Given that 97% of software development companies are unqualified to deliver the necessary results, you might ask yourself what are the main reasons behind that?.
Is it the lack of communication, unrealistic deadlines, or unpredictable costs?
It’s all of the above. Namely, many businesses turn to outsourcing, especially when it comes to IT, in order to finish their projects faster, reduce their costs, or improve the focus of their company. In fact, 68% of large US companies use outsourcing to some extent. Some of the biggest are Google, Facebook, and IBM.
While this business strategy comes with many benefits it can also pose a major challenge for companies. From selecting a trustworthy company to overcoming communication difficulties, here are the greatest challenges companies face when outsourcing software developers.
Challenge 1: Choosing a trustworthy software development outsourcing company
The most critical component in outsourcing is partnering with a legitimate and reliable company or individual that will provide your company with the expertise it needs.
If you want your project to be successful, your chosen partner must learn everything about your business strategies. They also need to be able to see the bigger picture so they can understand how the software fits your overall strategy and business goals.
On that note, you should conduct thorough research that includes the following points:
Company’s experience
Finding a company that has many years of experience in the IT sector is a must. This will speed up your projects and bring better quality to your business.
Furthermore, make sure that the company you choose has already worked on similar projects so they can get started immediately.
Customer satisfaction
There are about 24.3 million software developers worldwide, so finding the chosen one won’t be easy. Therefore, you should always read customer testimonials to determine if your candidate has the necessary software developer skills, such as programming languages and an understanding of operating systems.
Challenge 2: Dealing with communication issues
The second most common challenge in hiring software developers is miscommunication, in addition to different time zones and cultural differences.
Having two parties with different styles of communication working on the same project might result in a bumpy ride with unwanted consequences.
To avoid these potential problems, you can hire companies that speak your own language or engage your in-house project manager to work with outsourced contractors.
Regarding time differences, if you can’t find a candidate in your time zone, create a schedule that’ll suit both parties, your in-house team and the outsourcing company. Moreover, be aware of cultural differences that could impact work, such as how the outsourced party believes the work should be done or how the quality should be measured.
Challenge 3: Finding a software development outsourcing company that delivers projects on time
Project delays are another aspect you will likely encounter when outsourcing software development. This usually happens because:
- You have unrealistic expectations.
- You keep adding new features to your existing projects.
To avoid unnecessary delays, set deadlines in advance and make this statement a fundamental part of the contract. In addition to that, you can break the project down into smaller assignments. It’ll help you stick to the predetermined timeline.
Challenge 4: Dealing with unpredictable costs of software development outsourcing
As much as 70% of businesses turn to outsourcing to reduce their costs. However, to follow software development trends, companies often deal with unpredictable expenses that could lead to delays and unfinished projects.
On that note, make a cost estimation before starting a project. Many factors could affect the overall price of the project, such as:
- Project complexity and size: More complex projects will cost more money. For example, a web-based platform with multiple integrations will cost more than a mobile app with just a handful of features.
- Developers’ location: Software development hourly rates vary by region. For example, software developers from developing countries and regions tend to have high quality talent at affordable prices.
- Project schedule: Some software developers get paid by the hour, while others get charged per project. If you’re working with software developers who are paid by the hour, make sure to determine the exact timeframe of the project and include it in your contract.
Hidden costs can also include quality assurance issues, overtime, and additional testing.
To avoid unpredictable costs, create a budget plan that can roughly look like the following:
- Development: 50% of the cost
- Project management: 15% of the cost
- QA: 15% of the cost
- Legal fees: 13% of the cost
- Business analysis: 10% of the cost
- UI/UX design: 7% of the cost
Challenge 5: Intellectual property issues
Intellectual property, or IP, refers to creations, such as inventions and designs, used for commercial purposes. Intellectual property is therefore protected by law.
Digital assets such as algorithms and proprietary software codes are also considered intellectual property. In other words, software developers have the right to retain the intellectual property of the software they have created.
On that note, you should discuss the ownership issues with the software development outsourcing company before starting the project.
Your safest option is to sign a non-disclosure agreement (NDA) with the developer. This agreement obligates both parties to refrain from giving information about the software to third parties.
Make sure to be very detailed when drafting an NDA so that both parties know what information they can and can’t share.
After you conclude the outsourcing agreement, you will also have to register the software with the IP board of the country where you intend to use it. Furthermore, check the country’s legal framework to determine how they will treat your intellectual property rights.
Extend your business by outsourcing the right software development company
Technology advancements made outsourcing one of the most popular options for businesses that don’t have enough resources.
Due to its money- and time-saving potential, many companies, especially those in the tech sector, started partnering with developers from all parts of the world.
You could face many challenges when outsourcing software development — from experiencing communication issues to project delays and unpredictable costs. However, you can avoid most of the mentioned issues by choosing a trustworthy company that understands your business goals.