Risks of outsourcing development

The trend to outsource a development project or the development function has been growing in recent years, and for some very good reasons. It has the potential to provide great benefits to a business, namely accessing a diverse talent pool that might otherwise be unreachable, as well as improving business agility and efficiency, and reducing time to market of an application or new app features. The ability to move faster in creating new products could result in cost savings for a company. 

Conversely, outsourcing development can also introduce risks that any organization must consider before proceeding with this model. These potential hazards can negatively impact the business’s bottom line and bring critical projects to a grinding halt before they can even be launched. In this blog, we’re taking a closer look at the issues to help companies understand and avoid these risks. 

The key to many successful IT projects is often found in the preparations that are made well in advance. In that regard, outsourcing a development project is no different – management will still want to identify appropriate business goals for the endeavor and ensure that it is set up and managed in an organized manner throughout the project’s duration. And, if the outsourcing decision is meant for the longer term, the company should ensure that the model fits with overall strategy and corporate goals. 

Not finding a trustworthy partner 

In that vein, the first true hurdle that companies may encounter – and possibly have difficulty clearing – is finding a trustworthy partner company for the desired development efforts. For starters, a company might find it challenging to perform a thorough vendor evaluation for its outsourcing purposes. 

A proper evaluation should go well beyond consideration of the development abilities and general reputation of the outsourced partner. Companies should also consider if the outsourced partner is the right fit in corporate philosophy, culture and engagement style. If the final decision is based purely upon rates or market share, it can be a huge oversight that results in skyrocketing engagement costs, customer loss, fragile software or unauthorized use of third-party data and more. 

Companies also need a plan to help overcome major communication challenges like different time zones, languages and cultural conventions. But establishing regular channels of communication with the outsourced team, they can ensure a higher probability of project success. 

Inconsistent workflow and lack of clarity for scope of work 

Additional risk factors that can hamper outsourced development projects are workflow inconsistencies and failure to comprehend the scope of the project. This can lead to massive, wasted effort and depletion of financial resources. To avoid this pitfall, a company must ensure full transparency on all project requirements prior to the engagement, along with clear expectations for deliverables, including a timeline, before handing the project to a remote team. 

Failure to communicate these details initially might create alignment issues not just with the project scope, but the company’s overall product vision. If left unresolved, these issues can set up silos where the engineers assigned to your project are inadvertently creating a gap between the company’s expectations and the content of actual deliverables. 

To avoid this, companies can use a software requirements specification (SRS) document. An SRS describes the functionality the product will fulfill for all stakeholders (business, users). A typical SRS includes: 1) a purpose; 2) an overall description; and 3) specific requirements. The most useful SRS documents define how the software will interact with either hardware or other software, and account for real and practical use cases. 

Once the groundwork is established by a company and the features it wants incorporated into the software are clearly documented in the SRS, the dev team has an excellent starting point with plenty of insights into the project’s requirements. Then, the dev team can do its own work to add more domain-specific details into the SRS. By providing the document as the basis of the project, both sides of the project have an agreement on scope and can collaborate to ensure workflows are consistent. 

Deficient quality control and security testing 

Many outsourced dev companies claim they provide extensive quality assurance and security. This is often not the case. Additionally, outsourced parties are commonly far removed from the actual user of the product, and this can lead to the software not being testing properly. As mentioned previously, the SRS document can guard against the lack of context and knowledge about how the technology will (or should) be used. 

When it comes to security, there is no exception. Companies will want assurances that data processing methods are safe, and that intellectual property is protected. This is an enormous concern for many companies and entrepreneurs and for good reason. Approximately 63% of data breaches occur because of reckless outsourcing practices, and many companies only focus on SLAs with little attention paid to the outsourced partner’s security policies, DLP systems, etc. It’s important to know if they document security policies or retain ownership of the code from your project. There should be clearly defined risk management and incident response plans. 

Companies may have in-house staff that can perform thorough security evaluations, but the process should be completed once the code is written. This avoids any conflict of interest with the outsourced company that performs the development of the software. 

Overall, outsourcing development projects can have great benefits to a company and its market performance. As long as teams are prepared ahead of time with proper goals, documentation and responsibilities, they can avoid major pitfalls and complete the project effectively.