Challenges of IT Outsourcing: Typical Problems and Their Solutions

IT Outsourcing Mistakes

Explore common issues in IT outsourcing and discover effective solutions. From communication hurdles to quality control, learn how to navigate these challenges for a smoother outsourcing experience.


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    Today, software development outsourcing is common in the United States, Canada and various European countries.

    Unfortunately, not everyone has a positive and successful experience with it. Whether you have no prior experience with IT outsourcing or have already worked with remote developers, it is beneficial to learn about the common problems and solutions along this way.

    This post will explain the reasons why outsourcing can fail, the common mistakes made, and provide solutions to existing issues.

    “If you have a positive attitude and constantly strive to give your best effort, eventually you will overcome your immediate problems and find you are ready for greater challenges.” – Pat Riley

    No or Poor Market Research

    Hiring a specialist is a critical process, especially when it involves bringing on a remote team. As such, conducting market research to evaluate risks and opportunities should be your initial step.

    Solution: To prevent outsourcing errors, examine what competitors and reputable companies are doing on Google. This doesn’t mean you should replicate their strategies entirely, but it will provide a general understanding of your available options.

    Another effective approach to avoiding outsourcing failures is to investigate the unique characteristics of the IT market across various countries. For example, outsourcing to Ukraine has been gaining popularity each year. This kind of analysis can assist you in determining the most suitable country for sourcing developers.

    Unclear Requirements and Vision of your Software

    Outsourcing mishaps can often stem from miscommunication and insufficient information. Even the most skilled developer cannot produce desired outcomes or meet expectations without a clear understanding of the project’s goals.

    Solution: To prevent this, begin by examining your internal team, their roles, and responsibilities. Conduct a thorough analysis to determine what you expect from your remote team and the tasks or roles you will assign to them. Additionally, selecting the appropriate outsourcing model tailored to your company is crucial.

    Furthermore, it is essential to provide a comprehensive and detailed description of your project, encompassing all necessary information. Regular communication with the team is also vital, as it allows team members to seek clarification on unclear aspects and ask questions.

    Poor Selection Process

    The hiring process can be challenging. Common mistakes in a selection process involve insufficient market knowledge, not having a hiring plan, and focusing solely on cost.

    Solution: Quick and superficial selection may lead to unsuccessful outsourcing projects, along with financial and reputational losses. To prevent these errors, it is essential to first familiarize yourself with the steps and features of selection and hiring within the IT industry. A comprehensive understanding of this process will significantly streamline it.

    Hiring Workers from Anywhere (in the world)

    Advanced technology in today’s world enables you to connect with representatives from any company within minutes. However, hastily selecting the first seemingly suitable option is likely to be a poor choice.

    Hiring developers from foreign countries can present challenges such as cultural differences, education, or significant time zone differences. While it may initially appear cost-effective, these issues could eventually lead to unforeseen expenses and dissatisfaction.

    Solution: To address this, it’s essential to first familiarize yourself with various software outsourcing models, and then determine whether nearshoring or offshoring best suits your needs. Subsequently, research the potential countries you may collaborate with to ensure their developers possess the required education and experience levels.

    Timings and Timezones: Keep Delays to a Minimum

    Delays are inevitable in every work process and every team. However, when you work with the remote team, it may be harder to control them and to minimize delays. In this case, you will always need to take into account the time differences, especially if your team is a part of an offshore software development project.

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    Solution: If you prefer to get fast reactions to pressing issues, you should choose nearshoring and the country that has no more than 4 hours difference. Thus, the schedules of both you and your remote team will overlap. It will be easier to plan meetings and have real-time conversations with team members.

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    Going for a Shiny Brand

    When considering how to avoid outsourcing failures, you might think that partnering with a large, reputable company will eliminate all issues. However, such companies often collaborate with similarly large and well-known businesses, which means your project might not always be their top priority. Additionally, you could face inflated pricing and unexpected fluctuations in service costs.

    Solution: In many situations, collaborating with medium-sized or small IT companies may prove to be the most advantageous choice. This approach ensures that your project receives the attention and respect it deserves. Furthermore, you can expect the same (or even superior) quality of development services at a reasonable and more predictable cost.

    Not Validating the Skills

    It is obvious that looking for a software development company that has experience of working in your field is a smart choice for the outsourcing of software. This way you will be able to evaluate the knowledge of developers better and choose the right people for your team. Try not to opt for a company that has a very narrow area of expertise as this means they will have less knowledge in your field and will need more time.

