5 Risks of Outsourcing Development and How to Avoid Them
Outsourcing isn’t a new practice, but it’s surging in popularity as companies demand more high-quality software from their developer teams. Research expects the global IT outsourcing market to grow to more than a billion dollars within the next decade, prompted by the benefits of outsourcing — decreased onboarding and recruitment costs, increased delivery speed and filled talent gaps.
But outsourcing isn’t a failsafe, and companies that rely on this kind of labor render themselves vulnerable to various risks. Let’s dive into some of the most significant outsourcing-based pitfalls and how companies can best mitigate them to continue producing high-quality, business-critical software at top speed and lower cost.
1. Quality Assurance Concerns
Ensuring software quality must be a constant top priority. Varying work environments, methodologies and coding styles can make this difficult, compounded by the inevitability of human error. All developers make mistakes: Studies estimate that a developer makes 100 to 150 errors for every thousand lines of code.
Working with an outsourced team, in particular, creates circumstances rife with error because they’re writing the code outside of the four theoretical walls of an organization. Bad code can result in expensive production issues, increased tech debt, missed deadlines and poorly performing software that hamstrings a business. However, there are ways for companies to prevent quality assurance issues.
First, establishing and reinforcing a robust quality assurance framework will help define clear code-writing standards. Development teams should also leverage testing processes, including unit, integration and acceptance testing. Regular code reviews can catch and resolve issues early on in the development cycle so they don’t become more significant problems down the line, and automated testing tools can create transparency and facilitate communication throughout the development process.
A strong foundation built on clear standards that provides accessible tools and processes will allow outsourced teams to understand expectations and establish a shared commitment to delivering the best possible software. The more guardrails in place to ensure software quality, the better the final product.
2. Data Security and Confidentiality
Unchecked security carries costly consequences: IBM reports that data breaches cost an average of more than $4 million. Trusting an outsourced team with code that contains sensitive information leaves companies exposed to greater risk. Mishandled critical assets or disclosed user information can lead to legal ramifications and a damaged reputation. Whether vulnerabilities come from faulty security protocols, unintentional leaks or more nefarious activities, security must stay top of mind.
Encryption protocols for data in transit and at rest can offer enhanced protection and confidentiality, and regular security audits and assessments, too, can help identify and address problems. Much of security, though, boils down to culture. Companies must cultivate security awareness in and outside the organization, beginning with the reinforcement of coding standards. With these tools and processes in place, internal and outsourced teams can work together to create more reliable, secure software.
3. Communication Challenges
There’s no such thing as over-communication when it comes to software development; prioritizing it in the workflow will only boost productivity. More than 70% of business leaders understand this.
Outsourcing can often create its own unique fundamental communication challenges. Geographical and cultural roadblocks can prevent shared context and understanding, while language barriers and differences in work practices may result in misinterpreted requirements, expectations or project milestones. Different time zones also affect real-time collaboration or communication, which decreases overall efficiency.
Project management tools can streamline communication and put internal and outsourced teams on the same page, while regularly scheduled meetings can help those teams connect and align on priorities. A clear definition of roles, responsibilities, expectations and code quality standards prevents teams from doing the same work twice, failing to cover tasks or producing subpar code.
Maintaining transparent lines of communication between all your teams, including those outside your company, not only creates connections between teams but also streamlines workflows and fosters a culture focused on quality that’s pivotal to business success.
4. Lack of Control and Oversight
Lack of central oversight in the development process makes it easier for teams to miss deadlines or write poor-quality code. While this kind of management is implicit in-house, leaders must take extra steps to extend it to their outsourced teams. Otherwise, they risk the kind of misalignment that can take a project entirely off course. Establishing a project management process is proven to deliver results, with studies showing a 35% higher success rate among those who do.
Clear code standards, project milestones and deliverables help ensure all teams are on the same page. These steps ensure the development process stays on track and foster a collaborative environment with open communication and feedback that leads to great results.
5. Hidden Costs and Budget Overruns
With 57% of companies seeing financial overruns in their outsourcing projects, keeping costs in check is critical to preventing runaway budgets and timelines. Predicting hidden costs like unexpected license fees or additional development time needed to mitigate surprises can be challenging.
To financially stabilize costs stemming from outsourcing, companies can create detailed budgets with built-in room for contingencies while regularly monitoring development activities and project progress. Reporting integrated into the development process can provide the insight teams need to ensure alignment and accountability throughout the development cycle.
With software spending expected to surpass $5 trillion this year, businesses must stay vigilant about reducing costs wherever necessary. Outsourcing is meant to be a means of mitigation. Preventing extra costs that creep into budgets can help ensure this strategy achieves its goals.
Finding Success Despite Risks
Risk is inevitable in any business endeavor. For software development teams, working with outsourced development teams is no exception. This practice can bolster productivity at a decreased cost when spending runs rampant.
Software will continue to be a business-critical asset in the years to come, and with companies increasingly looking to outsource developers to solve problems, steps must be taken to ensure this happens. By assessing these risks and putting safeguards in place, companies can put themselves in the best position to create top-quality software that drives business success.
