Minimize the Risk of Software Outsourcing by Following These Five Rules

The world of software outsourcing is huge but fraught with problems. In 2014 Information Week surveyed businesses about their use of outsourcing the development of software. Only 12% indicated that IT was satisfied with the outcome, and only 11% of their end users would rate the outsourced software as “excellent.”

Outsourcing is here to stay, however. But if so many companies are dissatisfied with outsourcing, how can you end up in the lucky 11%?

The major problem facing many companies considering outsourcing their software development is that they feel it is too risky. According to the same Information Week report, among the reasons that companies are often reluctant to outsource their software we find complaints such as the vendors they have to choose from seeming small and unstable, and a lack of confidence on the part of the company when it comes to negotiating contracts with vendors. Outsourcing to large vendors doesn’t always work, either. Whereas small dev teams can sometimes provide higher quality and rapid execution, large vendors often fail in this same area. Thus, outsourcing remains an unsolved puzzle for many companies: do you take a risk with small, unstable vendors, or go with large vendors that might not be able to provide the same quality and speed?

Here are some of the top problems growing startups and enterprise companies face when they hire outsourcers:

• Quality control and logistics are widely recognized as major problems in outsourcing.
• Not receiving the product is another notorious issue with outsourcing.
• Outsourcing is actually tying the financial well-being of your company to that of another.
• Many outsourcing companies have issues with managing the project.

In 99% of cases, you can avoid these very problems if you follow five simple rules for hiring and managing your outsourcing developers. Even by implementing some of them, you will significantly reduce your risk, improve the results, and get closer to being a part of that lucky 11 %. Here they are, in no particular order:

1. Don’t hire individual freelancers; hire only development teams who’ve been working together for at least 3 years. This illuminates the risks and gives you the ability to scale.
   Do you think it’s cheaper to hire individual developers? — Yes. Is it safe and efficient? — No. Hiring for a regular job remotely you will end up spending your management time. Why would you spend hours per week managing a single developer who can disappear at any moment? It’s much better to work with a team of professionals who will provide you with a project manager and save you a lot of time. You will get better results and spend fewer resources after all.
2. Ask for daily written reports/updates from all the developers so you can retain control of the process.
   Sounds like micro-management, but if done right it’s not. Simply ask to send you daily updates every evening, just 2–4 lines of text via email. So you can see exactly what has been done during the day. It will help you to catch fatal errors at the very beginning and solve issues with transparency and communication.
3. Demand two project managers — one who is US based and one who is from the development team office. Thus, you can be sure the developers will work hard while reducing misunderstandings and delays.
   Not all companies provide such service, but you will save a lot of time and money by working with professionals, rather than hiring directly. Otherwise, you will get lost in translation and the relationship will be tense.
4. Demand a timeline-based estimate for your projects, which allows you to measure the ROI down the road.
   If your remote dev team just gives you a raw cost in $$ and a vague deadline — that’s a red sign. You have a chance to lose not only your money but time and clients. Instead — ask for an hourly estimate and a precise deadline. Discuss what will be if the deadline will not be met and how will you resolve potential roadblocks during the development process. While you are still relying on other companies, the detailed estimate will let you keep the budget under control and avoid any hidden costs.
5. Demand a reporting/progress tracking software so you can see all the materials and updates on one dashboard.
   This will let you control the quality and ensure you will get exactly the product you’ve planned.
   You can use Trello, Asana, or Jira for project/task tracking and some reporting tools like 15Five.

No matter what outsourcing developers you hire, be sure to follow these standards. Or at least some of them.

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