6 Red Flags to Watch for with Software Outsourcing

Red Flags with Software outsourcingSoftware development and web design have become popular for business outsourcing in the past decade. Outsourcing these services often saves companies time and money, and it also provides access to hard-to-find technical and creative talent.

With all of this software development and information technology business abroad, what could possibly go wrong? Apparently, a lot of things.

As a software development company specializing in software development in Costa Rica, we’ve heard many different stories from clients who have experience trying a wide variety of offshore services.

Risks of Offshore Software Development – Look Out for 6 Red Flags

Whether you are new to software outsourcing overseas, or are a seasoned veteran, here are six red flags for you to pay attention to when deciding to outsource your software development abroad.

  1. Cultural Issues: Cultural gaps are an obvious potential challenge when it comes to any type of overseas business. This often starts at the level of communication. When building an outsourcing relationship, it’s very important to understand another culture’s values and ideals, including typical work patterns, major holidays, and more. Gaps in communication and understanding can make this particularly difficult. When outsourcing, make sure that you are working closely with someone who shares a common language, or make the effort to hire a dependable interpreter. It may take time to understand another person’s culture, but it is well worth the effort, especially if you are hoping for a long term business partnership.
  2. Managerial Styles: When selecting an outsourcing development firm, it is best to look for a company that shares similar values and styles of management. While you may not be working in the same physical proximity as your offshore employees, chances are you will expect a certain style of project management to maintain project velocity and keep everyone on the same page. Make sure your offshore partner understands and respects the goals and style of your organization. Having a parallel vision for your onshore and offshore team members is very important to the overall success of any project.
  3. Weak Skills: Many outsourcing companies will do whatever it takes to get your business. This includes claiming to have senior or more advanced employees with specific technical skillsets that may in fact be much less experienced. Be wary of companies that claim to excel in every technical area under the sun. Most offshore technology companies do specialize in certain technologies, skillsets, and approaches to software development. If something sounds too good to be true, it probably is!
  4. Large Discounts: Sometimes companies offering offshore software development will try to draw you in with deep discounts. While potentially appealing on the outset, especially to new businesses with lean budgets, these “unbelievable” discounts can be a slippery slope. If the work you receive is not high quality, you end up paying as much or more debugging and fixing the errors.
  5. No “Point Person”: Even the most experienced and professional software development teams need good leadership. If you are thinking about working with an offshore software development company, make sure you have a clear understanding of the people that will serve as your major points of contact. How long have they been with the company? Working with an offshore partner that has good employee retention is highly desirable since turnover in the middle of a project can really slow down momentum and decrease efficiency. How interested are they in your business? Is their communication timely, effective and easy to understand? If this information is vague or simply unavailable, take notice!
  6. Travel Costs: Lastly, since you are looking into a company overseas, it is important to research the travel costs included in the likely event that you might want to visit your offshore partners. Depending on the location, traveling overseas may be quite costly and time consuming. For example, a flight from the U.S. to India will likely cost you over $1,000 USD and may involve multiple days of travel in each direction. In contrast, you can easily visit a nearshore location like Costa Rica in just a few hours’ time from the U.S. for under $500 USD round trip.

Not all outsourcing software companies are alike. Some may never raise any of the red flags listed above, while others will raise most if not all. Starting out in a strong position with your outsourcing partner is essential to the overall success of this business endeavor. Doing your research in advance will help you reduce your risks and increase the likelihood of a positive experience with software outsourcing.