13 Common IT Outsourcing Challenges Faced by Companies & their Solutions

IT outsourcing challenges

Table of Contents

Are you planning to expand your business to the next level? Do you want to improve your talent pool without incurring the cost of hiring new employees? Are you looking for IT outsourcing for your project or services?

When a business contemplates enhancing their competitive position in the industry, they strive to do something exceptional to make the big leap. And one of the most popular practices is outsourcing.

Outsourcing means-going ‘out’ to find the right ‘source’ to fulfill your business requirements. These days offshore development has become a common business practice allowing organizations of different sizes to grow without major risk investment.

Outsourcing is certainly a viable decision that saves a lot of valuable time & cost. Additionally, opting for the offshore development model gives you access to top-notch professionals.

For example, your offshore development team will include programmers, testers, project managers, designers, copywriters, UX/UI specialists, and others.

Common IT Outsourcing Challenges You Must Know

Common IT Outsourcing Challenges

Although offshoring services come with plenty of benefits, there are certain common questions asked by business owners. So, let’s get started with some of the common IT Outsourcing challenges.

Trust issues with your outsourcing partner

Outsourcing for the first time

Are you technophobic?

The Remote Development Company is either too big or too small

Outsourcing may be risky

You are doubtful about the confidentiality

You are afraid of the legal complications

Will you get high-quality services at affordable prices?

Does the offshore company comply with rules & regulations?

Looking for a company that fits your budget

Process adjustment and decision making authority

Will your offshore company be flexible?

Cultural, communication, and time-zone issues

Have you ever come across any of these challenges? Are you also looking for an appropriate solution to these challenges? Well, let’s get started.

IT Outsourcing Challenges and Solutions

IT Outsourcing Challenges and Solutions

1. Trust Issues with your Outsourcing Partner

Working with a company that is located overseas does bring in some trust issues. And quite frankly, this a very valid concern. Simply because the success of your project would be in the hands of your offshore team.

So, what’s the way to find the best IT outsourcing company that has the tech and domain expertise you require, fits your budget, guarantees on-time delivery, and can rely on at every step?

Collaboration with a reliable outsourced development team is the solution.

However, the first thing to do is to clarify what has to be done. Understand your business KPI’s and the reasons for which you are outsourcing IT services. Once you are done, the research work comes into play.

It is a must to perform in-depth research on the offshore development companies, before getting in touch. Though it is not possible to do so for weeks, the best way is to check out some B2B rating platforms for creating a rough list of top outsourcing companies.

As soon as you have the list, it’s time to get in touch and make a decision.

Select the Company Based on the following:

The maturity of the company: For how long it has been in the marketplace.

The number of long-term projects it has dealt with and the total number of successful projects.

Evaluate the company’s website carefully. Why will the company make something valuable for you if they are unable to do something good for themselves?

Social media presence of the company on different platforms like Facebook, Instagram, etc.

The knowledge-sharing process and technical skill development within the company. Company’s participation in different events.

Have an overview of the companies ranking & reviews on popularly known platforms like Clutch.Co, TheManifest & Good firms.

Case studies inclusive of the client overview, cooperation history, client issues, challenges, solutions, and technology stack issues.

2. Outsourcing for the First Time

If you are outsourcing for the first time, then it is important to understand the process. It includes defining your product vision, development stages, time to market deadlines, and the need for further maintenance.

After finalizing your outsourcing partner, set up clear and realistic expectations for your offshore development team.

Expect your outsourcing partner to walk you through the entire process during the initial discussion. In fact, it would be advisable to get in touch with your dedicated offshore developers and discuss your requirements in detail.

If your team is clear about your vision, objective & goals, then achieving them becomes easy. It would help them to craft an effective product development strategy and project charter to fulfill your end goals. Also, ask them to stay consistent about the regular project status update, in advance.

On top of that, your team will introduce you to the latest technology and whatever is trending in the industry. In short, they will ensure the adoption of best standards and practices for the development process.

3. Are you Technophobic?

Being clear about the technical requirements is crucial while outsourcing. In case you are not a tech-savvy person, things may become complicated for you. In this case, you can onboard a technical manager on site as a point of contact between your company and the offshore team.

Let’s say you are planning to launch a mobile app for your business. In this case (where you don’t have knowledge about the required technical stack), approaching a development team will become difficult for you.

Because a lot of technologies exist in the market for building a mobile app. For example, to build a mobile app, you may or may not need to hire;

  1. Front-End Developers with expertise in Javascript frameworks, HTML, CSS, etc.
  2. Back-End Developers with expertise in Java, Kotlin, Swift, ObjectiveC, Dart, Flutter, etc.

If you are aware about the technological requirements of your project, it would become easy for you to hire mobile app developers from an offshore country.

4. The Remote Development Company is either too Big or too Small

The Remote Development Company is Either too Big or too Small

Among the common offshoring issues, companies face a challenge in finding the vendor of the right size. Either the remote development company is too small and is unable to scale up or down quickly. Or they are too big that they don’t take mid-size companies too seriously.

For an enterprise, any offshore company that is unable to staff 10-20 individuals is an issue regardless of their expertise. Whereas for any startup, collaborating with a large remote development team can be frustrating and they may not be considered important. Also, they may not get the attention that they actually require.

