Cost reduction is a major reason for project outsourcing, but are businesses doing it right? DesignRush reached out to experts to discover some of the biggest software development outsourcing mistakes.
MIAMI - SEPTEMBER 01, 2022
A Deloitte survey suggests that the major reasons businesses outsource projects are cost reduction, flexibility and speed to market. This trend isn’t expected to slow down and, in fact, the spending on IT services is projected to reach $1.3 trillion worldwide in 2022, as reported by Statista.
DesignRush, a B2B marketplace connecting businesses with agencies, leveraged its 16,000-agencies-strong network for quick insights – or “QuickSights” – on the mistakes businesses should avoid when outsourcing software development.
1) DRAGGING THE PRODUCT RELEASE
Softkit Founder and CTO Vitalii Samofa shares that businesses shouldn’t miss the product launch or it may result in increased costs and decreased value.
“Develop an MVP for over half a year and not release the project,” said Samofa. “In my experience working in an outsourcing company, I saw five projects with three years of average development time that didn't go into production. You must target to go on the market asap, otherwise, the delay can expand costs and decrease the scope and quality of product launch activities.”
2) WORKING ON A FIXED PRICE BASIS
Nicolas Bonnefoy, CTO at the Web3 venture studio ERA2140, claims that being "financially" involved in the clients' projects is the best way to develop successful software and reach the goals of both parties.
“Before, our customers wanted to work on a fixed price basis, but working in Web3 and in blockchain requires a lot of innovation and R&D time which is not measurable at the start,” said Bonnefoy. “Projects constantly evolved over time and we were forced to cut features to fit the budget. Then we moved to the Venture Studio model. Being incentivized in the project guarantees quality and investment for the client and for us, a win-win model."
3) FAILING TO DEDICATE ENOUGH TIME TO DOCUMENTING DELIVERABLES
According to Ritesh Agarwal, director and lead developer at Appycodes, not spending enough time on key details such as documenting and detailing deliverables can result in disputes.
"When it comes to outsourcing software development, businesses often miss spending adequate time in documenting & detailing the deliverables, and clearly stating inclusions & exclusions from the scope of work,” said Agarwal. “This leads to expectation gap, and is the most common reason for disputes.”
Sourabh Surana, business development manager at Techforce, agrees on this matter and also emphasizes the importance of keeping the requirements and budget ready.
“While outsourcing, keep the list of requirements, detailed questionnaire and a budget ready, so the company can help you accordingly to estimate the project and provide the perfect estimate for the specified requirement,” said Surana.
4) DELEGATING THE ENTIRE WORK TO THE OUTSOURCING PARTNER
As stated by Romana Levytska, business development manager at Lionwood.software, businesses should never delegate the entire work to their outsourcing agency as they know their business better.
“A business's common mistake when outsourcing software development is delegating the entire work,” said Levytska. “You know your business better than anyone else. The proper product development can be reached by the two parties involved. Clear expectations and well-defined scope will help your [outsourced] team to deliver the product you envision on time.”
5) INCONSISTENT PLANNING & RESEARCH
In the opinion of Sana Ansari, AVP of marketing at Binmile Technologies, inconsistent planning and research is the reason for technical breakdowns and cost increases.
“70% of companies outsource to save cost but due to lack of consistent plan and research they end up paying more,” said Ansari. “This inconsistent planning erodes trust, leading to technical breakdowns and increasing the project's cost and TAT by 50%. Switch to an engagement model with crystal clear pricing and detailed project plan that includes all possible scenarios.”
6) DECIDING WHOM TO HIRE BASED ON LOWER COSTS
Empat CEO Nazar Gulyk suggests that businesses should not consider price as a deciding factor.
“If you put this [criterion] first, you'll have a high chance of starting your project with a low-quality vendor focused on quick profits,” said Gulyk. “The price must be reasonable, and it may be the deciding factor, but not primary. We saw a lot of poorly made projects after such vendors that are just unmaintainable for future development.”
DesignRush released the September list of the best software development companies to help businesses save valuable time on researching and hiring the talent they need to develop specific software solutions.
1. Softkit - softkit.dev
Expertise: Software Re-Engineering Services, Custom Software Development, BI & Big Data Management and more
2. ERA2140 - era2140.com
Expertise: Consulting, Blockchain Development, Web & App Development and more
3. Above Creative Events - blog.creativemalaysia.com
Expertise: Web Development, Microsite Development, Registration System Services and more
4. Appycodes - appycodes.dev
Expertise: Game Development, Web Development, App Development and more
5. Iriartec - iriartec.co
Expertise: Custom Software Development, Web Design, Consulting and more
6. Lionwood.software - lionwood.software
Expertise: Web App Development, Custom Software Development, UX Design and more
7. BrancoSoft Private Limited - brancosoft.com
Expertise: Software Development, Software Testing & QA, IT Strategy & Software Consulting and more
8. Binmile Technologies - binmile.com
Expertise: Digital Engineering, Quality Assurance, Product Engineering and more
9. Rubyroid Labs - rubyroidlabs.com
Expertise: Ruby on Rails Development, App Development, Custom Web Development and more
10. Techforce - techforceglobal.com
Expertise: eCommerce Development, Custom Software Development, Web Development and more
11. Timbergrove - timbergrove.com
Expertise: IoT, Software Development, UI/UX Design and more
12. CrawlApps - crawlapps.com
Expertise: Desktop Software Development, Web Development, App Development and more
13. Serious Web - seriousweb.org
Expertise: Web Development, Software Development, Business Automation & CRM Development and more
14. PocketDevs - pocketdevs.ph
Expertise: App Development, Web Development, Custom Systems Solutions and more
15. Moka - wearemoka.com
Expertise: Web & App Development, UX Design, Branding and more
16. Empat - empat.tech
Expertise: Custom Software Development, App Development, Web Development and more
17. AI Superior - aisuperior.com
Expertise: Business Intelligence, AI Research and Development, AI Consulting and more
Brands can explore the top software development companies by location, size, average hourly rate and portfolio on DesignRush.
DesignRush.com is a B2B marketplace connecting businesses with agencies through expert reviews and agency ranking lists, awards, knowledge resources and personalized agency recommendations for vetted projects.