Top 14 Outsourcing Problems and How To Deal With Them

Visual Craft profile on Clutch

Introduction

Many companies are using offshore outsourcing teams as their core teams or as an addition to existing in-house departments. The reasons are well-known:

  • Ease of scaling your team
  • Adding experts with the required skills both on the technical and managerial sides
  • Getting more cost-efficiency and saving on budget
  • Flexibility to rapidly adjust your team for specific projects and goals 

However, this time we will focus on the typical challenges of offshore outsourcing teams and effective solutions for those who have just started using this approach. This article will be especially useful for those who don’t understand how to eliminate challenges and don’t benefit from this software development approach as a result. 

Here, at Visual Craft, we are developing software using this method for over 16 years, and we would like to share our experience with you. 

Best Approaches to Deal With Top 14 Outsourcing Problems

1. Time zones differences

Differences in office hours with your offshore outsourcing partner can cause communication delays and failure to meet previously agreed timelines. Effective interaction between the client and the outsourcing team is vital for business development. While 2-3 hours delay is not a problem at all, 5-8 hours delay needs certain solutions.

With our clients, we solve this by conducting proper planning for the project and selecting an effective approach to the communication. In most cases, we use the Agile methodology for project management. It includes sprint planning, conducting scrum meetings, regular demos, retrospectives, and tech-related calls with team members and stakeholders. 

The location of an outsourced team is a very important factor. Our time zone allows our company to conduct such meetings during office hours of our team, as well as during office hours of our clients from Europe to the West Coast of the United States of America. Thanks to the usage of a combination of task tracking software, messengers, and proper process management, we are able to maintain effective communication between all parties involved.

However, it is not always like that. For example, working with companies from Southeastern and Eastern Asia communication becomes harder and both sides would have to shift their working hours to adjust. 

2. The lack of control and unclear delivery expectations

This is probably one of the biggest concerns of outsourcing in general. Yes, having an in-house team you will be able to check their progress as regularly as you want, and you will be able to adjust the development direction right on the spot. However, delegating your project to any kind of third-party vendor, you must be ready to let go of the control and micromanagement to a certain extent as well. 

The key to solving this problem is finding a reliable partner in the first place, with a proven track record with similar projects and positive reviews on independent platforms like Clutch.co or goodfirms.co. With a professional outsourcing vendor, you will be able to decide on the level of your involvement and the way you will be updated on the progress at the early stages of cooperation. It is also a good idea to do a test short-term project to assess the new team.

Additionally, it is important to have transparent processes in the outsourcing team. Having access to source code management systems, project management tools, and task trackers with detailed job reports will give you an understanding of what the team is doing at each particular moment, how much time is dedicated to each task, and how effective the performance is. 

3. Hassle with contractual and legal processes

Things like data protection, confidentiality, liability, regulation compliance, and intellectual property rights are major concerns for any outsourcing project. Additionally, with outsourcing, legal processes can vary dramatically from one country to the other. 

How to deal with this? Be ready to conduct some research and arrange consultations with law experts to get more understanding of this aspect. You need to discuss and document everything related to payment terms, reporting, confidentiality, security, data, and intellectual rights transfer.

Make sure to have in your contract such clauses as:

  • Compensation and payment terms
  • Service provider warranties
  • Reporting
  • Delivery and acceptance
  • Support services
  • Vendor’s responsibilities
  • Ownership and intellectual property rights
  • Confidentiality

As an outsourcing vendor, we, at Visual Craft, need to acknowledge that it will be a big advantage if your outsourcing partner has a US entity, as we do. This fact is making legal processes much simpler with our American clients. We are paying taxes and are legally responsible for any potential issues with clients in the USA, while we have most of our team in Eastern Europe. We are signing an NDA from the very first day of cooperation and keep professional ethics in the highest regard. 

In a nutshell, your outsourcing partner should have a thought-out contract that protects the client. As we do with our clients in the United States thanks to contracts that function according to laws of the USA.

4. Little to no experience with outsourcing

What if you never worked with an outsourced team and don’t know how to adjust your organization for this collaboration? This is a valid concern because you need to know what the process looks like, what you should expect, and what you should be aware of. 

