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6 Main Software Development Outsourcing Risks and How to Manage Them

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6 Main Software Development Outsourcing Risks and How to Manage Them | 9NEXUS
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There are several reasons for a company to consider outsourcing its software development processes. One of the most significant outsourcing benefits is faster time to market. Many also associate reduced costs and higher quality with these outsourced services. As the demand for software development increases, the ability to outsource development has become a popular solution. It can reduce costs and streamline releases, but there are risks associated with outsourcing that need to be managed.

In this blog post, we will discuss 6 of the main software development outsourcing risks and how you can manage them. From discrepancies in communication styles to unsafe data processing methods, these tips can help ensure smoother processes and successful projects.

Risk 1 – Selecting Inappropriate Software Development Outsourcing Supplier

Choosing the right supplier is crucial to the success of any project, especially in software development where expertise, tools, and equipment are essential. An inappropriate supplier can be a major hurdle to completing the project, and often falls short of the customer’s expectations leaving deadlines unmet. In some cases, overselling of technical abilities is a common cause of project failure. To avoid such issues, it is essential for companies to place a trial order to assess the supplier’s capabilities, evaluate their skill set, and ensure a good fit.

To aid in the decision-making process, creating a clear project brief with detailed requirements for the supplier can be helpful. It is also important to analyse a pool of suppliers, ask for references, and check their previous work before entering into a contractual relationship. By following these steps, companies can safeguard against the dangers of an inappropriate software development supplier and ensure that their project is completed on time and within budget.

When it comes to outsourcing software development, it’s crucial to choose the right supplier. This means taking the time to identify all of your company’s software needs, goals, and the programming languages necessary to accomplish them.

Once you have this information, an internal team can develop selection criteria and scoring methods to evaluate potential suppliers. This way, you can choose a company that meets your budget and experience requirements. It’s also important to assess the supplier’s maturity level and review their case studies to ensure they have the skills and expertise to deliver the development services you need. By following these steps, you can feel confident in your choice of software development outsourcing supplier.

Risk 2 – Preparing a Bad Software Development Outsourcing Contract

When it comes to procuring software development services, startups and smaller companies may think that they can save some money by avoiding the cost of hiring legal help. What they fail to realise, however, is that a poorly formed contract can result in many unpleasant surprises that could have been avoided. Unscrupulous suppliers can exploit loopholes to their advantage, resulting in abrupt contract termination or unnecessary changes.

To steer clear of these potential pitfalls, it’s paramount to create a solid legal agreement that includes essential details such as pricing, deadlines, and privacy policies. While the initial cost of hiring legal help may seem like an unnecessary expense, it can actually end up saving you a lot of money and resources in the long run.

You can include other important details such as penalties for not meeting deadlines, assigned workforce, and positive reinforcements. It will be helpful to also create a separate Master Agreement that includes strategic plans and a Statement of Work that highlights project-level conditions.

Risk 3 – Inappropriate Systematic Quality Control

In today’s world, software development has become an integral part of businesses, and the success of any software development project depends on the quality of the product delivered. A poor customer experience can ruin a company’s reputation and lead to revenue loss. Inappropriate systematic quality control in software development can result in bugs and coding flaws that could significantly affect the software’s usability.

Therefore, to avoid such issues, both the supplier and the company need to collaborate and have a hands-on approach during the entire process. One way to ensure that all bugs and flaws are caught early is by appointing an in-house tech expert with extensive knowledge and experience in the field.

Additionally, suppliers with vast experience in Quality Assurance should also be preferred over less experienced alternatives. These measures could lead to cost-effective processes and valuable software development services, creating a more positive customer experience, and increasing revenue flow.

A well-formulated test plan will also ensure that you and the supplier are not devoting too much time to development and too little to quality control. By highlighting all the necessary testing methods, you can identify potential issues early on and ensure that quality control is efficient and thorough. From integration to unit and load testing, a solid test plan can guide your entire development process and help you achieve your goals more effectively.

Risk 4 – Building Unsatisfying Communication Ties

When outsourcing software development services, communication between the supplier and customer is key. It’s essential that both parties understand each other’s needs and expectations to ensure a successful project outcome. But discrepancies in communication styles can lead to misunderstandings and tension between the two teams, thus hindering the process.

To counter this issue, it is important to establish a clear communication strategy from the start. This should include assigning roles, creating a project timeline and milestones, setting expectations and responsibilities for each party involved, and defining a response protocol.

It is beneficial to have a point of contact from both sides that can facilitate direct communication when needed or provide real-time updates on project progress. Additionally, regular meetings with all stakeholders can help to ensure that tasks are completed on time and the objectives of the project are met. By following these steps, companies can ensure satisfactory communication ties between customer and supplier and create a smooth process for software development outsourcing.

Risk 5 – Using Unsafe Data Processing Methods

In the age of cybersecurity threats and data breaches, it is critical to ensure that all software development activities are conducted in a safe manner. Companies should take steps such as encrypting their data and setting up adequate access control measures to protect sensitive information from malicious actors. Vendors must also comply with industry standards, such as GDPR or HIPAA, when handling personal data.

To ensure that all data processing methods are secure, it is important to carefully vet potential suppliers and select one with a proven commitment to data safety. Additionally, make sure to discuss the security measures they have in place and inquire about their security policy. Regular auditing of the software development process can also be useful for identifying any potential threats or vulnerabilities. By taking the necessary precautions, companies can protect their data and ensure a secure software development outsourcing process.

Risk 6 – Not Defining an Exit Path for Contractors

When outsourcing software development services, it’s important to consider the potential consequences of ending the contract abruptly. This includes protecting yourself from any potential lawsuits and liabilities that could arise due to a sudden end to the project. To avoid such issues, it’s important to correctly define an exit path for contractors in your legal agreement.

You should also create a clause that outlines the proper procedures both parties should follow if they decide to terminate the contract. This should include details such as when and how notice must be given, who will handle the transition of work, and who is responsible for any additional costs incurred due to the termination. By having these details written into your agreement from the start, you can protect yourself from any potential legal issues that may arise from ending the contract.

How 9NEXUS can Help with Software Development Outsourcing

At 9NEXUS, we understand the risks associated with software development outsourcing and strive to reduce them by providing high-quality services backed by years of experience. Our team of professionals is dedicated to delivering cost-effective solutions that meet customer expectations.

Our comprehensive suite of services includes quality assurance and testing, project management, and technical support. We also provide a secure platform to manage all your software development needs, ensuring that you are protected from any potential cybersecurity threats.

At 9NEXUS, we are committed to helping you create successful software development projects with minimal risk. Contact us today to learn more about how we can help you get started with outsourcing your software development needs.


Software development outsourcing can be a great way to cut costs and improve efficiency, but it also comes with its own set of risks. By being aware of potential risks and taking the necessary precautions, companies can ensure that their software development projects are successful. This includes creating an airtight agreement, appointing tech experts to oversee quality control, establishing clear communication links between customer and supplier, using safe data processing methods, and defining an exit path for contractors. By following these steps, businesses can ensure that their software development outsourcing projects are successful.

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