Software outsourcing challenges

7 Software Outsourcing Challenges and Best Practices To Avoid Them

The increasing availability of global IT talent has fueled the popularity, accessibility, and profitability of outsourcing software development. IT services now comprise a significant 72% of the overall outsourcing contract value, thanks to enhanced efficiency, cost savings, and access to a vast talent pool. However, unlike in-house solutions, outsourcing software development comes with its own set of challenges. This article will explore seven major software outsourcing challenges and provide effective solutions to resolve them.

Working across time zones

Dealing with software developers in different time zones poses challenges in software outsourcing, especially with significant time overlaps. For example, a 12-hour time difference between partners in the US and India can complicate communication and collaboration. While it may appear that the project is continuously worked on due to the time difference, it can lead to technical and communication problems. The limited window of overlapping working hours between teams can reduce overall productivity and potentially extend the outsourcing process. On the other hand, selecting an offshore partner with a smaller time zone gap can enhance resourcefulness and promote smoother day-to-day operations for the project.


  • Set overlapping working hours for teams to allow for real-time collaboration.  
  • Use asynchronous communication channels such as project management platforms and collaboration tools to ensure continuous interaction despite time zone differences. 
  • Proper planning and coordination are needed to avoid bottlenecks and maintain smooth workflow transitions.

Communication Barriers

One of the primary software outsourcing challenges is insufficient or poor communication. A recent study shows that almost 90% of businesses face significant communication hurdles when outsourcing capabilities. This issue arises from factors like cultural disparities, language barriers, and the dispersed nature of teams.

The client-service provider dynamic can further complicate matters, as service provider staff may feel compelled to accommodate unrealistic client requests, hindering open communication. Ultimately, this lack of transparent communication can result in unmet expectations and disappointment.


  • Establish clear and open communication channels. 
  • Utilize video conferencing and virtual meetings to promote real-time interaction between teams.
  • Having bilingual project managers or translators on hand to bridge language gaps and promote better understanding.
Software outsourcing challenges and best practices to resolve

Lack of control over the process and management

As a business leader, it is natural to feel uneasy about entrusting significant aspects of your organization’s management and processes to another company. The perceived loss of control can be disconcerting. However, it is essential to recognize that the lack of control itself is not a direct risk; rather, potential risks may arise as a consequence.


  • Create clear project milestones and deliverables. 
  • Implement project management tools to track progress and ensure transparency between all parties involved. 
  • Regular progress reviews and status updates will help maintain visibility and allow for timely interventions if necessary.

Service provider quality in outsourcing

One of the most horrified software outsourcing challenges is poor quality standards in the services provided. Companies often prioritize cost savings, leading them to choose outsourcing partners solely based on the most favorable price without delving into the reasons behind the low cost.


  • Request examples of their previous work and explore their past collaborations and project types. This step serves multiple purposes in evaluating their capabilities and expertise.
  • Ensure that your outsourcing partner follows project management methodologies and DevOps practices to ensure efficient project execution and seamless collaboration.
  • Establish clear expectations by defining a comprehensive Service Level Agreement (SLA) that outlines the services provided by the outsourcing firm and their associated costs.
  • To further safeguard against risks and technical challenges, consider having a tech-savvy specialist on your team who can inspect the work of the remote team. This additional layer of oversight will guarantee the high quality of the final product’s code and help avoid potential outsourcing pitfalls.
Best software outsourcing company

Lack of domain knowledge in the field

Another software outsourcing challenges comes when you hire an offshore company for your core project. You’ll become dependent on an external vendor. While outsourcing is cost-effective and convenient, it may lead to a loss of product expertise and core competencies over time.

Achieving high-quality software that meets stakeholders’ needs depends on shared understanding. Research on software team coordination has shown that aligning organizational and technical factors influences software quality and cost.

Experienced software development companies, with their expertise from diverse projects in various domains, play a critical role in reducing outsourcing risks. Knowledge transfer from the service provider to your business becomes a competitive advantage, mitigating final product and operational risks.

Remote team members may have the necessary technical skills but could lack product and domain knowledge, resulting in increased costs and missed deadlines. Consider hiring expert individuals like engineers or analysts to lead your development team and improve your product instead of outsourcing the entire project.


When evaluating a software outsourcing company, consider their previous work and the types of projects they have undertaken. This serves several purposes:

  • It allows you to determine if they have experience with similar projects to yours.
  • It helps gauge the level of expertise and experience of the company.
  • It provides insight into the scale of projects they have handled and whether they can handle your task.

Keep in mind that a wide range of customers and an extensive portfolio may not always be the best fit for your specific use case. Instead, focus on finding an outsourcing partner with experience in your business processes. If an outsourcing software development company claims to have experience with projects similar to yours but cannot share details due to non-disclosure agreements, exercise caution. They should still be able to provide a general overview of their previous projects, how they were executed, and the benefits delivered to their clients.

Lack of experience with remote teams

In our current era, remote work is becoming increasingly prevalent, with many businesses adopting fully remote setups. Embracing remote teams enables companies to access a broader talent pool and allows individuals to work in environments that maximize their productivity and efficiency. However, it poses a big software outsourcing challenge if you lack experience with remote teams.


  • Clearly define what success means for both parties. Aligning the goals and objectives from the beginning is essential. If there is any ambiguity in the desired outcome, take the time to reevaluate and rewrite the project definition.
  • Provide a top-level user journey walkthrough to the offshore team. This approach encourages a user-centric mindset and helps them understand how their deliverables contribute to the overall picture of the project.
  • Maintain open and constant communication with the offshore team. Designate an in-house point person responsible for providing all necessary information to the offshore team. This individual will be tasked with monitoring any changes and ensuring seamless communication between both teams.

Learn more about how to collaborate effectively with outsourced teams: Scrum in Outsourced Engagements: Roles and Processes for Global Team Success

Outsourcing software development services

Data security and IP protection

In the outsourcing model, it is essential to be vigilant about the risk of potential data security and intellectual property rights violations that may arise when outsourcing services. To mitigate these risks, it is crucial to implement all necessary measures to safeguard against damages.

Sharing sensitive information about your IT systems with a service provider can compromise security. To ensure data security, a comprehensive and ongoing risk assessment approach is necessary. These considerations should be treated separately while evaluating a service provider.

Data security plays a significant role in the outsourcing decision-making process. Hold outsourcing firms accountable for any risks associated with outsourcing. Choose a partner that prioritizes security and has contingency plans in place to effectively manage and mitigate potential risks.


  • Establish a non-disclosure agreement (NDA) with the vendor in compliance with local intellectual property laws before engaging a software outsourcing company or sharing confidential information
  • Conduct thorough due diligence by exploring independent review platforms to assess the vendor’s reputation and past track record regarding their clients’ intellectual property rights. Additionally, investigate the vendor’s internal risk measures and their ability to safeguard your intellectual property. 
  • Understanding their response plan in the event of a data breach within their organization is also crucial to making an informed decision.


Software outsourcing challenges are numerous, but it offers businesses a valuable opportunity to expand their delivery capability without increasing employee headcount or incurring hidden costs. With meticulous planning, establishing strong alignment both contractually and non-contractually, and ensuring transparency, many of these risks can be effectively mitigated.

At Devscout, our commitment lies in providing top-notch outsourcing software development services by harnessing the latest technologies. If you need guidance in selecting the right software outsourcing company, don’t hesitate to contact us. We are here to assist you!