You will hardly deny that development outsourcing could have a significant cost-saving effect to your project. However, there are always some mobile app development outsourcing risks that are likely to destroy well-established processes inside the company.
In this article, we are not going to discuss offshore soft development advantages such as global talent pole access, speeding-up project implementation, or keeping your budget low. Our task will be to find a way how to mitigate outsourcing risks with low resources.
Common Risks in App Development Offshoring
First, let’s find out what offshore development means. In practical terms, it is a form of executing soft development tasks related to your project with the help of a third-party team that works somewhere outside your office.
Outsourcing development is just another way to call the process. Its main advantage is obvious — if you do not limit yourself with the geographical region your office belongs to, you’ve got access to employees with wider expertise that may cost you less because of hourly rates difference in their country and your one.
Is it possible to minimize app development risks? Sure! But mind that each offshore development form has its peculiarities and breakdowns.
There are three forms of app development outsourcing.
You could hire remote individuals to strengthen your in-house team. You could divide the project into parts (design, development, marketing, and others) and outsource particular services that will be hardly executed in-house. And you may find a dedicated development team to assign the whole project.
The third concept means that although you’ve got lower involvement in the project in its middle stages, and in the end, you’ll receive the ready-to-use product.
What outsourcing type fits your project idea better? Read our article How to Hire Dedicated Developers to know more!
To mitigate app development risks, you need to study them. Here, we’ve listed most common of their regarding all of the offshore development forms described above.
- Unexpected expenses
No matter whether you work according to the fixed-price model, time-and-materials one, or cost-plus, there are always some risks the project was not estimated correctly. At the same time, your team may fail the task generally and it will be a need to hire a new team and start the process over.
- Low task performance and management
There is always some management issues when it comes to outsourcing. You can’t control remote workers’ task execution quality and manage the entire process as good as it is possible having an in-house team. As a result, the final product could have critical vulnerabilities. Management failures also involved project delays.
- Communication borders
Are you sure the dedicated development team has a clear vision of what you want to have as a final result? Product requirements document (PRD), clear objectives and timelines work well to lower risks. Nevertheless, you could be understood wrong due to cultural borders and that might be hard to provide developers with extra requirements being in different timezones.
- Security risks
The dedicated development team could share private information on your project with your competitors or just don’t use secure hardware or software and let hackers get into your digital business system. If your company works with bank accounts, collects users’ data, or owns intellectual property that could be stolen — that is extremely important to ensure the privacy of project data.
Choose a Suitable App Development Offshoring Destination
Choosing the development outsourcing destination is one of those critical concerns you may face soon after you’ve decided to offshore some of your project execution tasks.
The final decision will influence app development productivity, timeliness, and budget. Keep in mind that there are several aspects you could longlist candidates regardless of the company's’ competencies and size:
- Time zone
If you work with a team from the region that has more than 5 hours of time zone difference compared to your one, that could be harder to conduct outsourcing management.
- Cultural background and language
That’s great if you can communicate with your remote team members properly. In that case, you will spend less time on management and save the project budget.
- Hourly rates of workers from a particular region
Countries with higher social standards and life quality have higher hourly rates. If you’ve got a small budget, narrow the list of countries you’d like to offshore in.
- Quality performance of workers from the chosen region
Although some regions are known for their low hourly rates (India, China, or Indonesia), they are not always a good solution if you are not ready to provide constant quality assurance. As usual, extremely low salary rates mean low quality.
How to avoid risks of outsourcing? Find countries that are considered as proven digital outsourcing definitions due to their ability to provide you with skilled workers and keep a balance between hourly rates and quality performance. In 2020, Eastern Europe, the Middle East, and Latin America are definitions of that kind.
We advise you to take a closer look at Eastern European countries such as Ukraine, Poland, and Bulgaria, as well as their neighbors which are still gaining their outsourcing popularity among clients from the US, Western Europe, and Canada.
Companies from Eastern Europe can strengthen your project with highly-competent employees of various competencies with a good level of English and work attitude. The average hourly rate is around $50 there.
Ready to build your app with a reliable remote team?
Contact LANARS to estimate your idea
Company Size Matters
At first glance, the size of the company you are working with seems to be not an issue. However, when it comes to rare skills, complicated tasks, and risks of miscommunication, it is always better to have several candidates from the outsourcing company’s side to choose. So you may need a huge vendor.
The opposite is also fair — big companies have more complicated outsourcing processes and management, their services are more expensive, and there are some risks of having wrong or lower-skilled remote workers in your team.
