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Identifying and Mitigating Risks in Software Outsourcing Projects

By Arooj Shakeel
October 5, 2023

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Some things could be improved by outsourcing the development process. However, many of these are due to implementation and partner selection errors rather than outsourcing as a general principle. This blog will look at the biggest dangers of outsourcing software development and how to avoid them. We’ll go over each risk and provide you with some key strategies for dealing with them with the help of the right outsourcing company. 

What Are the Difficulties of Software Outsourcing? 

What Causes Software Outsourcing Failure? Expectations that are 

  • Unrealistic Expectation
  • Changing requirement specifications
  • Management and communication 
  • Software quality 
  • Information Confidentiality 

Unexpected Expectations

User Experience – Hey! My name is so and so, and I have a fantastic idea. It will alter the course of history. I want to create a better app than Facebook! My budget is $1,000. See what happened there? This is implausible. If someone decides to build this revolutionary app for $1,000, disaster is written all over it! Unrealistic expectations are a major barrier to software development outsourcing success. We are frequently asked as software companies to submit time and cost estimates without any prior discussion or evaluation. 

In that case, we have yet to learn the full picture. You can only expect an architect to tell you how much your house will cost if you give him detailed specifications, can you? So, why should you have the same expectations of a software development firm? As I previously stated, there is always someone who would agree to a $1,000 Facebook app development. And it is here that you take a risk, even before your project begins. 


  1. Create a detailed list of all the features you intend to include in your software application.
  2. Distribute this to potential software vendors. 
  3. Allow them to contact you with any questions or concerns they may have (I’m sure a good software firm will have plenty). 
  4. Sit down with them and review every detail of this project, leaving no room for confusion. 
  5. Proceed with the development once you agree on what to do. This is a lengthy and time-consuming process, but we guarantee it will cut the risks of software outsourcing in half. If your budget does not allow for all the desired features, divide it into phases. This will lower your software development costs and ensure your outsourcing flows smoothly. 

Ever-Changing Requirement Spec 

The development is proceeding apace. Kudos. We would like to know if we can create a new permission access control system and scrap the existing one. It’s not working for us! There are two issues with this: First and foremost, you paid a significant sum for a critical functionality you wish to discard completely. And you’ll have to pay a lot more to redevelop it. Second, this will significantly lengthen the development time. Keep in mind that your software developers are not Superman! They only have two hands, and that’s all they have for you. The risks of changing software requirements are that you will go back and forth a lot, slowing down the entire process. 


  1. Conduct market research on the features that your application requires. Examine which features are required and which are not. 
  2. Before deciding on the major functionalities, discuss the user journey and interaction with your software vendor. 

3] Create an MVP. Run it by your users. If your requirements constantly change, you invite risks into your organization. Never begin development with a sloppy project requirement analysis. Invest time here, and your project will be a success. 

Management And Communication 

Projects for major brands can only succeed if the project gains velocity. Poor communication and missed deadlines can hamper a project to the point where it is no longer relevant or valuable. You expect a project manager to handle this when you outsource software development. Your project manager should be your point of contact for all issues. It is the project manager’s responsibility to give the team clear instructions. They are in charge of assigning tasks and resources, tracking overall project progress, and communicating pertinent information to clients. Regular and real time project updates are provided by the modern and intuitive project managers. The most important characteristics of any good project manager are leadership, communication, and technical skills.


  1. Get to know your team. Regarding trust and communication, a small team has numerous advantages. When your software company is small, you have direct one-on-one contact with CXOs such as the CEO or CTO. 
  2. Hold regular meetings to keep track of the project’s progress. Make sure that your selected communication platforms are successful and not a distraction with unnecessary automated interruptions in the world of iterative development, global teams, and multiple time zones. 
  3. If your project is divided into milestones, demand will be updated after each one. 

Software Quality 

Everything revolves around the quality of your software. Everything you’ve worked so hard for is the software’s quality. Software glitches can significantly impact your business, starting with delaying project launch because these gliteches are to be fixed by the developers. If the flaws are discovered after the product has been released, it could damage your reputation and cause you to fail in the market. 


  1. Conduct thorough and early testing. This will aid in detecting bugs and make them easier to deal with. Testing at the end of the process and discovering bugs means redoing a significant portion of your work and any subsequent processes that rely on it. Bugs can appear at any stage, but regular testing makes fixing them earlier rather than later more cost-effective. 
  2. Conduct a thorough code review to ensure quality code is used. The code must be straightforward and clean. 

Information Confidentiality 

Let’s be completely honest about this. You don’t have trust in the potential software vendors, but you must discuss your business ideas with them all. However, disclosing your valuable information to strangers you don’t know and don’t trust is risky! 


Have the prospective companies sign a NDA (non-disclosure agreement), a legal document binding two or more parties to a contract in which they agree not to share confidential trade secrets about another party’s business that have been revealed to them. The main idea is to convey the necessary information to a third party about a business idea without fear of the other side stealing the information or using it without your permission. 

Final Words

Last but not least, the software development company you select has the potential to make or break your software. The software vendor you select is critical. Do your homework before making this decision. Consider the aforesaid factors before deciding on a software outsourcing partner. 

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