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How to Successfully Outsource Software Development

Victor Haydin
Victor Haydin

Planning ahead and following these five tips can ensure a successful outcome.

We've all heard about the famous examples of outsourcing gone bad: IBM and Queensland, Virgin Airlines and Navitaire. Sure, everyone wants to reap the benefits of outsourcing software development. It's relatively cheap. It's fast, and it allows you to increase the efficiency of your company.

But outsourcing is difficult. In fact, almost 70 percent of all outsourced projects fail, which means that any IT outsourcing project – even your's – has a significant chance it could fail. Outsourcing poses challenges and risks. 

What are the common mistakes in IT outsourcing?

What causes outsourcing failures? Just like in everyday life, the most common reason is miscommunication: not clarifying the details of the project with the outsourcing team and not ensuring they understand you. If you don't have a clear plan and don't check up on the team frequently, a lot can go wrong.

On top of that, when you hire an offshore company, cultural, language, and time differences can only make things worse. In fact, cultural differences in communication style correlate with 59 percent of all project failures. Miscommunication between partners leads to failed deadlines, hidden costs, lack of team motivation and commitment. But the scariest part is that, in the end, you risk getting a product that's far from what you anticipated.

Another mistake many companies make is outsourcing the wrong type or amount of work. Before outsourcing any IT project, understand the objectives and why this type of collaboration is important for your business. Set your priorities: What are the things you can easily outsource without the risk of failure? What is too important or irresponsible to outsource? Don't delegate work that is best done in-house.

5 ways to ensure success when outsourcing your project

The cost-effectiveness and operational efficiency of outsourcing are usually overrated. Then again, if you outsource wisely, the results may surprise you. Here's what you need to do to succeed when outsourcing your IT project(s).

1. Define the reasons and objectives for outsourcing.

Before deciding to outsource, take your time to really understand why your business needs it. Scrutinize the reasons for outsourcing, and from there, create a list of objectives. Don't underestimate this step and rush through it, because the success of your outsourced project depends on how you prepare for it.

Before hiring an outside team, ask yourself the following: Is there isanything you'd better develop in-house? Are you sure that it's the right time for you to outsource? Take startups, for example. When they outsource software development too early, the risk of failure is really high, but outsourcing at a later stage can bring major benefits. Revise your answers several times to build a clear and exact plan for your future outsourcing experience.  

2. Guide your extended team.

Vendors often boast being autonomous as one of the key benefits of outsourcing software development. What these vendors mean is that you can focus on running your business while the vendor works on your project without supervision. While this sounds good, it's often too good to be true. If you want results, contact your remote team regularly. Arrange video conferences, make calls, write them or hold meetings – use all the channels you have.

Frequent communication allows you to share important details, manage the development of the product and motivate the team. This participation effect will not only save you from some common mistakes in IT outsourcing but will strengthen your relations with the extended team, earning their trust and respect.

3. Set realistic milestones and track the progress.

What works better than creating the project's schedule, setting its goals and milestones? Making them measurable and realistic. Your team has to know the results are achievable. They may be hard, take up a lot of time and effort but are feasible. Sure, you may want to create the next Microsoft, but if the team fails to deliver it, is it really their fault?

If you don't take time frames and the complexity of tasks into account, you risk not having anything done or a project that is done poorly. Don't be too demanding, and negotiate the timeline with your outsourcing partner. Milestones are an important tool for tracking the team's progress but use them carefully. Check project updates and evaluate the completed tasks according to your standards. And always provide your feedback on the delivered results.

4. Be flexible and have an exit plan.

People often think they know how to successfully outsource software development. In most cases, you'll have to deal with unforseen curveballs and additional expenses in software development outsourcing. Be prepared for them. This involves being flexible and responsive to changes. Develop backup plans for your big decisions. Never outsource without an exit strategy in place.  

5. Don't expect too much.

Many companies have high hopes and expectations for the outsourcing team. This happens because they treat outsourcing as a purchase, not a process. You have to be aware that you may not get the best possible results. Just accept it. Set realistic expectations from the beginning and plan accordingly. Your extended team might even pleasantly surprise you at the end.

How to Outsource Software Development Successfully

To reap the benefits of outsourcing software development, you have to do a lot of work yourself: Plan ahead double check everything, communicate and manage. Just like in any other relationship, for outsourcing to succeed, both parties have to be committed. The key to outsourcing success lies in choosing the right partner.

To find a reliable outsourcing partner, search the web for recommendations and reviews from trusted sources. Check the Global Outsourcing 100 list, for example. Also, ask for information on the company's previous works and successful outsourcing cases. Once you find the perfect fit, you'll get a trusted partner for life. Good luck!

Image Credit: 3D_creation/Shutterstock
Victor Haydin
Victor Haydin Member
I'm a great believer in Lean principles, market-driven strategies, and customer centricity. To help businesses grow, I often deliver speeches on ITO topics at business schools, tech events, and international conferences. Also, I'm a regular representative of Intellias on the global events like CES, ConCarExpo, Automotive Tech.Ad, and CEBIT. As the result, I would like to cover such topics like breakthroughs in the tech world and automotive industry (e.g. autonomous driving, car sharing), and key management principles to succeed in software product delivery. Looking forward to contributing to