So where is the right answer? Here the most common advantages and disadvantages of working with outsourcing vendors of different size:
less than 100 employees
Pluses — lower costs, extra flexibility regarding development processes (you could change ongoing tasks on the way), high motivation to please you, good communication
Minuses — limited experience, no chances to scale up (the team is too small), fewer chances to work with top specialists (it is hard for a small company to attract skilled and experienced talents)
from 100 to 1000 employees
Pluses — wide experience regarding work with companies of various areas and sizes (startups and giants), well-established development processes, a brand reputation that helps a company to attract skilled workers, ability to scale your remote project team, no risks of sudden company closure due to bankruptcy, a still certain flexibility
Minuses — you can’t scale up the project momentarily if you’ve already hired a huge outsourcing team
from 1000 employees
Pluses — huge portfolio, you can scale up your team anytime, high-quality experts pole (they prefer working for large and well-known companies), rare expertise, ability to support huge and complex international projects
Minuses — high costs, bureaucracy, complicated management and communication, not interested in small or short-term projects, quality may differ (as it’s not likely that everyone in the company is a top expert)
What we suggest is to evaluate the potential effects of outsourcing you’d like to achieve and the requirements you have. If you are planning to launch a small startup or you have only a few tasks you can’t solve with your in-house team — choose small or medium outsourcing vendors. If you need to cover a huge project, a large company will be more suitable for you.
However, the golden rule is to choose the company of your size. In that case, you’ve got more chances to match your working styles and management issues.
Outsourcing IT Services: Build an Effective Management Process
The software development outsourcing market is continuing to grow which means that next year we could expect even more companies on the market. How to choose the best one for your project?
As we’ve written above, start from defining your task, proceed with tech requirements, timelines, and budget, and find the region and company size that fits your purposes better. To learn more about how the search for development vendors, longlist and shortlist candidates, read our article How to Outsource App Development.
The essential question that you are likely to ask yourself having picked a company to develop your product is how to establish effective management from the first day of project cooperation. There are some hints:
- Learn team members expertise fields
Regarding the form of cooperation (entire project or particular tasks outsourcing), that is a good idea to build direct relations with your remote workers. Study team roles and scope of responsibilities of each of them and don’t hesitate to ask them how it is going concerning project progress.
- Clear tasks and strict timelines
Information technology outsources needs clarity, certainty, and concreteness. Make sure that your remote PM accepted your tasks and project deadlines. Include communication sessions to each of the critical project stages to follow team performance.
- Keep an in-house person in charge
You may be too busy to stay in touch with remote PM or some team members all the time. That is a good idea to keep an in-house employee who could conduct general quality assurance of the project and ask the remote team for progress updates.
- Keep your remote team motivated
We all are humans not machines. If you show your team a friendly attitude it will perform better and have extra motivation to share project details (even hidden problems) with you. You could also speed up outsourcing information technology processes by appointing a reward for advancing deadlines.
- Save project communication data
Don’t speak — write an email. Don’t just tell additional project requirements — make notes and recordings. If you face a conflict situation based on misunderstanding, you can simply show your data to prove you are right.
Don`t Forget About Communication
Opting for offshore develop you need to take into consideration mobile app development outsourcing risks connected with communication.
Companies hire in-house workers because they are easy to manage, track, educate. The remote team could communicate with you using emails, various online team management tools, video chats services. However, you are not able to establish the same intensive communication compared with working in the same office space.
Below, we’ve listed common difficulties you may face while development outsourcing and ideas on how to reach flawless cooperation to overcome them.
#1 You say A, the remote worker hears B
Bad English speaking skills, lack of motivation, general irresponsibleness of particular workers, and not well-established processes could result in misunderstandings between partners.
Advice — send updated requirements as well as meeting feedback in written form and make sure your contract allows such changes
#2 Your requirements are being ignored
You are trying to find out at what stage the work on your project is, to make changes or additions, but no one is responding to you. Another option — they answer you, but with a long delay.
Advice — send requirements in written form soon after or before having a conversation and forward them to other persons involved in your cooperation (CEO, account manager, or somebody else)
#3 Nobody has asked for details — the result did not match your expectations
The result of the remote development does not match the way you’ve imagined your ready-to-use product. It seems that in your tech documentation there were too many controversial issues that the executors decided on their own.
