13 Common IT Outsourcing Challenges Faced by Companies & their Solutions

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 to 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’ of what you require. 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 time, on-site costs while providing a local level of expertise.

Additionally, the Offshore Development Center usually includes all kinds of specialists. For example, programmers, testers, project managers, designers, copywriters, UX/UI specialists and others. Although offshoring services come with plenty of benefits there are certain common questions asked by business owners that will be answered in this post.

Common IT Outsourcing Challenges

  • You have an issue of trust with the offshore development company
  • No experience working with an IT outsourcing company
  • You are not tech-savvy and need to outsource
  • 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


Let’s start!

1. You have an issue of trust with the offshore development company 

Many companies have an issue of trusting a company that is located thousands of miles away. This is a very valid concern. 

Successful outsourcing depends on the company you collaborate with. The offshore company can understand and solves your specific business issues. But, what is 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?

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 IT outsourcing. This establishes what criteria are vital for selecting the trusted software development partner.

Incomplete information about the offshore development companies is one of the major issues of outsourcing. This is because no one has plenty of weeks to manually browse through thousands of sites and contact hundreds of companies.

You need a pre-selected and shortlisted list of companies to choose from. There has to be a dedicated list of vendors having objective information about every company. 

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. You have no experience working with an IT outsourcing company

Understanding how everything works is very important for successful IT outsourcing. Once you pick the IT offshore company, it is all about setting clear and realistic expectations for the companies and the team.

It includes the product vision, development stages, time to market deadlines and the need for further maintenance.

However, a good company will always help you while walking every step of the process. Hire dedicated developers that will discuss the requirements and expectations in detail.

They will then develop an effective product discovery stage and make an experienced team of developers. On top of that, they will introduce you to the latest technology and whatever is trending in the industry. In short, they will ensure the adoption of best practices. 

During the development phase, the regular status update helps everyone stay on the same page. In addition, constructive and timely feedback prevents plenty of IT outsourcing issues. 

3. You are not tech-savvy and need to outsource

One type of outsourcing certainly differs from another type. Understanding the difference in outsourcing a particular technology or type of solution helps you look for a company that will fulfill your business requirements.

You can hire:

And whatever you want as per your requirement. But before building an offshore development center, you should ensure that the remote team expertise in the area you plan to outsource. They must have a proven track record and portfolio. 

4. 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.

For any startup, collaborating with a large remote team can be frustrating and they may not be considered important. Also, they may not get the attention that they actually require.    

Moreover, another important tip is to carefully choose a virtual company from a different geographical location that perfectly fits your needs and understands your business objectives.

If you are able to feel the zeal to work on your project within the company, hire developers from them.

5. Outsourcing may be Risky

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

a.) Loss of control: No one wants to lose control of the project while collaborating with an IT outsourcing company. It is not difficult to keep control over it.

Manage the project equally and ensure everyone is on the same page. Train your in-house staff to efficiently maintain a relationship with the offshore team.

Choose a remote development company that offers high communication transparency using a reliable tracking system.

b.) 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.  

c.) 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.

A preventive measure is giving you the authority to choose the professionals. By frequently interacting with them to make sure that they are the ones always working on your project. 

We understand that sometimes you become confused. However, with diligent planning, good choice of the offshore development company and ideal engagement model amplified by a comprehensive contract, you can certainly reduce the risk. 

6. You are doubtful about the Confidentiality

Whenever you outsource, you share confidential information like employee details and other important data. 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 agency that is working in compliance with international security standards. Find a reliable partner by taking care of the following:

  • Know if the company is comfortable in signing up Non-Disclosure Agreement 
  • Ask if the offshore firm has any previous experience of working with a 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 rights-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 vary. Every model has different legal terms, it is important to avoid legal IT issues related to outsourcing by knowing more about them. 

Another important thing is legalization within the country. 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?

One of the major reasons to outsource is the expectation of receiving better service from the remote development company.

What you have to do is to choose an outsourcing company not based on their technical skills but the ability to apply useful tools and frameworks. This should accelerate development and enhance work efficiency and productivity.

Find out what mockup tools, delivery process/methodology, tracking system and quality software metrics they employ. Let the offshore company know your expectations.

Recommended Read: How to Evaluate IT Outsourcing Cost? (For Better ROI)

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. Therefore they have trouble with the business proves and data access and the inability to deliver services. 

Hiring experts and smart retention are two important things every company looks for in their offshoring remote company.

An outsourcing firm that has the best engineers and they are able to retain them with the help of a sophisticated approach is a good company.

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

Employee retention is another good quality in an established software outsourcing team. Good management ability, strong partnership, clear career path, transparent policies ensure lower turnover within the agency.

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. 

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 engagement outsourcing model as per the requirements. Also, the choice of the offshore company plays a major role.

A startup may struggle with different business processes are they are new in the industry.

On the other hand, a certified mid-size or large vendor can understand 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

When you are looking for an offshore development company, you are often afraid of the cross-cultural issues. So, it is imperative to find an offshore company that will be a great culture for your business.

Rely on a remote team that is able to meet your expectations in terms of culture, communication, and business ethics aspects.

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

Every day new companies are looking for reliable offshore development services.

They want to hire top offshore developers they can’t locally hire, boost their development capabilities, access the technology expertise unavailable in their in-house team and bring their products to the market. 

Also, tech giants like Microsoft, Shutterstock, Oracle and more have chosen to outsource and reap the benefits. Take care of the aforementioned before handing over your project to the agile remote companies.

With the right plan, you will be able to achieve positive results and make your outsourcing experience beneficial. 

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