5 Worst-Case Scenarios of Offshore Development

Last Updated on 2024-10-11

There are serious advantages to offshore software development. However, it’s only beneficial when done right.

Your offshore developers are halfway around the world. From communication breakdowns to quality control issues, different challenges may come up. If not managed properly, these issues can turn into worst-case scenarios.

Worst Situations That Can Happen in Offshore Development

Understanding these scenarios allows you to navigate the process effectively. If you know what to prepare for, you can make proper arrangements to achieve your project goals.

1. Misinterpretation of Technical Requirements

After countless virtual meetings, your project is underway. Tech stacks and tools were already provided. Your offshore development team starts to build the software. But along the way, you noticed that each dev phase’s results were not what you envisioned. Mistakes were made, and it’s going to be costly to resolve.

The reason: your offshore team misinterpreted the technical requirements due to communication barriers. It led to project delays and even increased costs.

So what’s the lesson here?

Clear communication is vital for the success of your offshore development. Otherwise, differences in language, culture, and time zones can lead to these things:

• Misunderstandings
• Missed deadlines
• Compromised project outcomes

2. Production of Defective Products with Usability Issues

Outputs fall short of expectations if the offshore team lacks rigorous quality assurance processes. 

Varying technical expertise, standards, and work ethics can also affect overall project quality. 

Just take a look at what happened with Knight Capital Group in 2012. An offshore team developed its trading algorithm and suffered a software glitch. The bug caused the system to generate massive erroneous orders, resulting in a loss of over $460 million.

3. IP Theft and Misuse

When you offshore development, you share sensitive information and intellectual property with teams outside your company’s direct control. This increases the risk of your IP being stolen or misused. Especially if adequate legal protections and agreements are not in place.

Have you heard about what happened with Trade Technologies Inc. vs. China International Trust and Investment Corporation (CITIC)?

Trade Technologies claimed that CITIC misappropriated its proprietary source code and functionalities during development. The latter allegedly launched a competing product remarkably similar to Trade Technologies’ platform. It caused them significant financial losses and a potential competitive disadvantage.

Lawsuits were filed accusing CITIC of copyright infringement and misappropriation of trade secrets. The legal battle stretched over several years, ultimately resulting in a settlement with undisclosed terms.

4. Offshore Providers Closing Their Business in the Middle of Your Project

Over-reliance on offshore teams leads to a lack of in-house expertise. It makes you vulnerable if your offshore provider fails to deliver or suddenly becomes unavailable.

Try to imagine what you would do in this sample scenario. Your company partnered with an offshore company for a critical software development project. Months into your project, their offshore team is suddenly unresponsive. And you found out that their company is closed due to financial issues.

5. Additional (Hidden) Costs

Offshore development offers cost savings. But if not done right, hidden costs may pile up and increase your expenses. Management overhead, training, and longer turnaround times can offset these advantages. 

A major US retail chain partnered with an offshore company to develop its new e-commerce platform. While the initial quote seemed attractive, the project encountered several hidden costs:

• Scope creep and rework due to communication gaps extended the development timeline, leading to additional costs.
• The offshore partner introduced charges for services not initially included in the quote, such as additional development hours and bug fixes.
• The retail chain’s internal team had to dedicate more resources than anticipated to manage the project remotely and address communication issues.

Top 5 Strategies to Avoid Pitfalls

The worst-case scenarios we mentioned are stressful to deal with. Aside from the cost and time it takes to resolve them, your brand reputation may also suffer. However, there are ways to avoid those mishaps and ensure a successful offshore development experience.

1. Establish Clear Communication Channels

Since your team is working remotely, you must implement regular check-ins. This allows you to keep track of their progress. 

You can also utilize collaboration tools, like Jira, Asana, or Trello, to help manage the deliverables. Communication software like Zoom, Slack, and Microsoft Teams are also handy for your team’s daily interactions.

Clear documentation ensures consistency and transparency in communication for users, employees, or project stakeholders. 

Moreover, overlapping working hours can significantly enhance your success rate. For us here at Full Scale, we make sure that our developers overlap with our clients’ teams. According to our client’s preference, their schedules can overlap during the morning or in late afternoon their local time. 

2. Prioritize Quality Control

You must incorporate QA practices from the project’s inception. This step must not be skipped to avoid any costly mistake that is a pain to rework.

Integrating the best QA practices is also one of our priorities as an offshore development company in the Philippines.

At every Full Scale project, we include continuous testing, code reviews, and adherence to international standards in our processes. This helps us deliver products that meet our clients’ required quality levels and expectations.

3. Protect Your Intellectual Property

Draft comprehensive contracts that clearly outline IP rights and confidentiality requirements. You should also conduct due diligence on your potential offshore partners. Before signing a contract, check if they have a reputable history and robust security practices.

You must also prepare NDAs and other legal documents to impose strict confidentiality obligations from your offshore development partner.

Do our clients worry about confidentiality at Full Scale? No, they are confident with the terms included in our Master Services Agreement. It includes confidentiality, non-solicitation, limitations of liability, and other legal clauses that protect you and your IP.

4. Develop In-House Expertise

There’s no problem leveraging offshore teams. But you must also invest in building and maintaining core competencies within your own company. 

This approach ensures resilience and continuity in the face of any offshore-related challenges. You have a contingency plan if your offshore team is unresponsive or missing.

5. Account for All Possible Costs

Plan your expenses upfront to increase your project’s cost-effectiveness. Make sure to communicate these points clearly to your offshore development partner. 

Include miscellaneous costs, like management, communication, and potential quality issues that must be addressed.

Most importantly, your contract should stipulate that you and the offshore development team must agree upon any additional costs. 

What about Full Scale? How do we help our clients with their project costs? 

We charge 60% to 70% less than standard rates in the USA, on average. We also offer flexible project terms so our clients can easily adjust the services they need according to their needs.

Full Scale Can Help Your Business Avoid the Worst

We have been in the offshore development business for years. So, we know how to handle the intricacies of offshore development. It is also our commitment to turn potential worst-case scenarios into success stories.

Our experience and structured approach mitigate the usual pitfalls of offshoring. Here’s how we do it.

• Expert Communication: We bridge time zone and language gaps through effective communication strategies. Our clients and teams are always on the same page.
• Robust Quality Assurance: Our dedicated QA teams uphold the highest quality standards, employing continuous testing and review processes.
• IP Protection: We prioritize our client’s security and confidentiality with stringent IP protection policies and practices.
• Building Client Capabilities: We are not just a service provider but a collaborator. We can help you build and enhance your internal capabilities.
• Transparent Costing: We offer clear and upfront pricing with no hidden costs. Our contract ensures that our clients receive the best value for their investment.

Numerous challenges can turn into bad business situations when offshoring. But with the right strategies and a reliable partner like Full Scale, you can minimize the risks.

Trust our expertise and commitment to excellence.

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