5 Main Pitfalls When Outsourcing Software Development

October 22, 2020
Software Development Outsourcing Pitfalls | Israel IT | Blog

Outsourcing software development can improve your business’ efficiency, and result in significant cost-savings. But, there are some risks involved in outsourcing development which can impact your profitability and cause projects to fail if you’re not careful, remember, security always matters.

While outsourcing software development has its benefits, it can be detrimental if it’s mismanaged and it’s even more difficult if the company outsourcing development is not a tech company. 

The Problems to Avoid when Hiring an Offshore Team

1. Communication

communication with offshore team

The benefit of outsourcing software development is access to global talent. However, this also creates one of the major downfalls due to hiring an offshore team — issues in communication. Creating channels of communication with an offshore team is crucial. You need to make sure they understand the project requirements and potential outcomes. The use of collaboration tools, like Jira and Asana for establishing communication with the team, is really helpful. 

2. The Scope of the Project

Establishing clarity on the requirements, expected outcomes and timescale is essential for successful outsourcing with an offshore team. 

I’d recommend using an SRS template which can help with the documentation process. This helps you organize the essential requirements you want the outsourced team to be aware of and allows both sides to build a common plan before any actual production work begins. 

If the application needs a signup page, the initial SRS document will list the signup options to be incorporated. You’ll need to agree on the functional specifications for each element on the signup page and the validation checks needed for completion.  

3. Code Quality


This is a challenge for a non-tech firm without significant coding expertise. Essentially, good code needs to have clarity and maintainability. 

Maintaining a quality code when outsourcing requires set benchmarks, and regular briefings to track the development. 

Your offshore team should have checks in place to ensure code quality. Before selecting your developers, check they take measures like code review, unit testing and functional testing seriously. This will ensure they have developed a robust application before releasing it. 

4. Project Ownership

Lack of project ownership is a problem when outsourcing software development. If the company you choose has contracted programmers, then project ownership becomes uncertain. It’s helpful to have a project manager as a stakeholder, documenting the functional specifications for your developers, keeping them on track. To be successful, you should ensure that you find developers committed to finding the right solutions rather than implementing quick fixes. 

5. Bulletproof the Contract

Paying costly legal fees at a start-up may seem impracticable. A poorly framed contract will result in loopholes that can be exploited by the outsourcing company.

Yoav Achiam, the co-founder of GuardianEYE, talks about what went wrong with a contract they had with an outsourcing company. “The contract did not include a time commitment, layout of the assigned manpower, penalties if deadlines were missed, nor positive reinforcement.” It’s no surprise that things didn’t go to plan.

Best Practices for an Outsourcing Contract

·       Define the outcomes and the timeframes: The contract needs to clearly state the outcomes expected and the deadline to complete. Following agile development, the methodology can help give an accurate picture of the development progress. 

define outcomes and timeframes

·       Feature-based contracts: Have a feature-based contract that prioritizes a well-written and thoroughly tested application instead of one that simply adheres to the timelines.

featured-based payments

·       Target-based payments:  Defining the payment schedule by achieving set targets simplifies the payment structure. Plan regular follow-ups for meeting targets.

·       Include code guarantees: Specify that the code is free of malware. An acceptance period, 5-10 days is reasonable, within which any bugs are fixed at the contractor’s expense. Also, specify how the web hosting is managed. 

·       Maintenance support:  A maintenance support contract should clearly state the duration that the team will provide support on their software.

maintenance support

·       Intellectual property rights: Include the intellectual property rights clause in the contract. This will save you from any rights infringement issues.

·       Confidentiality agreement:  Non-disclosure clauses ensure the secrecy of the information that you share with the contractors. Non-disclosure and confidentiality agreements should be signed, not just by the outsourcing agency, but by individual developers.

·       Indemnity clause: Indemnity clauses are the legal provisions within the contract that address the risk between you and the outsourcing agency.

·       Termination clause:  Include a termination clause in your contract stating the course of action should the project not reach completion. 

·       Jurisdiction for resolution:  The jurisdiction in which any dispute that arises would be resolved and stating it in the contract to determine the laws under which the contract is covered.

Jurisdiction for resolution


It is now clear that all pitfalls can be easily solved if you know about them and understand how to do it. We at Israel IT guarantee full transparency at all stages of cooperation, as an offshore software development team, from the moment of negotiations to the launch of the product. Your project is our responsibility and we will do our best to make your plan a reality in a short time without losing quality.

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