Even if you don’t have outsourcing experience, a vendor that has years of proven experience in onboarding newcomer clients to this model of cooperation will be a big help. Such a partner should be flexible enough to add to the client’s processes, rather than disrupting them, and provide better results thanks to the expertise and experience of team members. 

5. Lack of cultural context

There is always a chance that cultural differences may lead to misunderstandings or even conflicts between team members. Our company has worked with foreign partners for over 16 years, and we are fully aware of cultural nuances and how to run processes smoothly. One has to take into consideration not only the country's culture but also the corporate culture. At Visual Craft the corporate culture is aimed at openness, the importance of good communication, mutual accountability, and focus on technological solutions to business problems by every team member involved on a project. 

6. Not effective knowledge transfer

The problem here is twofold and can be divided into clients’ and vendors’ perspectives. You can face this challenge when the project will be complete and the support of the vendor will become no longer available. On the other hand, a vendor can take over a not finished project from previous developers and fail to meet set requirements, due to the absence of a proper knowledge transfer procedure. 

What is the solution here? Based on our experience, we can say that you should always prevent any knowledge transfer issues by keeping the documentation of the project in check. Our developers, project managers, and quality assurance experts are always paying close attention to documentation management. We are using multiple tools and techniques in order to create accurate documentation for each project.

Our methods include:

  • Creating Wiki for general documentation, including descriptions, flowcharts, and details on processes
  • Documenting tasks in form of user stories and acceptance criteria
  • Documenting code and, most importantly, creating test cases that help team members to discover the expected functionality of each aspect of the application in the shortest time possible

7. Lack of proper management and communication

This could also be one of the most popular blockers in starting an outsourcing project. There are no guarantees that the vendor and its developers will understand you correctly in all details, and make the right decisions as a result. To ensure that communication is clear and there is a mutual understanding of short-term and long-term goals, make a continuous communication process one of the key elements of your cooperation. 

Right from the start, add calls and feedback loops as principal elements of your workflow. We keep Project Management Institute (PMI) in high regard, in the context of project management. This institute provides clear descriptions of the principles of successful project management, so it is very important to adhere to PMI practices in order to have effective projects. It helps when the managers of your vendor are certified by the PMI and that they put their knowledge to practice. 
 

Project Management Institute | PMILast but not least, project management tools like Trello, Jira and shared GitHub board are the must for outsourcing software development projects.

8. Making the wrong vendor choice

Rating and reviews on independent platforms like Clutch.co or GoodFirms will definitely help you to make the right choice. Read through the reviews and discover case studies and completed projects, schedule interviews to have a feel of what a particular vendor is capable of. 

9. Can’t find the proper size of the vendor

However, a proven track record is not the only factor you should pay attention to. The size of a vendor (which is also disclosed on the independent platforms) is also crucial to success. A small outsourcing vendor will not provide you with much scalability, while an enterprise-level company can be expensive and lack a personal approach.

Try to decide from the very beginning how you see your project and the scaling of what size you may require to prevent changing vendors during the development process. 

10. Lack of expertise with technology

Let’s say you found a development team that’s proficient in Java, Big Data, or even Machine Learning. But how could you fairly evaluate their work if you don’t have any expertise in this technology? You need to fill the knowledge gap! 

It will be a good idea to hire an expert or consultant for your in-house team to help you set reasonable performance metrics, monitor, and evaluate the vendor’s performance. In case another expert is too much for your budget, make sure your vendor will be able to help you understand the workflow, the process, and the results. 

11. Incorrect cost estimation

Cost-efficiency and saving budget are among the key reasons to embark on an outsourcing project in the first place, but there is always a risk of paying more than you initially planned. Accurate cost estimation is closely connected with setting clear project requirements. You need to know your requirements, timelines, and resources precisely. 

You can consult with a vendor, an individual firm, or even a freelancer to go through a project discovery phase to define requirements. Detailed estimations from several vendors will help you to see inconsistencies or project requirements misunderstandings. In a discussion with a vendor, set your budget limitations clearly and discuss the details of a possible pricing model in order to have clear expectations on both sides and control the expenses throughout the project. 

