Risks involved in outsourcing software development to offshore
Outsourcing has always shown a positive signal for India, but it brings significant risks that must be recognized and managed. In outsourcing, a company is completely depending on someone else to run certain business functions and if not properly managed will have a negative effect on the companies operations as well as the customers.
The product or service can be outsourced, but the risk cannot. Some of the potential negative outcomes include:
A major concern in the field of IT outsourcing is the risk of protection from lose of property rights. The question of intellectual property rights are raised when you deal with the international market. The queries with respect to privacy should be clearly mentioned to the concerned clients. The requirements should be documented to avoid further privacy problems in the future. Signing of Non Disclosure Agreement creates a confidential relationship between parties to protect any type of confidential and proprietary information.
Never outsource your project with a freelancer. Many of them have burned their fingers by outsourcing their projects to them. Its because they basically work from home with the intention of earning a few more bucks than their regular income so they could hardly devote enough time for the project as a full time software developer does. It is also proved that their delivery time is twice as compared to a web development company. They do not maintain confidentiality as they are prone to use your code on another person's project.
Before entering into a contract with a web development company, make sure that you make a thorough study with the company's existing clients so that you could identify their professionalism and expertise in the field. Also ensure that the services and applications they build are of high quality.
Also Read: How to choose the Best Offshore Outsourcing Company
One of the major problem which you face while you choose to outsource is that English is not the official language in many countries. The pronunciation, accent can vary tremendously. It becomes a tedious task for the employees if the person is not well versed in communicating in English. It becomes difficult to analyze the requirements and issues faced by the client. So you need to make a conversation with the concerned people before you decide on one.
How to choose the best offshore partners?
While choosing the outsourcing partners, it is to be ensured that the companies carefully select, high end outsourcing partners to contract with so that the quality does not deteriorate. A very high importance is to be given in selecting the most appropriate partners so that the quality is not suffered.
There is a lack of personal touch when a product is outsourced. An in-house IT specialist is able to deliver more efficiently, accurately and personally as he knows the unique characteristics of his business and can provide a personal touch. So ensure that you have your own dedicated developer with whom you can deal personally through chat or email, so that they are regularly updated regarding the project status.
The companies should carefully assess the business knowledge of the outsourcing partners and determine whether they have the sufficient knowledge in working on the concerned project. Before contracting, make sure that how good the company and their research team is to implement the project efficiently.
It is always better to engage in a contract with a medium sized company rather than a small or large sized company. The contract with a small sized company is risky as they deal with limited resources and their expertise in the field will be low. Similarly, its better to avoid contracting with a large sized company due to their cost factor.
There is no such thing as a fixed-price contract as the price varies depending on variations from the actual estimated work. In terms of changes or alterations, the companies charge for the concerned differences, so have an initial discussion in this regard.
Risks of Offshore Outsourcing
Risk of unmet cost savings.
Risk of insecurity and loss of intellectual property.
Insufficient discipline to manage the vendor.
Loss of business knowledge.
Risk of vendor failure.
Risk of non-compliance.