3 Reasons Why Outsourcing Your Software Development Offshore is Risky Business


In 2018, the out­sourc­ing mar­ket was worth over $85 bil­lion USB. Even though this was a dip from 2016 when it to­taled over $100 bil­lion USD, off­shore out­sourc­ing is still pop­u­lar, but is it worth it?

Ask 100 C-level man­agers of Australian pri­vate and pub­lic or­gan­i­sa­tions this ques­tion and you will get a tan­gle of re­sponses weigh­ing the pros and the cons of out­sourc­ing against in-hous­ing and off­shoring against on­shoring.

In the end, each man­ager will have a unique per­spec­tive on what counts as a pro or a con. To mud­dle things fur­ther, some con­sid­er­a­tions could be piv­otal to some de­ci­sion mak­ers but be com­pletely over­looked/​dis­missed by oth­ers. Ultimately, how­ever, the size of India’s out­sourc­ing in­dus­try shows that many think out­sourc­ing to India, Southeast Asia or else­where is the best com­bi­na­tion of these op­tions.

This is prob­a­bly be­cause it is per­ceived to be the most cost-ef­fec­tive op­tion; how­ever, those po­ten­tial sav­ings come with more than some risk, es­pe­cially when it is soft­ware de­vel­op­ment that is be­ing out­sourced.

Click to see the top 20 risks as­so­ci­ated with off­shore out­sourc­ing

Choosing the right de­vel­oper is a lit­tle more in­volved than com­par­ing hourly rates and pick­ing who­ever is cheaper. The true cost of de­vel­op­ing soft­ware is also a ques­tion of con­trol, speed and qual­ity.

When you take these into ac­count, the off­shore mar­ket’s com­pet­i­tive ad­van­tage quickly van­ishes.

#1 Control

The im­me­di­ate and in­evitable loss of con­trol is the biggest down­side to off­shoring.

Right off the bat you have to deal with time­zones. For an Australian or­gan­i­sa­tion out­sourc­ing to South America, there is lit­er­ally zero crossover be­tween stan­dard work­ing hours! Outsourcing to India is more con­ve­nient in this re­spect, but 9:00 am in New Delhi is 1:30 pm in Brisbane.

This is prob­a­bly not a deal breaker, but the change in coun­try also means new laws, cul­tures and lan­guages.

Can you pro­tect your IP in India? Probably, but there is an el­e­ment of risk. Food and drug com­pa­nies in par­tic­u­lar have been caught up in the Indian court sys­tem in re­cent times and cor­po­rate es­pi­onage rears its ugly head every­where, in­clud­ing Silicon Valley (Google vs. Uber).

To make mat­ters worse, due dili­gence is much harder on­line or over the phone. Who is re­ally de­vel­op­ing your app? When you de­velop with a lo­cal de­vel­op­ment house, you can sched­ule meet­ings and meet the de­sign­ers, de­vel­op­ers and testers work­ing on your app and see the progress that they are mak­ing as they make it. This ap­plies dou­bly when you de­velop in-house as your de­vel­op­ers are now your em­ploy­ees.

Developing on­shore may mean a big­ger price tag, but it also means more con­trol.

#2 Speed

One of the biggest time sinks in the de­vel­op­ment process is test­ing and bug squash­ing. As such, hard and loose cod­ing is usu­ally slower than de­lib­er­ate and me­thod­i­cal cod­ing.

While there are high-skilled de­vel­op­ers work­ing over­seas and low-skilled ones in places like Australia, the high­est skilled and most tal­ented in­di­vid­u­als will tend to grav­i­tate to the ecosys­tems with the best pay.

For ex­am­ple, Silicon Valley tech work­ers are pri­mar­ily for­eign-born. Even else­where in the United States, e.g. Austin, Texas, more than a third of tech work­ers are for­eign-born.

Considering a de­vel­op­er’s time spent cod­ing is dom­i­nated by qual­ity con­trol and that less ex­pe­ri­enced de­vel­op­ers make more mis­takes (and as a re­sult spend more time do­ing qual­ity con­trol), de­vel­op­ing on­shore is less risky as it is where you can ex­pect the tal­ent pool to be at its best.

The ques­tion of speed is linked with the above ques­tion of con­trol. The slow­down will vary, and it might not be no­tice­able, but there will un­doubt­edly be some on ac­count of is­sues such as lan­guage and time­zone.

Considering that the av­er­age on­shore de­vel­oper (a pool that will in­clude peo­ple born over­seas) can al­ready be ex­pected to be more ex­pe­ri­enced and, as a re­sult, less likely to make mis­takes, speed is a le­git­i­mate risk as­so­ci­ated with off­shoring.

This is­sue is com­pounded be­cause cor­rect­ing mis­takes re­quires over­sight and com­mu­ni­ca­tion (i.e. con­trol) which is weaker when part­ner­ing with an off­shore team.

#3 Quality

Turnover is a nat­ural part of busi­ness, but it can be par­tic­u­larly dis­rup­tive to de­vel­op­ment teams.

For starters, some de­vel­op­ers do not build what you need, they build what they think you need, and not even that–they may build what they think the tech­ni­cal re­quire­ments back­log says you need. Depending on the back­log, this could be a very ac­cu­rate rep­re­sen­ta­tion of your needs, or it could be the com­plete op­po­site. In any case, most peo­ple are not ex­perts in your busi­ness and as such mis­un­der­stand­ings will oc­cur.

The con­cern is that a small mis­un­der­stand­ing in doc­u­men­ta­tion can trans­late into a large gap in ca­pa­bil­ity. This is why turnover is par­tic­u­larly dis­rup­tive to de­vel­op­ment teams. Familiarity is crit­i­cal to min­imis­ing mis­un­der­stand­ings. India’s high turnover rates (35%) cou­pled with time and lan­guage bar­ri­ers, can have an im­mense im­pact on prod­uct qual­ity.

This is a hid­den risk to part­ner­ing with an off­shore de­vel­op­ment com­pany.

Is it worth it?

Some of the man­agers choos­ing to send work over­seas do so with­out know­ing these risks, think­ing the lower price out­weighs po­ten­tial draw­backs.

But choos­ing the right de­vel­oper is a lit­tle more in­volved than com­par­ing hourly rates and pick­ing who­ever is cheaper. The true cost of de­vel­op­ing soft­ware is also a ques­tion of con­trol, speed and qual­ity.

Hidden costs, such as long dis­tant phone calls, travel and the reper­cus­sions to um­brella is­sues of con­trol, speed and qual­ity can quickly up­set the bal­ance.

In the end, out­sourc­ing and off­shoring both have their ad­van­tages, but they also have their risks. Knowing the risks em­pow­ers you to make the de­ci­sion that’s’ right for your busi­ness.

A new way: Codebots

Codebots is a rev­o­lu­tion­ary new way of de­vel­op­ing ap­pli­ca­tions. In short: it is code that writes code.

WorkingMouse has been us­ing Codebots for years to de­velop and de­liver high qual­ity ap­pli­ca­tions. Codebots can write 300,000 lines of de­vel­oper-read­able code in a minute and, on av­er­age, writes 92% of an ap­p’s to­tal code base. This al­lows WorkingMouse to con­cen­trate on the code that will solve your busi­nesses prob­lems.


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Mitchell Tweedie

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