    Solution: The main advice here is to judge the company by the cases they worked with. Even if its experience does not match your expectations 100%, you still can send them a request. Such a decision is especially relevant if you opt for outstaffing. So you can just choose several remote developers in a narrow field to complement your existing in-house team of IT specialists.

    Outsourcing the Wrong Activities

    Most IT companies offer the widest range of services. And of course, you may be tempted to outsource as many tasks and functions as possible. Rush and lack of analysis are some of the reasons for failed outsourcing projects.

    Solution: You should analyze your needs, requirements, and tasks of your in-house team. Evaluate risks, pros and cons, and consequences of each option one by one. Only after you have a clear understanding of what you already have and what can be done in-house, you should start to look for a remote team.

    Internal Resistance

    Your in-house team of IT specialists may also sometimes be the reason for a company’s failed outsourcing. In-house staff may be skeptical about outsourcing or even openly resist the idea. Sometimes they are worried about their own position in the company or their own income. They also may doubt that the remote team of developers will deliver the product of good quality.

    Solution: As in many situations, in this one, communication is the key. You have to clearly and definitely justify why outsourcing is the best choice in your situation. Your in-house developers will for sure appreciate open discussion and the ability to ask questions. Try not to work with the specialists who are not committed and devoted to the project and your business.

    Ignoring Personality, Technical, and Process Mismatches

    Outsourcing usually means you will probably work with people from a different country (especially if you opt for offshoring). That is why it is crucial to remember about the cultural differences you may have, which include differences in business culture as well.

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    Solution: In order to avoid this outsourcing failure, thoroughly discuss all the cultural differences that may be sensitive and influence your cooperation. In some cases, additional employee training regarding this topic is necessary. You may as well introduce additional cooperation rules and policies. Another important point to discuss and approve on both ends is the technologies and systems you are using.

    Not Being Transparent

    There is no doubt that you are interested in protecting your business and its secrets. However, without a full understanding of what you are doing and what are the main business processes in your enterprise, it would be hard for vendors to satisfy your needs and meet your expectations. Too much hidden information may ruin your relationships with your remote team.

    Solution: Try to be as transparent and honest as possible. To protect your intellectual property and sensitive data, discuss and sign non-disclosure agreements with your remote employees. This will make your experience of outsourcing of software both safe and efficient.

    Lack of Commitment

    An offshore software development project is a thing that requires trust and commitment on both sides. Lack of those will most likely result in significant losses of time and money. No commitment may result in delays in your project as well as the situation in which you will have to change the contractor in the middle of the project.

    Solution: The best advice, in this case, is to be 100% sure when you sign a contract with the IT outsourcing company. You have to be certain that the remote team you have chosen will be dedicated to the project. On your side, enterprise-wide commitment is also necessary as every moment of uncertainty may harm your business.

    Code and IP ownership issues

    Uncertainty surrounding intellectual property rights and ownership can negatively impact your business over time. This crucial aspect is occasionally overlooked, which may lead to unsuccessful outsourcing experiences.

    Solution: To address this issue draft comprehensive and well-considered non-disclosure agreements (NDAs) to safeguard your data, and confirm that the final code and intellectual property (IP) of the app are owned by your company. Make certain that all parties are aware of their roles and rights.

    Lack of Defined Exit Strategies

    Exit strategies are essential for all business endeavors, as there may be situations where you need to conclude a partnership before the contract expires. In this situation, it’s important to save time, resources and your reputation as a reliable business partner for future collaborators.

    Solution: To ensure a smooth exit process, adhere to development outsourcing best practices by involving legal representatives from both parties. Confirm that the signed agreement includes explicit terms for renegotiation, renewal, and termination of the collaboration.

    Wrap Up

    IT outsourcing can be a cost-effective and efficient way for companies to access specialized expertise and improve efficiency. However, it also comes with its own set of challenges that businesses need to be aware of before deciding to outsource IT services. By adopting the best practices outlined in this article, companies can overcome the challenges of outsourcing and build a productive and fruitful relationship with their vendors.

    Tags: challenges, communication, cost, it, management.

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    Back in 2013, I founded Echo with the simple business idea: "Connect great tech companies around the globe with the brightest software engineers in Eastern Europe." We've employed hundreds of talents so far and keep going.
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    li profile Lou Reverchuk

    IT Entrepreneur

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