You’re probably considering outsourcing some of your software operations, right? It sounds like an excellent way to de-stress your in-house team and save on unnecessary hires. But it’s also a tough decision if you consider the common outsourcing issues.

Let us help you make up your mind. Keep reading to discover why outsourcing fails and how you can avoid hitting a snag. These seven issues are the biggest dangers for businesses, but awareness is half the battle.

Going for whoever is the cheapest

While you may want to outsource to save money on staffing and overheads, the cheapest vendor may be the riskiest one — and your first hurdle. They’ll likely provide quotes you can’t refuse — something that’s way lower than $60 per hour for a US-based Java software engineer. But if you know nothing about this vendor and are outsourcing for the first time, step back and run the numbers.

outsourcing issues

Unreasonably low prices often come from corner-cutting. That’s why the cheapest service providers may NOT:

  • Have access to the best talent and technologies for your software development project
  • Deliver your product as quickly as those who charge more
  • Be up for changes, improvements, or updates
  • Be able to meet the security and compliance requirements of your project

Either of these missing competencies passes on additional costs to your business. Whether they come from subpar deliverables or a longer-than-expected time to market, they lead to costly failures in outsourcing in the long run.

That doesn’t mean you should only team up with a service provider that pushes prices skyward. The most expensive isn’t necessarily synonymous with the best.

What you should do is outsource to those who have a relevant portfolio, expertise, and complete dedication. Ask your vendor what specialists they hire for the job and whether they can ensure successful outcomes throughout your project lifecycle. You have the luxury of choosing at this stage, which brings us to the next outsourcing problem.

Committing to the first vendor you’ve come across

Outsourcing involves a great deal of homework you need to do to find the best service provider. You don’t hire a UX/UI designer just because they were the easiest to contact and got back to you promptly, do you? The same applies to outsourcing.

Rolling your eyes at examining all options is one of the deadliest outsourcing mistakes companies make. If you never go beyond the first Google search result when looking for a vendor, you’re putting a cap on how great your product can be. Is it worth the time you may be saving by making fewer clicks?

To know all your options and compare offerings from multiple service providers, be sure to:

  • Request quotes from as many outsourcing companies as you can
  • Look beyond the country your business is operating in
  • Use Clutch and other review-based platforms to find the right fit

If the first vendor you’ve found still looks like an excellent match for your project after comparing several options, go ahead and contact them. You now know you haven’t missed your hidden gem.

Outsourcing without a step-by-step plan

Planning can be intimidating. But it’s certainly not a waste of time.

90% of startups go south within the first ten years of their operation, and the lack of proper planning is one of the reasons why.

issues with outsourcing

When outsourcing software development, inadequate planning may lead to the same failure rate. If you let your project slide without penciling in what needs to be done and what you expect to get, waving the white flag is just a matter of time.

Here’s how you can avoid planning-related outsourcing mistakes:

  • Make sure your team is well-versed in the project to be outsourced or hire someone who is
  • Lay out a comprehensive statement of work that covers requirements, development stages, milestones, and documentation
  • Craft a project roadmap with explicit short-term and long-term project goals
  • Decide on the tech stack
  • Plan the way you’ll communicate with your outsourcing partner and request changes if any

For example, if you were to outsource an AI project, you’d first put down what problems you want AI to solve for end users. From there, you’d plan an adoption strategy considering the technology and data you currently use and agree upon feasible results with your vendor. This would make the development process easier to carry out, saving you from lousy products that are anything but what you expected.

Being an apathetic type of stakeholder

You may be thinking you can send all your IT headaches to your vendor and do nothing on your own. (Isn’t that why outsourcing is a thing in the first place?)
For better or worse, it’s too early to book a getaway and let others do the job in blind obedience. The outsource-it-and-forget-it mindset always ends in IT outsourcing failures because there’s no clarity as to the responsibilities of each team, you encounter budget overruns, or big decisions are made without you.
Your involvement is as important for your project success as the expertise of those you outsource to. So, the next time you outsource something, you want to:

  • Be involved in all stand-ups and Agile sprints or hire a project manager who will do that on your behalf
  • Get into the intricacies of design, development, implementation, and other crucial project stages
  • Request progress reports from a service provider
  • Communicate with other stakeholders to make result-driven decisions everyone is fine with
  • Adjust the scope of work and budget whenever necessary

Outsourcing is a team game. If you care about what you’ll get as a result, always do your bit as the project moves from one stage to another.

Drowning in overexpectations

The Deloitte 2020 survey shows 70% of those who outsource do so for cost efficiency. But cost efficiency has nothing to do with paying little and getting twice the amount of work you pay for.

In other words, if you’re about to order web development services, a flawlessly designed and developed website is the only output a service provider must deliver. You won’t expect to get a few complimentary mobile apps and free cloud integrations with your website for the cost.

