Face 15 business risks in software development outsourcing

What are the business risks in software development outsourcing you must face?

Software development outsourcing is a strategy known to all IT departments and embraced by many companies to accomplish their business goals. Regardless of industry size, many companies struggle to outsource software development successfully.

The root issues were neither systemic to the process of choosing the right outsourcing firm nor caused by the outsourcing partner, but rather due to internal factors of the company which ultimately prevented success.

Defining types of business risks in software development outsourcing

Defining and mitigating business risks will help the company proactively remove barriers to successful software outsourcing. When it comes to software leadership, every business needs to recognize these three dimensions:

1. Business: Not all risks to a software development project lie within the domain of IT department. They are within other areas of the company where business takes them lightly.
2. Management: Risks when management fails to take action to ensure that software development goals are pursued as planned.
3. Technology: Despite of the choice of an outsourcing partner, risks are introduced by flawed elements of the technology architectures, tools and frameworks.

Mitigating business risks in software development outsourcing

Here are 15 business risks in each dimension that InApps – The leading outsourcing company in Vietnam have collected from CIO.com source to help you get your business back on the right track and maximize your software outsourcing project. 

Business risks

1. Undefined metrics

Business and IT must be clear on the company’s success-thriven. The mission statement should be tied to expected outcomes which can be gained. The software development targets should also have a clear alignment with those metrics.

2. Inconsistent priorities

Which elements (capability, functionality, components) of a software solution matter the most? It is imperative to have a sequence of work products that is shaped by priorities the business areas have endorsed.

3. Few executive champions

Leaders set the tone for their teams and are ultimately the “culture keepers” to ensure the commitment to teamwork.

4. Lack of team engagement

Sometimes a third party is set up for failure because your company employees do not engage them in the necessary ways to accomplish the tasks assigned by you.

5. No partnership contract

Your software outsourcing vendor is an extension of your internal team’s capabilities. Their success is YOUR success. Companies should embrace the mindset of “covenant” rather than “contract”. Business partners agree together striving for a common goal.

Management risks

6. Unrealistic expectations

Reasonable parties working together can usually find a palatable compromise, but unrealistic expectations can derail the relationship.

7. Unfocused leadership

Sometimes the right leader – based on knowledge or skill – are assigned to a project, but the assignment does not take into account the need for properly focused attention to the project.

8. Unclear milestones

Without clearly communicated milestones, businesses and other parties might create unnecessary confusion if a software release is not as expected.

9. Lack of team interaction

Good communication has always been important in software development projects. Processes and collaborative technologies must collaborate supportively to ensure the workflow is seamless and at low risk.

10. Weak processes

Technology can never overcome bad processes in a software development project. The company and the outsourcing vendor must fully understand the roadmap and methods to be used by the project. Furthermore, each side must be fluent and diligent in using the methods over the project’s life.

Technology risks

11. Inadequate skills

Business needs to confirm that the project team has the requisite skills and experience to be successful.

12. Undefined operations

Adding a software development outsourcing partner into the mix is an effective means of getting work done, but it also adds complexity. Ask your business these questions: Who is responsible for hosting? How will the software be certified for the intended target platform – and who will do it?

13. Ineffective design

Do the design elements of the system properly address the business goals? For example, will this beautiful new web application be a bust on day 2 of go-live when users try to launch it on mobile devices? Or does the solution require so many pages of data entry that shoppers will become frustrated and abandon the purchase? Misalignment of design and business objective is a huge risk factor to be avoided.

14. No quality assurance

The speed of development and the opportunity to deploy code to production rapidly may create a temptation to overlook or minimize the necessity of good quality assurance. Moreover, some software outsourcing companies may not have proper QA control module. Therefore, IT department of business should also focus on QA checks.

15. Technical debt

The risk in the form of technical debt must be addressed in radical ways: accelerated change through leveraged outsourcing partners, “leapfrogs” of functionality or technical platforms, for instance.

Conclusion

As a Top 10 software development outsourcing company in Vietnam, we encourage every business leader to carefully address their business, management, and technology context with critical eyes and be alert to these 15 risk areas before outsourcing their software development project.

Technology is not an expense but rather an investment for business opportunities. Mitigating or avoiding these 15 risks will help ensure that your investment of time and money in a software outsourcing relationship yields the highest ROIs for your company.

If your business needs advice, we are positively open to a discussion. We are InApps – Your trustful software development outsourcing partner. 

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