Insights | Don't Take Chances: How to Proactively Minimize Risk in Software Outsourcing

Don't Take Chances: How to Proactively Minimize Risk in Software Outsourcing

By Andy Hilliard | August 9, 2022

Outsourcing software development to nearshore or offshore teams is a strategy being adopted by companies in record numbers to build resiliency and create a competitive edge. 

For many, it’s the only viable solution in the face of tech talent shortages on the domestic market, high labor costs, hard-to-find skills, and increasing demand for software in all industry verticals across all business processes.

Yet despite the many advantages of outsourcing, there are too many outsourcing disaster stories. Our clients often come to us after they have struggled and failed to attain desired business results from their software outsourcing partnerships. 

What are the root causes of failed software outsourcing efforts? In our 20+ years of experience with client-partner relationships, we've found that these are the main culprits:   

  • A lack of cultural fit between the client and the outsourcing partner

  • A lack of alignment with the in-house and partner team members around desired business outcomes

  • Poor communication with or from the outsourcing partner team

  • A lack of “ownership” or understanding of progress and results on the part of the outsourcing partner

  • Treating the outsourced partner as a transactional “vendor” rather than an integral team contributor

  • An inappropriate or inadequate skills composition in the outsourced partner team

When there are problems with outsourcing software development, clients tend to lay all the blame for a low-performing engagement on the development partner. However, a large part of software outsourcing success rests with the client.

Often, issues stem from internal, existing issues that threaten a positive outcome. After thousands of successful outsourcing projects, we’ve identified 15 potential risks in software outsourcing that every technology leader should consider before starting a development project. Get our checklist to see where you stand:

15 Risk Factors Mockup (450x340)-2

You don’t have to face those challenges alone. Drawing on almost 20 years of experience in outsourcing partnerships around the globe, Accelerance has developed a specialized management approach to help you deal with critical factors that can make or break your software’s success. 

The Four Phases of Software Outsourcing Success

Projects are at a high risk of failure if the outsourcing relationship breaks down, as a result of poor communication, lack of cultural compatibility, misaligned expectations, unrealistic milestones or a hasty start. 

How do you minimize the chances of a poor outsourcing experience? Put a set of strategies in place - up front - for each stage of the software development lifecycle to identify and mitigate as many risks to your outsourcing initiative as possible in advance. Our professional consultants collaborate with your IT leadership to:

  • Prepare your organization before you engage a software development outsourcing partner.

  • Define objectives and establish costs.

  • Facilitate handover to your offshore or nearshore partner.

  • Fully realize your business objectives.

For a more hands-on engagement, Accelerance’s onshore management consultants can provide critical oversight and personalized support throughout the entire engagement at whatever level is required – ensuring the work stays on track, on time and on budget.

Phase 1

Most companies are unaware of the proper preparation that should take place before entering into an outsourcing engagement. Tech leaders who jump straight into Phase 2 (partner selection) overlook potential risk factors within their organization that could derail success.

Those root cause issues were not systemic to the process of outsourcing or caused by the outsourcing partner, but rather because of internal factors at the company that ultimately prevented success.

As we've analyzed thousands of outsourcing experiences, we’ve found a pattern of “warning signs." These 15 risk factors, if addressed in advance of the start of an engagement, will help a company proactively remove obstacles to successful software outsourcing.

The risk factors fall within three areas of software leadership:

Business: Not all risks to a software development project lie within the domain of the IT department. Rather, they're within those areas of the company where business stakeholders reside. These stakeholders see the business opportunity that can be achieved through software solutions.

Management: Risks emerge when management fails to take action to ensure that software development goals are pursued with intentionality, clarity, and healthy team dynamics.

Technology: Finally, we see that, regardless of the choice of an outsourcing partner, risks are introduced by flawed elements of the technology architecture, tools and framework.

Accelerance consultants have successfully guided clients through these up-front assessments to pinpoint their internal issues that may put the outsourcing engagement at risk. Mitigation is the critical next step: An actionable plan will be created to address the identified risks. 

We encourage every IT leader to evaluate their organization for outsourcing readiness. Mitigating or altogether avoiding the risks will help ensure that an investment of time and money in a software outsourcing relationship yields its highest return.

 

Phase 2

The right partner can make or break your outsourcing success. But with countless software development firms across the world, finding a qualified partner for your needs is a daunting task.

How can you take the time sink and risk out of identifying that perfect-fit outsourcing partner among the many questionable players out there?

Many firms have turned to a software development advisor like Accelerance. Often they come to us after a disappointing or even disastrous outsourcing experience.

We offer a business model that eliminates your chance of a partner mismatch. Our pre-vetted network of software development firms is a result of our dedicated partner assessment team that has reviewed more than 8,000 software development and systems integration firms in 40+ countries. Only the top 1% qualify to become premium certified partners in our Accelerance Global Network. 

Certification involves a three-month due diligence process where potential partners are assessed across more than 500 criteria. The final step is an on-site visit. While this is currently curtailed due to COVID-19 restrictions, Accelerance is the only software outsourcing advisory firm that travels to personally certify software development providers and validate our research findings.

Using our personalized Rapid Referral® matching process, we can offer you recommendations for perfect-fit nearshore or offshore partners in 10 days, rather than what could be 10 months on your own. You then choose the right partner that best fits your specific requirements, and you've saved the time and expense of a lengthy and complex search.

Phase 3

Once the ideal software outsourcing partner has been selected, you'll need to lay the foundation for a successful collaboration. You'll need to bring your internal and partner teams together to align around expectations, roles, development approach, communication and other best practices that are vital to your engagement's success.

Software development projects have a bad reputation for missing deadlines and exceeding budgets. Accelerance's approach to achieving alignment is unique in the industry, avoiding potential pitfalls that cause engagements to fail.

We ensure that you and your software development outsourcing partner are in sync right from the start. The goal of our Align workshops and consulting services is to create "one team" - a fully integrated client-partner relationship.

This "right from the start" approach consistently yields increased productivity, cost control, and well-managed expectations throughout the entire process.

Phase 4

Not all software outsourcing relationships that begin well stay on track.  Skilled program and project management is required for invaluable ongoing accountability and healthy work rhythms between your company and development partner. 

After they've selected the right partner, our clients often use our experienced consultants for advice and support as needed. Fractional or full-time resources can also be provided on a project-by-project basis to manage the process and coordinate with your remote team.

Working with Accelerance can make all the difference. Our customized partner selection process and innovative software solutions connect you to a world of IT talent – ensuring a high-quality outcome for companies wanting to step up their software and digital strategies. To find out more, reach out to an Accelerance advisor.

Andy Hilliard, CEO of Accelerance, has been building effective global software relationships since 1997.


15 Critical Risk Factors for Software Development Outsourcing Success

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