Hoping to get more than your money can buy is the wrong strategy that causes discordant problems with outsourcing. When you set your expectations unreasonably high, you’re putting your partnership at risk. There are no winners in this case.

These tips will help you bridge the gap between your expectations and reality when outsourcing:

outsourcing mistakes

  • Be involved in all stand-ups and Agile sprints or hire a project manager who will do that on your behalf
  • Look into every line and cent a quote covers
  • Plan your budget for the primary service and all secondary ones
  • Ask a service provider to back the cost of your project up with financial proof (e.g., the cost of hiring a dedicated team)

The money-saving benefits of outsourcing go beyond your corporate bank account. You should shatter your illusions about getting $10,000 worth of work while investing $1,000.

Letting things get out of hand

Think of outsourcing as hiring a babysitter. You won’t always know what’s happening to your kid, and your parental control may ease. But let’s face it: you’ll never want to lose this control forever to grapple with defiant behavior for the rest of your life.

This problem accounts for many outsourcing failures in the IT landscape. When delegating a project to a vendor, you aren’t delegating project ownership or giving them 100% control. Like with babysitting, you should keep a tight rein on the process, actions, and deliverables provided by a development team.

Whether a service provider relies on in-house specialists or gig workers, you can maintain your control by:

  • Setting down your own quality control and other requirements
  • Signing a software development agreement on your terms
  • Getting a business analyst or a delivery manager to oversee your project
  • Establishing a communication channel with a development team

A business analyst is the babysitter of your outsourced project. Bring them into the fold so that no control-related issues with outsourcing leave you at a disadvantage.

Neglecting industry-specific compliance

Some organizations encounter the problems of outsourcing to vendors that aren’t savvy enough to ensure product compliance in their industries. Neglecting this at the project discussion stage may cost you millions in annual fines.

HIPAA, GDPR, and other regulations require certain measures and technologies during the development process. And if you choose the wrong service provider, they may not even know what needs to be done for compliance. Don’t make them google it.

However, you can easily save your business from hefty penalties, and here’s how:

  • Outsource to those who have done a great job in your industry before, be it healthcare or financial services
  • Share compliance requirements your software needs to meet and make sure your vendor has everything it takes to do that (technology, expertise, etc.)
  • Get it in writing when signing a contract

A good rule of thumb is to never team up with a vendor that’s a stranger to your industry. For example, if you’re a primary care clinic, steer clear of outsourcing companies that specialize in construction software projects only.

Outsourcing can go without a hitch

Although some common outsourcing mistakes stem from how you act, most issues arise on the vendor side. That’s why you can deftly avoid them with the right outsourcing company.
Invest more time into going over vendors’ expertise and success cases. Get to know the development process they follow, the tools they use, the industries they cover, and the fees they charge. It’s like candidate screening to evaluate the most effective partnership for your business.

Where do you start the screening process? impltech is thrilled to become your software development partner to bring you through any issues with outsourcing and secure a successful outcome. Contact us if you’re eager to see what we can do for you.


Why does outsourcing fail?

Going with the wrong vendor or doing nothing as a stakeholder can turn your outsourcing into a lost cause. Your chances of success shrink even further if you don’t have a development plan or fail to care about product ownership and compliance.

Should you outsource software development?

Outsourcing is a money saver for startups. But it can also drive the growth of established organizations. Whether you’re a budding company or a big player looking to access more professional skills and more advanced technologies than your in-house team has to offer, you can benefit from outsourcing software development.

How to outsource software development?

How to outsource development often depends on where you’re looking for an outsourcing company. It’s a good idea to search for global vendors based on their reviews, expertise, and referrals. You can then contact your best fit and ask for a quote after sharing your software project plan.

When should you outsource app development?

If you’re wondering when to outsource software development, analyze your in-house capabilities first. Pressed for time? Outsource it. Limited by the availability of local developers? Outsource it. Never used the technology your project calls for? Get a respected vendor to implement it for you.

What are the most frequent outsourcing mistakes companies make?

Ill-advised decisions are the culprits of failed outsourcing projects. The silver lining is that you can learn from the mistakes others have already made, like not taking enough time to search for vendors, getting started without a plan, and staying back from your project while it’s being carried out.
Posts by
Sergej Hermoni

Sergej Hermoni is Managing Director and co-founder of impltech and the expert when it comes to business development in real estate and finance. He has a deep understanding of the customer journey and the development of optimal customer experiences. Sergej completed his business studies at the Humboldt University in Berlin and wrote several academic papers on financial market efficiency and portfolio optimization. Before impltech, he worked for several companies in Berlin, London and New-York and was responsible for digitalization projects at banks and insurance companies.

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Have more questions about outsourcing?

Contact us to get a Free consultation regarding your project.

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