Advice — mitigate app development risks following the project progress constantly, initiate meetings and discussions at least once a week
Use Right Cooperation Model
You could minimize risks of outsourcing using the right cooperation model. That is also important to understand that each of the models has its advantages and disadvantages. What you need to do is to use the strengths of the model to save budgets and strive for excellence.
Use the list of project goals, consider your preferences for management style, and don’t forget about risks regarding your startup area.
The fixed price model
good for a small project, MVPs, products with concrete requirements
The cooperation of that type is based on a fixed-price agreement where the client is going to pay a fixed price and wait for the result that perfectly matches their expectations. In this case, the client has to share a clear vision of the final product using project specifications and requirements.
The model works well for projects with highly predictable development procedures that could be easily rated and evaluated. According to the fixed price concept, additional ongoing requirements are not acceptable or they may cost extra money. At the same time, the project is easy to plan, manage and check.
The time-and-materials model
good for long-term projects or cooperations, startups with an unknown scope and dynamic requirements
Outsourcing information technology with the time and materials concept is about flexibility. You as a client is supposed to pay for an actual number of hours employees spent on working out your tasks as well as they should cover the cost of materials (equipment, licenses, subscriptions, etc.).
In case of a time-and-materials contract, clients can change ongoing goals, set new tasks, cooperate with remote employees as much as they want, and shift directions. Although dynamic work scope is the major advantage of the concept, there is also better project timing as you will constantly how much time is required for each app feature implementation.
Learn more from our Time-and-Materials vs Fixed Price vs Milestone Pricing Models blog article.
Pay Special Attention to Security
Outsourcing management, as well as other tasks concerning your product, involves working with secure data. There several types of information that is valuable for the third-party groups (cybercriminals as well as your competitors):
- Project documentation — ideas, plans, and promotional strategy
- Company secure data — number of employees, information on inner processes, profits, bank accounts, employees’ personal data
- Users’ personal information — names, bank accounts, telephone numbers, emails, activity inside the app
Two major risks may occur in data security. First, data may be stolen with a purpose and used against your company. Second, your outsourcing partners may develop weak data operating algorithms that cause errors and leads to data storage failures. Both options are unfavorable for your business so is it any chance to overcome them? There are some tips:
- Include privacy terms to your contract (security guarantees to you, your investors, and users)
- Choose trusted IT vendor (with good references and huge clients in its portfolio)
- Use information security standard ISO/IEC 27001 working out your project
- Check what kind of soft your partner use and what data protection mechanisms they provide
- Consider General Data Protection Regulation (GDPR) and proceed with early security evaluation, gap analysis, and risk assessment while completing your software development life cycle
To mitigate outsourcing risks connected with commercial or users’ data losses you may also keep in-house PM and QA manager who will be in charge of security tests. Another way is to ask for permanent access to remote workers’ hardware to check their activities.
You may also limit private data accessible for outsourcing developers or split the project between several companies.
It is impossible to avoid the risk that something went wrong completely. And it’s even more difficult to predict which risks will become critical for the project while working with a remote team. However, in 2020, it seems the game is worth the candle. Outsourcing gives business a lot. Cost reduction, access to more qualified specialists and experts, and the ability to scale the project are the most significant benefits
At the same time, the most common risks of the outsourcing process remain unpredictability of communication and problems with information security. Our advice is to conduct information technology outsource thoughtfully — paying maximum attention to selecting a company, choosing a model for interacting with a team, and communicating with your remote employees frequently.
A company offshores its operations when it transfers them to another country to achieve certain benefits, such as cutting costs, reducing its tax burden or being able to ship products more easily to market. The decision to offshore does not necessarily mean that the work will be performed by a third party. While that can happen, the company may also choose to maintain direct control of its operations in another country.
Outsourcing refers to the process of transferring an aspect of the company’s operations to a third-party firm. This may occur within the same country or result in a cross-border transfer of work. Additionally, the outsourcing may be permanent or linked to a fixed-term contract for the performance of services.
Offshoring is when a company sends in-house jobs to be performed in another country. An example of offshoring is for a United States based company to produce their goods in Mexico.
Both offshoring and outsourcing ultimately save companies money but they reduce costs in very different ways.
Offshoring means getting work done in a different country. Outsourcing refers to contracting work out to an external organization. Offshoring is often criticized for transferring jobs to other countries. Usually companies outsource to take advantage of specialized skills, cost efficiencies and labor flexibility.
Ready to build your app with a reliable remote team?
Contact LANARS to estimate your idea