Top Offshore Development Risks Your Company Should Avoid

Last Updated on 2024-10-11

Diving head first, even with calculated risks, can make or break a business. However, in the early stages of an organization, risks need to be addressed.

One misstep and your business goes down the drain. While not all risks are of grave impact, we recommend avoiding each with proper caution and management, especially when offshoring!

In today’s age of globalization, outsourcing has become an inevitable route that enterprises use to help them scale their businesses. In fact, the outsourcing industry continues to experience steady growth over recent years with no signs of slowing down.

Offshore development offers many advantages to businesses. Hiring top-notch IT experts and building software solutions is a cost-effective way. However, it’s also important to keep an open mind about the potential risks of such a decision. Before outsourcing your business, you might need to consider these critical risk factors.

Top 6 Offshore Development Risks

Even though offshoring invites countless opportunities for business growth, it comes with several risks that could compromise your operations. Let’s identify the potential threats to offshoring that can complicate the dynamic.  

1. Data Privacy and Security Risk

Privacy concerns should be a top priority for companies that store and process data such as customer’s names, credit card numbers, and email addresses.

When researching, check if the offshore vendor offers robust security measures. Find one with solid security policies and a dedicated team to enforce them.

Make sure that you sign security protocols and non-disclosure agreements before sealing the partnership. Doing so protects your company’s data from possible infringement on privacy and security.

2. Hidden Costs Risk

Generally, outsourcing offers companies cost-effective benefits. However, hidden costs may arise during the development stage.

These expenses stem from unforeseen changes that need immediate adjustments. We recommend that you discuss all explicit costs and extra charges with your offshore vendor before signing the agreement.

3. Communication Risk

To meet outsourcing project expectations, it has to be supported by a seamless communication flow between vendors and clients.

English is the primary language used in international communication. While many people read in English, not everyone can write and speak with the same proficiency. In addition, you need to consider the cultural and local context when communicating with each other.

Offshore and onshore teams must always collaborate throughout the project. Use emails, messaging apps, and project management tools to discuss the project and manage multifunctional teams.

4. Organizational Structure Risk

Workplace organization in the US tends to be flat and more straightforward than its offshore counterpart.

A hierarchical social structure tends to limit independent thought, creativity, and soft skills. This doesn’t imply that all offshore vendors function in this manner, but these are legitimate issues that you need to address early on.

5. Government Regulation Risk

As more and more global companies outsource their critical business processes, a number of legal issues are also on the rise. Before outsourcing, your company must do due diligence in researching applicable laws concerning intellectual property and data protection.

Take note that rules of governance are different among countries. Always consider two legal systems when outsourcing. Since there are no standard legal rules to follow, we recommend that you discuss all legal aspects with your outsourcing provider.

Make sure that your offshore partner complies with all government regulations and provides adequate and accurate transparency when company audits are made.

6. Service Delivery Risk

Despite best intentions, vendors can fail in their obligation to deliver the level of service expected of them. This isn’t always the case, but it can happen even with solid methodologies in place.

The dedicated offshore team must provide high-quality service even with minimal supervision. Choose a reputable offshore vendor that meets your technical and business requirements.

Check the vendor’s portfolio to see if they have worked on similar projects and assess its complexities. This gives you an idea of whether they have the experience and skills to do the job.

Offshore Development Risks Are Concerning But Avoidable

Remember that while offshoring can be a game-changer for your business growth, it’s not without its challenges.

Stay ahead of the game by addressing these risks head-on. By doing your homework and being proactive, you can navigate these risks and make the most of offshoring for your business.

Your best bet in ensuring safety in offshoring is to partner with experts.

An offshore partner can guarantee a reliable dynamic with your offshore team. You can discuss costs upfront to avoid surprises and keep communication clear and open to overcome language or cultural barriers.

Offshore with Full Scale

Teaming up with the right experts is the key to keeping your offshoring safe.

Full Scale specializes in staff augmentation. We’ve matched clients with skilled professionals for over five years in the business.

We’ll help you build a solid relationship with your offshore team. You won’t have to worry about hidden costs or legal repercussions. We discuss costs upfront to avoid surprises and ensure smooth communication to overcome any language or cultural differences.

Learn more about how we do offshoring in the Philippines.

How We Mitigate Risks

We’ve come up with a win-win solution to offshoring software development. Full Scale simplifies the offshoring process with our unique Guided Development approach.

This method not only streamlines the management of your external team but also provides comprehensive transparency about your team. You get full disclosure of each member’s background, performance, and credentials.

• Flexible Arrangement—We understand the importance of flexibility. That’s why we offer terms tailored to your project’s needs, ensuring long-term contracts do not bind you.
• Data Security—We enforce stringent non-disclosure agreements to safeguard your information, giving you peace of mind.
• Thorough Candidate Screening—Each team member assigned to your project is handpicked to meet your requirements, ensuring dedicated time and expertise.
• Full Project Control—Our project managers will regularly update you on the project’s progress and help you effectively manage your offshore team for timely, high-quality results.
• Philippine Law Compliance—We maintain an office in our offshore location in Cebu. Our local team complies with all government requirements, from tax filing to employee benefits and operational policies. We guarantee a clean and legal operation.
• Clean Track Record—We’ve been in the offshoring business for more than five years. Named one of the fastest-growing companies by Inc. 5000, we’ve helped several companies through our staff augmentation services. Check out some of our client testimonials.

If you’re interested in getting your offshore development projects running, we at Full Scale can help you. Our industry experience and expertise in offshore development have a great advantage in understanding the needs and challenges of our clients and equipping them with the best solution possible.

Get A Free Consultation Today!