Image for How To Mitigate Risks in Software Development Outsourcing

09 Aug 2023

How to Reduce the Risks of Outsourcing Software Development

Software development outsourcing has become a popular approach for companies seeking to cut costs, increase their IT capacity, and tap into global development talent. However, with the numerous benefits of hiring practices like nearshore outsourcing come a few risks that could potentially derail the entire project. As an organization about to hire nearshore developers, understanding how to mitigate these risks is a key strategy for the success of your software development projects. With about 300,000 jobs getting outsourced out of the US each year, it’s important to know how to protect your company from these risks no matter the type of outsourced staff you hire. This article will dive into how to mitigate risks in software development outsourcing and the precautions all companies hiring remote developers need to take.

10 Ways To Mitigate Risks In Software Development Outsourcing

1. Be mindful when picking a nearshore development company.

One of the crucial steps in ensuring a successful software development outsourcing venture is selecting the right partner. The offshore or nearshore development company you choose can make or break your project, which is why actors such as their experience, expertise, reputation, and their understanding of your business goals should be thoroughly evaluated. Furthermore, consider their financial stability and whether they have a scalable workforce. A vendor that aligns with your business needs and values can significantly reduce the risks of the project going sideways, so you need to ensure their honesty and transparency from the get-go. 

2. Define a clear IT project scope.

A well-defined project scope is vital in risk management. It sets clear expectations and provides a roadmap that guides the entire development process so your remote developers are given a clear guide on how to progress through the project. To define a clear project scope, you have to outline your project's goals, deliverables, milestones, timelines, and budget. This ensures that all parties are on the same page from the onset, thereby reducing the chances of multiple misunderstandings and conflicts later down the road. 

3. Establish clear communication channels between project developers.

Effective communication is key to any successful outsourcing endeavor. Misunderstandings or miscommunications can lead to mistakes and delays. Establishing clear communication channels helps keep everyone in sync. Tools like Slack, Trello, or Microsoft Teams can facilitate real-time collaboration, file sharing, and tracking progress. Regular meetings and updates are also essential to keep stakeholders informed.

4. Regularly monitor progress when you hire nearshore developers.

Keeping track of the project's progress is another crucial aspect of risk management. Regular progress monitoring allows you to identify issues early on and implement corrective measures before they escalate into significant problems. Cutting-edge technology and development tools like JIRA or Asana can help track tasks, deadlines, and milestones effectively. This will help you track your developer’s projects and minimize the risk of low productivity among your augmented staff members. 

5. Prioritize intellectual property protection.

Software development outsourcing exposes your intellectual property to potential risks. It's therefore important to ensure that your IP rights are protected through Non-Disclosure Agreements (NDAs), copyrights, or patents where necessary. You should also ensure that the vendor adheres to international intellectual property laws - there are also many different ways to protect your intellectual property when outsourcing, read this article to learn more about how to do this!

6. Provide and ask for adequate documentation of the process. 

Documentation plays a pivotal role in risk mitigation by providing a written record of all project-related information. This includes design documents, requirement specifications, test plans, user manuals, and more. Having the necessary amount of comprehensive documentation ensures continuity of knowledge throughout the project lifecycle and also be useful for future revisions beyond the project’s completion timeline. 

7. Implement Agile outsourcing. 

Incorporating agile methodologies in your development process can significantly reduce risks in software development outsourcing. Agile development promotes flexibility and adaptability enabling teams to respond quickly to changes and deliver high-quality software faster. To implement agile effectively, ensure that both your team and the vendor's team are trained in Agile practices.

8. Establish a proper risk management plan. 

An effective risk management plan is a crucial tool for identifying potential risks and determining strategies to deal with them. The plan should cover risk identification, risk assessment, risk response strategies, and risk monitoring and control. 

9. Conduct regular quality assurance of all project deliverables. 

Quality assurance plays a critical role in risk mitigation by ensuring that the delivered software meets the required standards and expectations. Adopting best practices like regular code reviews, automated testing, and continuous integration can help ensure quality. This will help you ensure that all project deliverables are always up to the highest standards and won’t need any revisions, saving you both time and money. 

10. Incorporate strict security measures. 

With increasing cybersecurity threats, incorporating security measures in your software development process is essential. Ensure that the outsourcing vendor follows best practices in data protection and cybersecurity such as encryption, secure coding practice, and regular security audits. If you want to read more about different ways to protect your data when software outsourcing, read this article from our blog! 

Ready to hire nearshore developers and get started with software development outsourcing? 

While software development outsourcing comes with its share of risks, these can be effectively managed through careful planning and strategic decision-making. As a company looking to start software development outsourcing, leveraging these techniques will not only help you mitigate risks but also enhance the success rate of your software development projects.

At Blue Coding, we ensure your software development projects are successful by helping you hire nearshore developers in Latin America through staff augmentation and nearshore outsourcing. Our technical recruiters will find the top LATAM talent for your development solutions and handle everything from vetting to initial interviewing. Whether you’re looking to hire a big outsourced development team or just do one direct placement, our team can help you welcome the right people to your staff. Contact us today to book your free discovery call and learn more about our software development outsourcing services! 

Enjoyed reading it? Spread the word

Subscribe to the
Blue Coding Weekly Rundown

Get helpful tips on remote jobs, our latest job openings, and more!