are many great reasons to take advantage of software development outsourcing –
ranging from the flexibility it offers, easy access to skilled specialists to
possible time and money savings. However, not all companies will be able to
benefit from it – they will make mistakes on their outsourcing journey that
will give them all sorts of headaches. Don’t get discouraged, though. All you
have to do is learn from their mistakes rather than your own ones! Today, we’re
talking about some of the biggest mistakes that keep companies from leveraging
the power of outsourcing.
Why some companies fail to benefit from all the advantages of software development outsourcing, getting frustrated and discouraged in the process? That’s because, just like with any other activity, outsourcing can be done well or badly. If the idea of learning from other people’s mistakes sounds good to you, get familiar with our list of 10 outsourcing mistakes to avoid so that you can give it your best shot.
What do companies that fail at outsourcing tend to do?
1. They prioritize low price too much
According to a study by KPMG, 26% of companies consider cost savings the most important reason for using software development outsourcing. Generally, it isn’t a bad strategy. The mistake is trying too hard to find the lowest priced alternative, without regards to quality. Read one of our previous articles to find out why hiring bad developers eventually leads to bigger costs.
2. They are victims of short-term thinking
Most of companies are partial to the idea of establishing a long-term relationship with a quality and trustworthy outsourcing partner. The longer they work with them, the more efficient the cooperation becomes. But their initial approach to finding this partner, often centered around the lowest price and making their decision quickly, goes against this long-term goal. Studies of successful partnerships with outsourcing vendors show that a “skilled human resource” is by far the most important success factor as well as an essential ingredient of a long and fruitful client-vendor cooperation.
3. They don’t pick the most suitable type of deal
There are many various types of outsourcing deals. Some of the most popular include fixed-price contracts and time and material deals, in which budget isn’t predetermined. The fixed-price model works well for short projects with a thoroughly defined scope. For projects that require more flexibility and assume changes of the scope during development, it may result in having to pay more or getting a subpar product.
4. They don’t put enough emphasis on security…
In the past few years, the world of outsourcing has made a great progress when it comes to legal coverage of outsourcing projects. It’s highly recommended you take advantage of it, by including documents such as a non-disclosure agreement or getting your vendor to explicitly state their approach to security and code quality in the contract.
5. … as well as proper planning
Seeing through a software project to a successful end is a team effort – both for in-house and outsourced projects. If you expect your external developers to deliver a product you dreamed of, you need to be very specific about what you want. From the very beginning, share your full vision of what the product is supposed to be and what you want to achieve. Don’t expect the external developers to figure everything out themselves based on general guidelines. At the same time, take their suggestions into consideration.
6. They think that external projects will manage themselves
External projects require management just as much as in-house work. Don’t expect your vendor to manage your own business. Maintain frequent communication throughout the project and make sure that tasks are completed on time.
7. They don’t take differences between countries into consideration
Sure, software developers can be much cheaper depending on their location. However, every time you open your distributed team to a new location, you need to consider many factors, like time zones, cultural and language differences, and availability of types of specialists. Improperly managed offshore development can turn into a disaster. Learn why Poland is one of the safest bets when it comes to choosing an outsourcing destination.
8. They don’t know what they really outsource
Even if software development isn’t anywhere close to your core competency, you can’t stay ignorant about any of the aspects of your outsourced project. Having a technical co-founder is extremely helpful. But there are many ways to ensure that you keep tabs on everything, including proper project management and involving your in-house team in the process.
9. They underestimate the people factor
Regardless of the size of your outsourced projects, make sure that all stakeholders, including team members, sponsors, suppliers and executives, understand their role and share the same vision of what the project is supposed to be. A good kickoff meeting is an important step to achieve this goal.
10. Most importantly – they don’t do their research properly
Take your time when making your final decision. Consider full costs of both in-house development and outsourcing in various countries to choose the very best value for money. Get familiar with the portfolio and case studies of your picks. Consider all factors take come into play.
Software Mind is a Polish software house that aims to provide top-of-the-line software outsourcing services. From the initial meeting, through careful planning and consideration of all factors important for the project, we’re maximizing your chance of success. If you are also ready to give it your all, contact us and let’s talk about your next exciting venture.
 The radical new world of outsourcing for technology-related services, KPMG IT Outsourcing Service Provider Performance & Satisfaction Study 2014/15
 Critical Success Factors for Offshore Software Development Outsourcing Vendors: An Empirical Study