Thriving for more than a decade, outsourcing has been praised as cost-effective, efficient, productive and strategic. However, as benefits come, risks do also, threatening to ruin everything that you have expected to achieve from your outsourcing plan. Are you aware of what risks your company may face when adopting outsourcing as a strategy and how can you manage them? Here is the list of the 8 most common of them, as well as their solutions for how to manage risks in software outsourcing:
This is seen as one of the biggest threats to any CIO. The lost of visibility over your project may present a consequence of poor communication between your firm and the outsourced developers that result in less desirable and more costly products.
All-time fluent communication with your outsourcing developers is the key to resolving the problem. Discuss with them frequently and honestly so they can understand what you want from the project and how you want them to get it done.
- Read more: Benefits of QA Outsourcing
Email, Skype and Greeting are an absolutely good tool to keep in touch with your vendor. As a way to make it more convenient for both sides, use a common VPN or a custom cloud solution for sharing information. Besides managing the relationship with your outsourcer, it’s noteworthy that you should have your own staff prepared for the business: make sure that your in-house team understands how things are going to change with an outsourcing deal, and that they are able to cooperate harmoniously with their new remote partner.
2. Hidden Costs
The point of outsourcing is to have good products at a lower cost, but as a matter of course, you would still have to spend a large amount of money on maintaining the business, e.g. your project managers’ pay or transition costs. When these hidden costs sum up and exceed returns, your outsourcing transaction is no more cost-effective.
- Read More: In House or Offshoring
The best way to avoid this is to acknowledge all potential hidden costs before starting your initiative so you can get a clear approximation of the benefit that your project will bring. For most of the time, there are six kinds of hidden costs that you may encounter: costs of choosing a vendor, transition costs, cultural difference costs, productivity lags, internal consolidation costs, and costs of managing an outsourcing relationship.
3. Different Time Zones
The different time zone is a common issue in outsourcing, particularly in an overseas project. This might especially become a serious problem if your work requires close collaboration with your development team. The good news is many vendors have no trouble adapting to this: they can either accommodate a specific working time or switching among their team to ensure there’s always an overlap. What you need to do is just select the ones that are capable of such. Otherwise, you should at least select a suitable time zone, and find a good vendor that works there.
Communication plays a crucial role in outsourcing, especially in order to avoid the first risk. One of reason leading to communication failures is that your in-house and development teams do not share the same language. This can occur even if you and they do have a common language for communication, e.g. English, the difference between “your English” and “their English” might be different. Therefore, choose the country that has a positive track record of teaching or speaking the language you prefer, and a vendor that can guarantee to accomplish the job in such a language.
5. Quality Control
Quality is always the top objective that any client wants a contract. So it might sound totally unacceptable to you when you receive a product full of bugs, and by then the vendor is no longer responsible for it. In fact, according to Deloitte Consulting’s “Global Outsourcing and Insourcing Survey” conducted in 2012, 48% of the surveyed companies have had their outsourcing contract terminated early due to service quality problems. The idea is you should require your outsourcing developers to strictly follow your list of quality standards, and supervise your project through a certified quality assurance specialist.
You might be concerned a lot with data security when you decide to outsource your software development to other people. You want your vendor to guarantee that your data is kept secure every minute, especially when your project contains highly sensitive information. What you should do is making sure that your outsourcer had experiences with working on sensitive info and dealing with security problems before. Ask them about their security methods and the way they solve security incidents in the past; if they’re unable to give a persuasive answer, then probably they won’t be a good partner.
7. Unstable Business Partner
Every investor would like to have a stable outsourcing partner, which provides reliable and consistent resources. What would you feel if one day you find that their tech specialist has already been busy with another project, and you have spent all the money and transitioning your project to them? What if there is a data breach? Many more problems can root from your vendor’s failure to carry out their duty.
Again, we should talk about the necessity of carefully selecting your vendor. Try to build a clear and detailed request for proposal (RFP) so your potential vendors can understand what you want from the project, and what you require of them as part of the transaction. Use the criteria in your RFP to screen for an appropriate software outsourcer, considering all of their aspects, from their reputation to tech experiences, from their team structure to outsourcing model, to ensure that you’ll have a partner that is stable and most suitable for your project and background.
8. Legal issues
As you’re working with a vendor from another country, you may soon find out that the legal system there doesn’t offer the same protection as that in your home country; this is where IP loopholes come from. Even in case you’re provided with similar legal protection, you would have to pay a high price in terms of money and time for a transnational lawsuit.
Before a company decides to outsource to another country, they need to consider legal issues may arise in that outsourcing arrangement. For example, companies that transfer their work to India should be aware of intellectual property protection and data privacy and protection in India.
With many years’ experience in working with international clients, we offer IT outsourcing services in premium quality. At Savvycom, we are proud to have 100% of staff speaking English and good employee retention, which will make sure your project goes smoothly without any communication problem. Being a client focused company, we deeply understand our customers’ situations and bring them the best solutions that meet their requirements. Rather than being a vendor for only a short time, we have striven to be an IT strategic partner to our clients in a long-term and sustainable relationship.