6 Biggest Problems of Outsourcing Software Development


What is outsourcing software development?

Software Development Outsourcing is the process of subcontracting software development to a different company (or an individual) instead of handling the job in-house by hiring the developers themselves. Outsourcing is now a common aspect of business and life seen in every industry and sector.

For example, manufacturing clothing is typically outsourced to companies located in Colombia, Bangladesh, and The Philippines. Phones are produced in China. Software development has also followed the same pattern as outsourcing. The development process for software has become more frequent and will likely remain so.

The outsourcing of software is a cost-effective method of gaining the skills from highly experienced professionals without needing to go through the process of hiring them and taking on responsibility for their work as employees. Another benefit often is that it reduces costs. Outsourcing software engineers typically live in less developed countries and pay lower wages. With the development in internet technology and internationalization, outsourcing development for software can be something, anyone, whether business or individual, can do.

Outsourcing has become standard practice as well for both international and local projects. Smaller companies typically seek to outsource their software development requirements to different countries, and more giant corporations could establish their software development center offshore or subsidiary to meet their demands.

There are three primary reasons that companies outsource their development of software:

  • Save money
  • Time is money
  • Fill in gaps in expertise.

If businesses lack the skills in a certain field or wish to dedicate resources to outsourcing, it’s a practical option. For instance, when a company has a good grasp of marketing but isn’t able to build an application and decides to outsource the task of building an app could be wise.

Another instance would be an organization whose primary product is a logistics solution. If the logistics firm doesn’t have mobile developers in-house, choosing a company is specialized in mobile development to create an app can save time and cash. Outsourcing encompasses a broad array of agreements and isn’t limited to companies that employ other businesses; corporations and individuals frequently employ independent contractors and small businesses to develop products.

What are the benefits of outsourcing software development?

The outsourcing of software is an intelligent solution for many start-ups and established enterprises for various reasons. Businesses are trying to reach their objectives within their strict budget. Additionally, companies cannot sacrifice the quality of their work at any cost, which is why companies turn to outsource. In 2021, the spending on IT outsourcing was anticipated to be around 1.2 trillion US dollars worldwide, which is an increase of 11.2 percent over the previous year. This could be due to the economic effects of the coronavirus (COVID-19).

Incorporating a developer outside of the confines of your business will have huge benefits. Delegating the development work of your projects to an interdisciplinary group will help you get your job completed on time, cut down on the cost of labor, and provide an additional set of wheels to improve your speed. As your business owner, You should be asking questions about the quality, budget, and deadlines for your projects before you transfer them to a third party.

Let’s explore the reasons why you need to outsource software development.

1. Cost Reduction

This is the main reason why companies decide to outsource. Most businesses have to face financial pressures as well as periods of decline. Finding a skilled outsourcing company can aid you in staying within your budget. You could make a huge reduction in the cost of hiring.

Also, you can save on the costs needed to educate the employees and provide them with the tools. Compared to the USA prices for the same task could vary by as much as 80 percent.

2. Shorter Development Time

The software will take less time to create when you outsource it to another business. Collaboration with a third party guarantees that you meet the deadlines and deliverables of your project efficiently. This is because the team of developers at the company is proficient in their work. They already have the necessary resources to complete the task quickly.

Furthermore, the time needed to recruit a whole staff is significantly longer than finding the most suitable IT firm to outsource your project. A team of developers with previous experience working in the agile paradigm can ensure that your business is prepared to stay ahead of the competition.

3. Focus Towards Critical Aspects

Business executives must carry out various duties in the contemporary business world and assume multiple responsibilities. It will save you much time making appointments, hiring, and instructing your employees. Employers can use this extra time to concentrate on the essential aspects of their firm.

You can dedicate all of your time and energy to the essential elements of your business that are vital to ensure its smooth functioning. Marketing, sales, and business development are all areas that can be enhanced and improved.

