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 a steady growth over the recent years with no signs of slowing down.

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

 

Top Offshore Development Risks

Data Privacy and Security Risk

Concerns about privacy should be a top priority for companies that store and process data such as customer’s names, credit card numbers, and email addresses. When doing your research, 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.

Hidden Costs Risk

Generally, outsourcing offers companies cost-effective benefits.  But, there could be hidden costs that 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.

Communication Risk

To meet outsourcing project expectations, it has to be supported by 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 in 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.

Communication risk in Offshore Development

Organizational Structure Risk

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

A hierarchical social structure has the tendency 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.

Government Regulation Risk

As more and more global companies outsource their critical businesses processes, a number of legal issues are also on the rise. Before you outsource, it’s important that your company made the due diligence to research on 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 aspect with your outsourcing provider.

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

Service Delivery Risk

Despite best intentions, vendors can fail on 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 minimum supervision. Choose a reputable offshore vendor that meets your technical and business requirements.

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

 

Offshoring Risk Management: Preparing Yourself for the Worst!

When considering if offshore outsourcing is for you, we recommend that you look at all angles. Balance the advantages with the potential risks involved to determine whether offshore outsourcing is for you.

Well-defined project objectives, reliable outsourcing partner and consistent communication are integral components to make the collaboration work. To mitigate these risks and avoid any legal repercussions, ensure that you do all preventive measures before you even start.

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

If you want the competitive edge in your industry, get your free consultation with our Full Scale customer team today.