To address this challenge, you need to find a company with an appropriate size that will take your business objectives seriously. You may also need to choose the right country for outsourcing software requirements.

5. Outsourcing may be Risky

Outsourcing helps different companies to deal with the talent shortage. Working with a third party may be risky but there are ways to mitigate any possible risks.

  • Loss of Control: No one wants to lose control of the project while collaborating with an IT outsourcing companyManage the project equally and ensure everyone is on the same page. Train your in-house staff to efficiently maintain a relationship with the offshore product engineering team. Also, make sure that your company offers high communication transparency using a reliable tracking system.
  • Data Protection: The security issue is significant when the project involves sensitive data. In that case, it is always good to conduct a background check. The previous clients will tell you how the company dealt with security issues in the past.
  • Unqualified Professionals: A major problem occurs when an offshore software development company makes big promises but gives you a team of unqualified specialists. The major reason for this is, the lesser the salary of the employees is, the higher the revenue of the company. This unprofessional approach may bring poor quality results.

Here, the best measure would be to choose developers based on the interview, and visiting their office in person (if possible).

6. You are Doubtful About the Confidentiality

You are Doubtful About the Confidentiality

Whenever you outsource, you share confidential information like ideas and concepts. It is natural that you start worrying about the way your offshore partner will be handling security.

To resolve this issue, you have to choose an IT outsourcing company that stays compliant with international security standards. For the same purpose, do the following:

Ask if the company is comfortable in signing up Non-Disclosure Agreement

Ask if the offshore firm has any previous experience of working with sensitive data

And if they have completed any project in the industries similar to the one you work in.

It is also important to include all the necessary clauses regarding the safeguard of the proprietary rights and confidentiality in the service level agreement.


7. You are Afraid of the Legal Complications

Confidentiality, liability, data protection, regulation compliance, and intellectual property right; all these aspects may create certain issues in outsourcing.

As per the engagement model that you choose (whether it is a fixed model, time & material model, dedicated engagement model) the terms will vary. Every model has different legal terms. So, having in-depth knowledge about them is crucial.

Another important aspect to consider here is the country to which you are outsourcing. There are a few IT outsourcing destinations that strive to foster the benefits of IT outsourcing and create a legal environment that helps the company to grow.

On the contrary, others neglect to support the industry and create more issues for outsourcing.

8. Will you Get High-Quality Services at Affordable Prices?

Will you Get High-Quality Services at Affordable Prices?

One of the major reasons to outsource is the expectation of receiving better service from the remote development company. So, do not choose your outsourcing partner on the basis of cheap prices only.

Consider all the industry standards, frameworks, tools, and technologies that your offshore team follows. Find out what mockup tools, delivery process/methodology, tracking system, and quality software metrics they employ. 

9. Does the Offshore Company Comply with Rules & Regulations?

Have you wondered why it is so crucial for an IT offshoring company to be certified and comply with international regulations? Well, many outsourcing issues stem from the company’s failure to deal with the requirements.

Hiring the best experts and retaining them smartly are two important things. An outsourcing firm that has the best engineers, do all the possible things to retain them with the help of a sophisticated approach.

This attitude helps them to create a well-structured team that delivers exceptional results.

10. Looking for a Company that Fits your Budget

This is a good question. One reason why companies prefer outsourcing over in-house recruitment is because of the tight budget.

Whenever you are planning for a budget, make sure the company you choose doesn’t set unrealistic goals. To keep the integrity of the final product and make sure the cost remains less, avoid budget-draining mistakes.

However, the wrong choice of cooperation model, changing requirements, and poor management strategies may raise the cost and cause many issues. So, being clear with everything is the right measure to avoid this outsourcing challenge.

11. Process Adjustment and Decision Making Authority

Who will take decisions is a common source of contention. In-house employees usually feel that they have the right to take all the decisions. To overcome this issue, you and the offshore company should have a clear understanding of the authority and decision making power for the functions has to be mutual.

12. Will your Offshore Company be Flexible?

We are living in an unpredictable world that keeps changing continuously.

A decade ago, companies would sign a lengthy paperback contract and commit to a long-term partnership with an outsourcing company without making any changes in the contract. Well, those times are long gone. Modern times have other solutions.

Now, the agility of the development process is achieved by selecting the right outsourcing engagement model as per the requirements. Also, the choice of an offshore company plays a major role.

A certified mid-size or large vendor understands these concerns and adapt faster. Moreover, companies having more than 10 years of experience are more likely to be able to maintain the balance between the agile processes, product quality, and satisfaction of both.

13. Cultural, Communication and Time-Zone Issues

While looking for an offshore development company, a lot of businesses are afraid of cross-cultural issues. So, it is imperative to find an offshore company that can easily integrate with your business culture.

Every country has its own set of features that defines its mentality and the way they approach business. Some countries are independent while others need more guidance. Some have to please the client at any cost and others are result oriented regardless of the size of the project. 

Moving Forward with Outsourcing

Today, most of the business understand the need for outsourcing. That’s why most companies prefer to hire top offshore developers to boost their development capabilities, access the technology expertise unavailable locally, and bring their products to the market.

There are a lot of examples out there in the market. Even the tech giants like Microsoft, Shutterstock, Oracle, and a lot more companies have been outsourcing for the past couple of years and reaping the benefits. 

With the right plan and outsourcing partner, you can also make your offshore development journey successful.

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