4. Increase in Knowledge Base

If your business isn’t equipped with the experience to manage an assignment, outside experts will assist you in completing the task on time. This will help meet deadlines and gain knowledge from the outsourcing business. Even if the developers you hire are experienced enough, they may be exposed to new frameworks and techniques for programming that will help them complete their work most efficiently. This exchange of information could be helpful for future projects.

5. Maintaining Customer Expectations

A competent company will aid you in identifying and researching your audience more effectively. The time spent understanding the personas and behaviors of customers can help you create software that caters directly to their preferences. Without understanding the customer and their target market, virtually no business will achieve success. It is crucial to know the needs and expectations of customers.

6. Reduced Risk

Collaboration with a third party with extensive experience in the industry and an established skill set ensures that you receive top-quality work in the specified time. Employing experts in a specific technology can reduce the chance of failing.

7. Broader Reach

Outsourcing offers the chance for your business to expand into new areas, and it is feasible within your resources. But, if an outsourcing firm presents your work as an example of their work, your company’s name is sure to grow. Employing qualified developers could help you improve your performance and grow in a worldwide public.

8. Out-of-the-box Approach

The monotony of daily work can hinder the potential to find creative solutions to problems. Collaboration with those outside the confines of your organization will provide valuable insights into your business. They can help strengthen your business with new knowledge along with constructive comments. As a result, your project workflow and abilities are improved.

Read more: Custom Software Development: Definition and Process

Top 6 Common Challenges in Outsourcing Software Development


No doubt, IT outsourcing could bring several advantages to a business. However, no one should ignore the difficulties that arise from outsourcing software. The hiring of a firm involved in software development projects can aid in achieving our goals. However, this procedure isn’t just about benefits. Many obstacles arise at each stage of the outsourcing process, beginning with the company’s selection, all the way through the implementation process’s development until the product’s release and delivery.

1. Choosing a Software Development Company You Can Trust

From the very beginning, main concern is that people select an outsourcing partner solely based on the provider’s cost. Selecting an outsourcing partner is primarily based on the most affordable deal for many companies and executives. We must remember that a high-quality final product is a key to successful outcomes.

The idea of receiving the best quality at the most affordable price could be false and misleading, resulting in the appearance of savings, causing the company to experience a hiccup for an extended duration. In the end, this could have not just financial but adverse effects on the business’s reputation. Although cost is a top consideration, when selecting an outsourcing partner, you need to evaluate other aspects that are essential to your service.

Before choosing the best IT outsourcing provider, conduct your research. Mainly, you should consider:

  • Experience – many years in the field can be all the difference in the speed at which work of your project takes place. Suppose a business doesn’t have the appropriate background but has previously worked on projects for the industry you are in and can showcase similar products. In that case, that’s an indication of good quality.
  • Customer feedback and testimonials As in all industries, the more happy and satisfied customers a software company can count, the more favorable you!
  • Technologies they operate in be aware of if they match your product goals and offer an understanding of the technology behind your requirements.

In addition to the above factors, whenever you can, it’s worthwhile to visit the company’s headquarters to feel the atmosphere for yourself. Be aware of the way employees communicate. A welcoming workplace allows employees to concentrate fully on the tasks they’ll soon be doing for you.

Research done correctly will narrow your options quite a bit and help you stay away from a novice firm whose product doesn’t satisfy your needs.

2. Poor Communication Between Parties

Working with an outside company is not without its challenges with communication. Businesses decide to outsource their development offshore because there is no way to have an internal development team. However, in addition to language or geographical issues, we often observe cultural differences within the company, which could result in a variety of miscommunications and obstacles in the workflow.

The solution to this issue is to ensure the continuity of communication. Consider with your business partner what you want your service to function and who will be the person responsible for the management of the project. Learn how developers typically work, what time and which tools you’ll be in contact with them, and with an administrator to review the plan’s development.

If there is a difference in time zones, ensure that communication doesn’t get affected and you’ll be regularly kept updated on the progress. Check that the outsourcing companies you’re considering employing a Quality Assurance team to check the code’s quality.

Do not skimp on this step, and ensure it aligns with your expectations. A clear and organized flow of information can prevent any issues. A reputable third-party outsourcing firm can assist you in establishing a precise action plan.

