What are the Business Risks in Offshore Software Outsourcing?

By Abhishek Amin Mar 24, 2021, 4:03:18 PM , In Offshore Development
What are the Business Risks in Offshore Software Outsourcing?

The offshore software development or offshore outsourcing model has seen exponential growth over the last decade or so. The process of offshore software development means that a business outsources the partial or full software development tasks to a specialist vendor from a different continent. This model is the most preferred approach for any startup, business, or enterprise who is looking to get a software application built by an offshore partner due to many reasons. 

However, there are certain risks involved in offshore software development outsourcing too, just like the other engagement models. It is always better for any business entity to know the associated risks in order to reduce the vulnerability in any engagement model. After all, businesses are hiring development teams beyond their geographical borders, having different mindset, language, culture, etc. Even in a multi-shore outsourcing model, there are multiple teams hired from various locations and this multiplies the risks associated when teams are distributed. 

This blog will showcase the exact risks that are involved with offshore software outsourcing.

Risks in Offshore Software Development

Your Idea can be Stolen by an ODC

Perhaps the most undesired and unfortunate thing to happen is that your unique business idea might get stolen by an offshore development company (ODC). It is impossible to get a quote without sharing information about your business idea to develop a software solution to overcome an existing problem. Information sharing also helps the offshore development team to understand the project scope, raise suggestions and questions, and core business objectives to design and develop a software application as per the expectations. 

Just imagine if you find out that a white-label or full-fledged solution is launched in the market after a couple of months by the same company you contacted and shared your original idea. To prevent this scenario, never forget to sign an NDA (Non-disclosure agreement). 

NDA ensures the privacy of your information, business idea, and data where your offshore development partner can’t share or use any such information for its own usage or anyone else. Sign an NDA ASAP before the knowledge sharing starts between you and your offshore team of software developers.

Partnership with Inexperienced or Incompetent ODC 

Even though you may have taken all the points into consideration to hire the right offshore development firm, you later feel doubts about your ODC partner to be competitive and experienced. This may happen often after a brief time spent together and you may have analyzed the inexperience pitching in during the meetings, collaboration, responsiveness, and business understanding. 

The best option is to go for an MVP, or a Proof of Concept (PoC) in the pilot phase for the first few weeks. This will help you to run the SWOT analysis on your ODC partner and decide if you wish to go ahead and establish a long-term business relationship. Toxic cooperation will lead to failure for sure, so it is always better to make a move as early as possible to find another offshore partner if something just does not feel right.

Constant Delays Due to Time-zone Differences

This risk is associated when you partner with the rigid offshore development companies. For example, a business in the USA partners with an ODC in Asia, the time-zone difference would be around 11-12 hours. In this case, by the time you wake up, your offshore dev team would shut down their systems. When a team is waiting on something for your approval, they may have to wait till the next day to continue the work. Many time calls will be scheduled at time where either of the two parties will have to be available outside the working hours.

These problems exist where either of the parties are rigid, not flexible. Here is where the importance of close collaboration and effective communication with timely responses matter a lot. Project Manager’s skills and experience would be the key in arranging the scheduled calls to ensure every project stakeholder is on the same page.

Loss of Control over Quality & Cost

Businesses will always worry on the initial level of engagement about the quality of the product an offshore development team will build. Businesses normally have more faith over the in-house teams and see them as dependable, expect from them to deliver the best quality. But there will always be a question if they can expect the same from a fresh hired dev team of a different continent. 

Another fear in offshore development is the fear of losing control over the expenses. There is always a period, a phase, involved in the initial project discovery workshop or knowledge transfer sessions where the software developers perform research to learn about the client’s business. The vagueness lies here where business owners think how much time is required and they fear losing their control over the project duration and cost as a result.

Fear About the Programming Performance

The risks associated here are subjected to two types: Code quality and reliability. There will be concerns and questions initially if the hired software developers would like the quality codes on a continuous basis? How much supervision will be required for code review and quality check? 

The expectation of the business owner would be to have a code developed that is well structured, quality tested with comprehensive optimization for the expected environment. At the end of the day, any business would expect that the software app developed by an offshore dev team will be as good as an app that is developed by their own in-house development team in the past.

Find the RIGHT ODC to Partner With…

Now you may understand why it is extremely important to find and engage with the right offshore development company. Your homework done before the engagement with an ODC will be the key to the project success and a cost-efficient software application development. 

Read More: How to Choose Right Offshore Development Company?

Even after you have found the right offshore development company, the work is not done yet. There are things you must consider while handpicking the right resources to create your great project team of dedicated developers.

Read more: How to Hire Right Resources for Software Development Project?

Why IndiaNIC is Your Preferred ODC partner?

Since 1997, IndiaNIC has been successfully helping global startups and businesses to hire dedicated software developers for all the web and mobile app development technologies. Create a great software development team by an easy onboarding process and unlock the access to hire software developers with an average of 4+ years of experience in various technology domains.

Following are a few advantages when you hire dedicated developers from a top offshore development company:

  • 100% project control
  • Direct communication 
  • Zero upfront investment
  • Flexibility to Scale up/scale down team
  • 100% transparency, access, and integrity 
  • Choose your own team from the hand-chosen developers based on your project requirements

Interested to have a quick call to know more about engagement and quotation? Contact us to onboard an experienced dev team in no time!

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