Key Takeaways

• The research team found no information relating to the common pain points of outsourcing software development or evolving the digital products of companies and the benefits of using 3rd-party software consultants in Agriculture and Digital Health.
• Communication is the most cited pain point in outsourcing software development, also mentioned by 57% of participants in a Diceus survey. This is the backbone of a successful software development project.
• Hiring a third-party software developer is more affordable than relying on a company's in-house team. This has been cited as the most common benefit of hiring a third party to develop a software product. 35% of respondents in the National Outsourcing Association survey cited cost savings as the primary benefit of hiring 3rd party software consultants.

Introduction

Pain Points of Outsourcing Software Development

• As per research by Dun & Bradstreet, about 20% t0 25% of all outsourcing relationships in software development fail within two years, while upto 50% fail within five. The most common pain points of outsourcing software development are provided below based on the frequency they appear in articles and other content sources.

1) Language Barrier or Communication Issues

• Communication is the most cited pain point in outsourcing software development, also mentioned by 57% of participants in a Diceus survey. This is the backbone of a successful software development project.
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• At times, getting a professional proficient English-speaking team is hard, and 3rd party consultants will give assurances about their team's proficiency in a specific language. Still, it's not always as genuine as they claim.
• Language barriers are also a result of cultural differences and diverse mindsets, leading to botched communication and poor use of resources and energy.
• Therefore, explaining the project's details straightforwardly and eliminating communication issues are crucial to its successful completion.
• Dawid Krala, Head of Development at The Software House, says, "I can't stress this enough — transparent communication is the key. The foundation of successful software outsourcing projects is a partnership approach during the entire process — from the planning stages to the final implementation. The critical element is honesty and open communication."
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2) Project Delays or Unrealistic Delivery Expectations

• Outsourced Software Projects rarely meet their initial deadlines for two reasons; unrealistic initial expectations and changing project features.

• As a result, companies hiring software development consultants should incorporate allowances for those instances.

• In a SourceSeek survey, unrealistic delivery expectations were the third most reported software outsourcing challenge, with 16% of respondents believing it's among the most significant hurdles.

3) Quality Issues

• A survey about outsourcing software development projects cited poor quality of service as one of the project managers' most common pain points when dealing with software outsourcing services.
•  Budget-centric outsourcing companies that do not emphasize the significance of quality assurance tend to use inexperienced and low-cost software engineers that deliver poor quality code. Other times, even the most experienced teams may not meet expectations despite a high skillset.
• Inexperienced software engineers might error in coding, a mistake that could take weeks or months to fix. As a result, managers should do proper research prior to signing a contract with a software development service.

4) Unclear Costs

• The other most-cited issue in outsourcing a software development company is underestimating costs.
• Costs that creep in suddenly can spoil cooperation and dampen the whole project.
• Financial issues will also result in constant project delays and affect the quality of the final output. As such, project managers should conduct due diligence to discover hidden costs that could creep in and create a leeway for them in the contract.

5) Intellectual Property Issues

• There's always a possibility of leakage of confidential information with outsourcing software development.
• In addition, most people in a LinkedIn survey listed this as the most prominent outsourcing issue.
• The 3rd party outsourcing service could share the client's software or its elements with their competitors or as their own.
• Therefore, project managers should take legal steps to protect the company's intellectual property, going far and beyond to sign a non-disclosure agreement (NDA).

Benefits of Using 3rd Party Software Consultants

1) Cost Savings

• Hiring a third-party software developer is more affordable than relying on a company's in-house team. This has been cited as the most common benefit of hiring a third party to develop a software product.
•  35% of respondents in the National Outsourcing Association survey cited cost savings as the primary benefit of hiring 3rd party software consultants.
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• Additionally, an experienced software development service will provide the estimated scope of work and the completion time, enabling project managers to plan their budgets and work with an agreed amount.
• Research also suggests that the cost of outsourcing software development is often 60% — 70% lower than that of using an in-house team to build a workable structure.

2) Team With Experience And Expertise In Advanced Technologies

• An experienced software development company specializes in software development and, as such, is versed in the latest trends and technology.
• They are also trained in using these technologies to develop and implement software products.
• A software development business also brings experience in a wide range of services, have worked on various projects, and are well suited to take on any task.

3) Risk Reduction

• By outsourcing software development to an experienced team, the company does not need to worry about coordinating the technical aspects of the project and can rest on the fact that highly trained professionals will successfully execute the project.
• Project managers also avoid the risk of hiring new employees or opening a new department to perform the service.
• Additionally, it can be assumed that since the company is working with professional software consulting services who are skilled in data security, it is guaranteed that the system will have safeguards to protect against external attacks.

4) Flexibility and Agility

• Outsourcing prevents the company from time spent searching for qualified specialists to work in-house. Research suggests that assembling a qualified specialist team could take more than 3 months.
• Delegating product development to an external team facilitates the whole process, and provides the company with the leeway of having a department with nothing to do after the fact.
• The software development service can also hold meetings and consultation at anytime since they are not part of the company's daily routine.

5) Quality Product

• Finally, since the software outsourcing service is responsible for the entire project output, the company can be sure that any technical issues "such as bug-and-downtime fix, performance improvements or software updates" will be dealt with by an experienced team.
• They will also use any cutting technology in emergence at the moment to ensure that the final output is of high quality.

Research Strategy