3. Unclear objectives and poor product specifications

The effectiveness of a project can be affected by vague statements to an outside organization of goals we have set. We shouldn’t consider the project’s specifications as a supplementary element. If we aren’t sure what the final product will appear like, we shouldn’t believe that outsourcing partners to meet our vague expectations. Be sure to be certain of the purpose of the product and the quality of your requirements. Consider the relationship between your customers and the importance of the functions. If you’ve come across an interesting feature elsewhere does not mean that you need the feature in your product. If your product isn’t a good fit for your customer’s needs, it likely will not be a success.

The final product is just as important as the elements which make it. Before you sign the contract, ensure that you have the fundamental requirements for the project. Also, you should discuss your ideas with the development team and be sure to consider their suggestions. If you prepare a digital project specification to be outsourced, the finished product will allow an outside development firm to pick the best solution to meet your requirements. The final product must function well, not just in the initial delivery phase. If you know soon that you are planning to expand the product, inform your outsourcing partner in advance.

4. Unpredictable costs

Nothing is more damaging to cooperation than unexpected information regarding cost-related issues. To avoid disappointments, make sure to inquire at the beginning of the relationship about the possibility of any costs that may arise. Determine how to handle any overtime or billing charges not included in the software project’s estimate of completion. Make sure the entire arrangement is stipulated in the contract. You can also establish a notification period to notify you of any changes.

5. Project Management

Typically the software development partner is usually in charge of project management. The issues in this area occur due to an absence of communication, unbalanced expectations, and undefined procedures.

A well-organized project management system can help teams organize short-term goals and long-term plans. It is essential to have a clear plan for the tasks completed during the next sprints and what’s required to finish the job.

In this case, employ the agile/scrum method in conjunction with central project management tools to ensure that the work is recorded and progress is recorded. Any problems are identified and resolved whenever feasible.

6. Concerns about data security

The last major issue facing companies who decide to outsource software development services is ensuring the security of data for the company. To protect intellectual property and confidential information, several steps must be followed. Expert software development partners can suggest solutions to make this riskless. Be sure to communicate your concerns and any laws that the third-party service provider is required to be aware of. It is also essential to sign a non-disclosure agreement (NDA), which ensures that your business is protected from the disclosure of confidential information.

Read more: How To Outsourcing Web Development in 2022

Software Management Tools

Although outsourcing development projects typically have associated challenges, some tools can help alleviate these problems.

Communication tools, such as tools for communicating with an outside team simpler. Here are a few tools you might need to consider :

  • Slack Slack is an application that lets teams communicate with one another in real-time and also centralize information into one location. Slack is quite well-known and is widely used by many groups who collaborate on school and work-related tasks.
  • Google Hangouts is another tool that is popular for the facilitation of communications. Compared to other options, Google Hangouts’ chat could be less effective in conversation. However, it’s one of the top videoconferencing applications and is extensively utilized.

Another toolset that can facilitate outsourcing development is the source control tool. Source control is essential for ensuring the integrity of the code base of development projects, the accuracy of code, and the past work that has been completed from the moment the initial line of code.

Here are some suggestions for controlling source sources:

  • The most well-known and well-known instrument for managing source files is Github. Github is a cloud-based repository for controlling the version. This powerful tool lets teams of any size organize and archive their app’s codebase.
  • It also assists in maintaining the quality of code and facilitates inclusive collaborations in coding. Github is free to use for public and private repositories. However, it is charged to use more than three collaborators on private repositories.
  • Another alternative can be Bitbucket, it is available for free for both private and public repositories. Much like Github, Bitbucket can be utilized by teams of different sizes. Bitbucket comes with numerous similar features to Github. Most likely, the success of Bitbucket stems from its unrestricted use of private repositories.
  • The most recent software for managing source content available for source control AWS CodeCommit is a fully managed system for controlling source code. AWS CodeCommit allows businesses to host a highly flexible private Git repository.

