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Outsourcing Software Development: The Risks You Face & How to Minimize Them

by Itotia Waiyaki
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Which Risks Do You Face When Outsourcing Software Development

Introduction

As the software market gets more crowded, it becomes easier for users to jump ship from solutions that are just not cutting it.

It has therefore become very important to build scalable products that users actually need and want and companies are turning to outsourcing as a solution.

This is because it promises cost efficiency, access to a wider range of talent and skill, and the ability to focus solely on core business activities

At a glance, choosing the right company to outsource your custom software development may seem straightforward, after all, shouldn’t one just look for a company that specializes in the desired technology, and has a portfolio of similar projects and competitive rates?

This is almost always not as easy as it seems.

People often overlook the importance of ‘skill-role-ft’ for example which is the harmony between the skills offered by the outsourcing company and the specific roles required for a project’s success.

A successful project can be compared to a well-orchestrated symphony, where each musician plays a crucial and harmonious role.

Understanding these dynamics and recognizing where your in-house team excels or is lacking and then supplementing that with an outsourced team is where the magic happens.

In this article, we will take a deeper look into this, talk about the risks involved in outsourcing your software development, and how to mitigate these risks ensuring a harmonious and successful collaboration.

Understanding ‘Skill-Role-Fit’ in Software Development

At its core, the ‘skill-role-fit’ denotes the alignment between the skills that a specific project demands and the roles required to fulfill those requirements.

It is crucial to have this alignment if your software projects and partnerships are going to succeed.

Similar to a journey that may require a map and landmarks, software development has its own milestones from the conception of the product, to its final deployment. Without clear role definitions and skills, the path to these milestones can become muddled.

Let us get into the most common roles in a typical software project

  1. Product Manager – This is the person in charge of steering the ship. He or she defines the product roadmap (guided by the business goals and users’ needs and requirements) and features, making sure that the end product aligns with the objectives and visions.
  2. Documentation Specialist – This role is not so common and sometimes can be a shared area of responsibility. The specialist here is responsible for sketching out the product’s specifications, user guidelines, and technical intricacies, serving as a blueprint for developers and stakeholders.
  3. Project Manager – He or she ensures the timely delivery of everything including efficiency resource allocation, and seamless communication within the entire project team.
  4. UI/UX Designer – These are the artists who transform abstract concepts into tangible mock-ups and designs ensuring the software is both functional and user-friendly.
  5. Tech Lead – These are the guardians of the technical integrity of the project. They make important architectural decisions ensuring high code quality through necessary reviews.
  6. Quality Assurance (QA) Tester – Another very important role. This person is responsible for meticulously testing the software, identifying bugs, and ensuring that the end product is flawless.
  7. DevOps Specialists – This is the bridge between development and operations. Ensuring smooth deployment of the software, continuous integration, and server management.
  8. Software developers or engineers – Last but certainly not least are the builders who breathe life into the software. They are responsible for turning designs and specifications into functional code.

Remember that some of these roles can be filled by single individuals or even larger teams. Some of them like the documentation specialist can also be shared and done by the tech lead or a senior engineer.

The neglect of any one of these roles or practices can potentially lead to a disaster within your project so before even engaging with a software house, some sort of introspection is needed.

Take a thorough look at your in-house teams’ strengths and weaknesses and how you can supplement this by outsourcing your development needs.

If you do not have an in-house team, then the job here is to make sure that any potential software houses you want to hire, have to have these roles as part of their model.

In-house vs. Outsourcing: Finding the Balance

Let’s take a look at how to strike the perfect balance between your current in-house team and resources and outsourcing.

Recognizing the strengths within your in-house team and identifying Gaps

Perhaps your team has a keen sense of the user’s needs and preferences and you’ve managed to have solid product management processes, or maybe your developers are particularly skilled in a specific technology stack.

Recognizing and leveraging these strengths will help guide your outsourcing decisions so create a sheet or document with the roles and rate each role in accordance with your in-house capacity.

In the same vein, outline the gaps and where you are in need of help.

It can sometimes be tempting to say that although you are lacking in certain areas, the team can adjust and compensate, and while a flexible team is always a plus, what often happens is that you end up overburdening your teams leading to inefficiencies and even burnout.

Choosing the Right Software Development Partner

What are some of the common software development partners?
What are some of the common software development partners?

Once you’ve done an honest audit of your in-house team and identified where you are lacking, it is time to choose the right team to outsource your development needs.

At first glance, the outsourcing market can seem saturated with each company claiming expertise and excellence, however, not every provider might be a fit for you.

Let us categorize some of the development houses you are likely to come across.