12. Choosing the most suitable engagement model

There are three most popular engagement models that are different in effect depending on your goals, requirements, scale, timeline, budget, and other unique conditions. Discuss with your vendor which out of three will work with your project better:

The fixed price model
In this model requirements, scope, deadline, and budget are set from the start. This is probably the weakest model among the three in terms of flexibility. You will need to pay extra fees for any work beyond the predefined scope and plan. 

The time and material model
This model is much more flexible, as it is built for long-term partnerships and changes along the way. You are free to change the direction of the development process on the go. 

The dedicated development team model
With this model, you will be able to add extra specialists to your existing team to fill the knowledge gap or boost performance. In this case, the entire project will not be delegated to an outsourcing company, but rather a part of it. 

13. Recruitment and HR hassle

While your outsourcing vendor takes over recruitment and HR activities, it can experience some problems with those. To prevent this situation, and be able to leverage fast recruitment and smart retention, make sure that your vendor has a good reputation as an employer and experts will be willing to join the company to take over an interesting project. Learn employee reviews, and read through inside policies to make sure that your vendor is a good and reliable employer. 

14. The risk of data leaks

For over 16 years on the market, we, at Visual Craft, had never faced such a problem. How can you ensure that your vendor can keep your data safe? Always sign NDA, add Intellectual Property (IP) protections into your contract, use only licensed software with regular updates, and make sure that the vendor has policies of managing access to sensitive information.

Signs of outsourcing going wrong 

Bad communication

You should pay close attention when the team is not telling you about occurring problems in time. When you have no news about the project through the entire sprint, but suddenly learn that the demo is failing to perform as expected, you are in trouble. Why it had failed? The code was probably written badly by some other team, something wasn’t provided for your team in time, or maybe there were some issues with documentation or API? You should know about all of those issues in advance, and your team should warn you about any potential roadblocks! 

Lack of responsibility

Your team is blaming others and refusing to be accountable for misunderstandings in multi-team projects? Make sure that your vendor sets up logging and troubleshooting tools to figure out where the problems occur and fix them. Repeatable chaos in responsibility after failures may be a sign that you partnered with the wrong company. 

Absence of multi-team processes

You are starting to realize that there are no processes for multiple teams working in different time zones? When you see that your vendor doesn't have a strict meeting structure and the process lacks synchronization and mutual visibility between the work of teams, that should be a red flag.

A planned communication process is a sign of a truly professional vendor. There should be an effective and regular exchange of information among all developing team members. We, at Visual Craft, adhere to the Agile process and have:

  • regular weekly meetings with stakeholders for sprint planning and grooming
  • sprint retrospective sessions
  • demos
  • daily team meetings
  • tech meetings with relevant members of other teams with needed expertise and feedback

It is also important to have appropriate software and tools for daily project management, smooth deployment flow, and synchronization of teams. 

Low quality of the product in the early stages

When you have this situation, you are probably dealing with developers with low skill levels, ineffective processes of quality assurance and automated testing, and weak project management. In this case, your vendor needs to find skilled developers suitable for the tasks, implement a continuous testing process and implement better control and project management practices. With a professional vendor, you will get a high-quality product at any stage! 
 

Outsourcing done right: Home Junction example

We joined forces with Home Junction, a leading geospatial data provider for the real estate industry, and provided Web Development expertise to redesign a legacy application according to the modern business requirements of a client. 

We started our partnership by achieving just a few goals. Our experts worked together with in-house experts of our client. Over time our team received more tasks and responsibilities and Visual Craft became a permanent partner for Home Junction. Discover more about this project in a case study

Conclusion

The partnership with an offshore development outsourcing service provider can bring your business major business benefits. However, you need to pick your partner carefully and search for reviews, and maybe even get references from a previous client.

In most cases, you won’t need to change your existing processes significantly in order to cooperate with an outsourcing vendor, if they work properly anyway. However, be ready to make some changes that will make outsourcing effective and beneficial for your organization to the fullest extent.

Hopefully, our article will help you make the right decision, pick a suitable software development partner, and set up the collaboration in the most effective way, which will become a basis for a successful and long-term partnership!

 
Table of contents:

Introduction

Best Approaches to Deal With Top 14 Outsourcing Problems

Signs of outsourcing going wrong 

Outsourcing done right: Home Junction example

Conclusion

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