Task management is the process of planning, testing, and reporting a project throughout its entire life cycle. It is a different process that can be enhanced through software.

The most well-known tools for managing tasks currently can be found in Asana and Trello.

  • Asana is a tool to organize team workflows as well as task management. It’s easy to use and straightforward. Many people prefer Asana because of its sleek and well-thought-out user interface and the fact that it comes with all the features required to manage projects. Asana is completely free for up to 15 team members. Trello is famous for its simplicity. However, many people are unhappy that it comes with too many features.
  • Trello was created upon the Kanban project management system to allow users to organize their work. Trello is beneficial for visualizing tasks. This benefit and the fact that Trello is completely free for small businesses and freelancers alike make Trello an extremely sought-after option.

Software Development Methodologies

Software development methods enable outsourcing of developing software to be more accessible and efficient. There are a variety of methodologies that are used in the process of software development. However, I will focus on the most well-known and well-known ones.

The Waterfall Model

The primary and most well-known method can be described as the Waterfall Model, a sequential linear flow where the phases must be completed in sequential order. The second stage must be met before the third phase begins.

The Waterfall method is easy to comprehend since everything flows logically from the start of a project until its conclusion. It is most effective when the specifications of the program or application are well-known precise, sanitized, and stable and when the application’s definition is solid, and all technology used to create the software is specified.

Waterfall Methodology is not recommended for projects with numerous interactions with users or customers. One good example of a project that will benefit from the Waterfall method is creating a site that is carefully designed from the start. If all the website’s pages and features are firmly enshrined and are understood by all the parties during the development process, Waterfall may be an efficient method.

The Agile Model

Another method of software development is the Agile Model. The main difference between Waterfall Model and the Agile Model is the degree of interaction throughout development. Although there isn’t any interaction during the process of development with the Waterfall Model, there is plenty of interaction during the development process using Waterfall Model, the Agile Methodology has a lot of interactions throughout each stage in the development process.

When using the Agile Methodology, projects are divided into smaller parts, and each build is subject to interactions. For instance, a web project could be divided into several phases, with one step providing users to request an estimate or cost of services they need. This phase will be undergoing the interaction of the method, including planning, analysis of requirements design, coding unit testing, and acceptance. These interactions will happen at every stage of the project. Within the Agile Model, each project step is a collaboration between all parties, including clients, designers, developers, architects of the software, and managers.

The Agile method is highly suggested for projects requiring extensive interaction with the customer and the outsourced business. Additionally, employing the Agile Model to create an MVP (Minimum viable product) or products that require substantial adjustments before reaching their final form is typical.

The Agile Model can be utilized to outsource software development; however, the contractual agreement that needs to be made between the parties is clear and specific. This is essential because the numerous interactions and changes in the development process will result in increased hours of work and the use of resources.

The Prototype Model

A prototype Model is a methodological approach designed to test and validate the product before its introduction. This model is the most appropriate when the needs for the development are not precise at the start. In the Prototype Model, the creation of the final product isn’t thought of until a viable prototype is decided upon, which could take many iterations. Through these iterations, users scrutinize their strengths and weaknesses at every step of the process. User feedback guides the development decisions.


The advancements in technology and globalization have led to outsourcing becoming a popular option for companies lacking sufficient in-house resources. The possibility of savings in time and money makes outsourcing an attractive option for many businesses, particularly those concerned with developing software. Hiring an engineer or developer from another part of the globe is easier and more convenient.

Although outsourcing is getting more simple, it has its challenges. The fact that developers are located in different locations can make collaboration and communication more challenging.

The hiring of foreign workers for work in software development can increase the challenges. For those who decide to outsource their tasks, techniques and tools help allow outsourcing to be more standard and straightforward, even between different countries and cultures.

There’s no reason for doubting that outsourcing will increase in popularity as technology improves. Outsourcing is probably going to follow a similar fashion to manufacturing. Similar to how the majority of companies decided to move their manufacturing processes to third-world countries to cut costs, an increasing number of firms involved in software development are outsourcing their development requirements to other countries and vice versa.