication is often the most cited challenge in software outsourcing. In a way, it’s perfectly understandable: you take two companies with two different cultures and two different communication styles and you expect them to work as one.

Slight bumps in the road and minor snafus are to be expected. However, major communication issues can seriously harm the entire project.

Project Management Issues

Typically, your software development partner is in charge of project management. Issues in this area arise when there is a lack of communication, mismatched expectations, and ill-defined processes.

A good project management process should help the team manage both the short-term priorities and the long-term ideas. There should be clear plans for the work that’s happening in upcoming sprints and what’s needed to get that work done.

Scope Creep Or Failure to Understand the Scope of the Project

Scope challenges are often related to trust and communication, but it’s so pervasive that it deserves a line item of its own. Software projects are notorious for going over budget and beyond timelines.

scope creep illustration

Many software development companies work in silos and the developers themselves have little knowledge of the bigger picture. Without a broader view of what they’re trying to accomplish, they often don’t have enough relevant background to ask “why” or bring up ideas, which can lead to rework, unnecessary features, and overages.

Project Delays

Outsourced software development projects rarely meet their initial deadlines. This happens for two primary reasons:

  • The initial expectations are unrealistic
  • The project keeps changing (new features are added, existing features are changed, and so on)

In a way, this is normal. Things change rapidly and when your industry or your business makes a shift, you want that to be reflected in the way your software works. However, those shifts can cause unwanted delays.

Project Ownership Challenges

Who is responsible for what in outsourced software projects? When clear guidelines and expectations aren’t set from the get-go, you get a lot of back and forth between the client and the team about who’s in charge of what.

As the project evolves, there are a lot of small decisions with a big impact to be made. Initial scope definition and requirement gathering are crucial for the success of any project, but so is ongoing, bi-directional communication—a fact that some outsourced development partners seem to forget.


Gone are days of software outsourcing to distant lands for cost arbitrage. Instead, companies outsource to tap into critical technologies, capabilities, and ingenuity to create a competitive value stream advantage.

An organization should be considered as a series of jobs that operate together to provide value to customers. Outsource non-core tasks to unlock hidden potential and create a more cost-effective, agile organization that will outperform the competition.

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