  1. The recruiter – These are essentially talent scouts who match you with development teams or individual developers who match your requirements. While they offer flexibility in choosing developers they do not participate in the project, leaving the management to you.
  2. Outstaffer – A step up from recruiters, outstaffers handle the nitty-gritty of contracting and payments. They help you with the smooth onboarding process of developers and assist if there’s an issue with say performance. However, just like the recruiter, the day-to-day management is on you.
  3. Dev Shop: Think of these as a cohesive unit. They provide a managed team complete with a structured process. They bring along project management expertise, ensuring streamlined delivery. With the right input from you, they can transform your visions into functional and scalable software.
  4. Product Shop: These are the holistic solution providers. They go beyond development and management and deep dive into aspects like UI/UX design and product strategy. They are exceptional at translating abstract ideas into tangible roadmaps, designs, and ultimately scalable products.

The risks of Misalignment

Choosing to outsource your software development to a team that is either under or overqualified can have some repercussions:

  • Overqualified Providers: While bringing seasoned expertise to the table, they often, obviously, cost much more than the average provider. More importantly, they are accustomed to taking on significant strategic roles in projects which means if you have a small project, it might not get the attention you need and deserve compared to their other clients.
  • Underqualified Providers: They might promise the moon and back but they’ll ultimately lack the skills needed to deliver even though the price might be attractive. However, you may end up paying more to get your product released in the long run because of substandard quality, meaning accumulated technical debt, missed deadlines, and project mismanagement.

Finding the Perfect Match

So how do you find the perfect match?

Again, the key here is introspection and being honest with where your business is, where your team is, and where you want to go.

It’s all about synergy. Seek a partner that aligns with all these aspects and offers the best synergy with your company.

Minimizing Risks and Streamlining the Process

Embarking on a software development journey can be exciting but likened to a sial on uncharted waters.

While the potential upsides are huge, there are always potential risks and in this section, we will get into some of the strategies you can use to minimize and mitigate these risks.

  1. Implementing a Product Process – A well-defined product process is the compass of your development work. It offers a clearly defined roadmap, and the responsibilities of the team thus making sure all the stakeholders are on the same page. Whether you are refining a current feature or conceptualizing a new product, this princess ensures systematic progression.
  2. Time Management – The Captain’s Log – Carving out dedicated time for product management as a founder or leader is like keeping a captain’s log on a ship’s proceedings. It helps prioritize tasks, track progress, and ensure that the project stays on track. Avoid the temptation to multitask or dilute focus which can lead to oversights.
  3. Short-Term Planning – Avoiding Rough Seas – Focus on planning short-term, one to three sprints at a time rather than long-term. Start with a long-term vision and ‘North Star’ but then break that down into smaller sprints.
  4. The Art of Documentation – Documentation is the anchor that keeps the project grounded. Comprehensive, clear, and updated documentation acts as a reference point and the ‘single source of truth.’ This way there can never be any ambiguity and you’ll reduce uncertainty and unnecessary back and forths.
  5. Charting the User’s Journey – User journey mapping and understanding is paramount for you to minimize the risks associated with working and outsourcing your software development to an external team. How will you know if your product is being built with your users in mind if you do not know them intimately?
  6. Transformation Stories – From Chaos to Clarity – Knowing that certain waters have been navigated with success before can build confidence within teams. Lean on successful projects you’ve done previously and leverage all your learnings.
  7. Seeking Expert Guidance – Sometimes an external point of view can bring some invaluable insights. Consider hiring a dedicated product manager to streamline your processes.

Remember, minimizing risks in software development isn’t about avoiding challenges but being prepared for when they occur.

The Scale Factor: Determining the Cost of Software Development

I’d like you to picture yourself at the base of a mountain, gazing up at a towering peak. You are ready and filled with ambition to climb it but the path to the top is not a single, straightforward route.

Software development is similar to this, there are varying degrees of challenges.

The Deceptive Simplicity of Ideas:

Let’s talk about custom software. Think of the simplicity of the concept of a to-do list app. It is easy to assume that its simplicity would equate directly to low development costs. However, the reality is far more nuanced.

Initial cost estimates can range from a few thousand to several hundred thousand dollars, so why is this?

The underlying Complexity of Scale:

The crux of this disparity often lies in one overlooked factor – Scalability.

While features and complexity do influence cost, scale exerts a profound impact on development decisions. An app designed for ten users differs greatly from one designed to cater to ten thousand users.

This distinction permeates every aspect of development – from the choice of technology and architecture to the level of testing and the database to be employed.

The Specialist’s Dilemma

Developers and software houses often specialize in particular quality and scalability levels. They possess standards and gauge every project against these benchmarks.

A large-scale enterprise solution specialist might view a simple to-do list app through the lens of scalability, leading to higher cost estimates. In the same vein, a smaller dev shop might offer a lower quote but may not be equipped to handle significant user loads.

Features vs. Scale – A Delicate Balance

While feature complexity undeniably affects the cost, it is important to recognize that a simple app catering to a vast user base can incur higher costs than a feature-rich prototype.

The infrastructure, security, and performance factors for large-scale applications will often outweigh the developmental challenges of complex features in smaller apps.

The Value of Scalability

Seasoned developers excel at crafting scale solutions. A tech giant like Google can extract exponentially more value from a single feature than a smaller entity justifying their investment in premium developers.

For startups and smaller businesses, understanding the potential scale of their software is pivotal in determining the necessary development approach and budget.

Understanding your project’s potential scale and aligning it with the right developmental strategy can make the difference between a successful launch and a missed opportunity.

The Joy of Working with a Great Development Team

Working with a proactive and experienced development team can be a great joy with features being released in time to happy users, with little to no bugs.

Such a partnership can elevate a project from good to exceptional.

When you partner with a seasoned outsourcing team, you’re not just hiring developers, you are aligning with a collective of experts.

Each member from the developer to the UI/UX designer brings a wealth of experience to the table, leading to a product that is functional, captivating, and scalable.

A characteristic of a great outsourcing team is its structured approach to project management. Tasks are systematically grouped and assigned with milestones and goals clearly defined.

The progress is meticulously traced and the communication channels are always seamless giving way for feedback and changes can be promptly addressed.

One of the most liberating aspects of working with a great team is the trust you can put to them. You have no problem at all delegating because you know they’ll be executed with precision.

This freedom allows you to focus on key business objectives and growth initiatives.

A great team doesn’t just code but innovate. Their specialization means that they are always in tune with the latest technological advancements meaning you are always getting the best and most efficient practices on your project.

At the end of the day, software is built for users. A great team will always have this in mind and ensure every feature, every interface, and every interaction point is crafted to delight the end user.

 

Navigating the Project Handover Process

This is another important aspect of outsourcing is preparing for a project handover. You might be reading this article and you want to change your development team, so you need to know how to navigate a project handover process.

A misstep can lead to delays and misunderstandings. Below is a guide to ensure a smooth handover process, safeguarding your software’s integrity and momentum.

  1. Wrapping Up Loose Ends – Before the handover, ensure that any nearly-finished features are completed. Transferring incomplete tasks can lead to a much longer integration time as the new team adjusts to what was done.
  2. Fortify Access Points – Software security is a huge talking point in the software space right now. Ensure all your access points, from code repositories to cloud services, are secure. As you transition, establish clear protocols for access, ensuring only authorized personnel can make changes.
  3. Architecture Deep Dive – Organize sessions where your outgoing team can discuss the software architecture with the new developers. This dialogue can provide insights into design decisions, dependencies, and potential areas for improvement.
  4. Comprehensive Deployment Guide – A step-by-step guide, crafted by the current development can be invaluable here. This guide should detail how to set up a local environment, deploy any new features, and troubleshoot common issues. This serves as a solid foundation for the incoming team.
  5. Business and User Orientation – The new team needs to understand the business vision, user personas, and goals. This ensures that future developments remain true to the vision and the goals.
  6. Code Exploration – Allow the new development team to explore the current codebase. Initially, assign simple tasks to gauge their understanding and identify potential knowledge gaps. Once they are in tune with the codebase, this will help them move forward with the project
  7. Draft a challenge Document – The key here is to document the highs and lows of a project. What worked, and where were the struggles? This will offer new team insights into challenges and opportunities.
  8. Update the ReadMe File – The ReadMe file is often the first point of reference for developers. Ensure it’s updated with the latest information about the code structure, functionalities, and best practices.
  9. Centralize Documents and Assets – This goes beyond saying when it comes to project management. Everything has to be kept in one centralized repository and accessible to the relevant stakeholders and then to the new team.
  10. A Smooth Transition – A project handover is more than just passing the reins but also ensuring that there is continuity. By following the steps laid out here, you can ensure that the development momentum is not stalled.

Conclusion

Each project in software development is a unique journey, filled with possibilities, challenges, and of course opportunities.

You are now in a much better position to gauge your current in-house setup and benchmark that with what you need. It makes it much easier to go out and find an outsourcing partner that is right for you.

Whether you are a seasoned tech entrepreneur or on the cusp of your first software project, the roadmap outlined here will serve as a beacon.

Ready to take that leap? Get in touch with us today!

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Victor Purolnik

Trustshoring Founder

Author, speaker, and podcast host with 10 years of experience building and managing remote product teams. Graduated in computer science and engineering management. Has helped over 300 startups and scaleups launch, raise, scale, and exit.

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