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Binary Studio 19.06.2013

Risk Management In Outsourcing

Nearshore software development can be an extremely profitable option, but it is not a silver bullet. As with any new business venture, there are real risks and challenges, many of which are highlighted by distance. With so many options to choose from, it is critical to be as fully informed as possible in order to find a great match.

The first major question is what type of cooperation model is best and where to look. While relying on freelancers for small or non-critical projects is often a great option, when development work is more significant, long term cooperation with a trusted overseas development company may be a more secure choice. Larger firms may ramp up development quickly, but can be less dedicated to their customers over the long run. Firms with real experience can help structure projects to maximize efficiency and reduce your uncertainty by recruiting, training and focusing on retention so you don’t have to.

When outsourcing software development, the three primary worries are ineffective communication, technical inexperience, and weak motivation. Partnering with a reliable firm can help to address the first two, while effective project management is needed for the third.What communication between customer and developer in Outsourcing sometimes looks like.


In complex external projects, mutual understanding comes from effective communication during long term cooperation. With developers in a foreign country, potential issues include not only workers’ language skills and understanding of project requirements, but also their ability to understand the customer’s way of thinking. Cultural differences can sometimes affect developers’ work attitudes. For example, anecdotal evidence suggests that East European developers are more likely to proactively evaluate assignments looking for better ways to complete them.


Video and VoIP services give managers the ability to respond to questions immediately or with little delay and to hold regular meetings. Use of Scrum procedures can help keep everyone on the same page. Adjusting shift schedules can increase workday overlap, although minimizing the time zone difference is overall more effective. Overall, working within Europe may minimize miscommunication.

At the same time, there is no substitute for face to face meetings when it comes to establishing and reinforcing a relationship between employer and developer. Companies looking to start an overseas project should be aware that personally meeting programmers during the project kick-off stage and over the course of later collaboration will be very beneficial. They should therefore investigate the possibility of hosting workers onsite or of traveling to the offshore development facility.


The problem of finding suitably experienced developers is sometimes part of what drives companies to consider outsourcing in the first place. Locating developers with desired skills, knowledge and dedication can present a serious challenge and a major time commitment. Furthermore, it is also necessary to make sure that programmers’ knowledge stays up to date. Fortunately, outsourcing can actually alleviate some of these problems, so long as companies are very careful when choosing prospective partners to work with.

Make sure to focus on the people to be hired, as well as on the selection process. Strong STEM education in many outsourcing countries provides access to a talented pool of developers. While it is not always possible to find programmers who have an exact set of project-specific knowledge, outsourcing providers excel at finding skilled individuals with the aptitude to quickly build on their experience. Find out about options for knowledge sharing, training, and skill development. If developers are capable and quick to learn, and have an effective support network, it is likely that they will contribute effectively on your team.


What are the motivation killers while nearshoring?After you have made a massive investment of time and effort evaluating, training, and learning to work with your crew, the last thing that you want is for them to leave or become unmotivated. Little can be more disruptive to your project’s progress or to your bottom line. This potential risk can be minimized by effective project management and by thinking about task selection. Your overseas partner should also be a valuable resource if they are truly committed to keeping retention high.

Involve your nearshore workers in the process: effectively integrating them into your company will keep them working at their best. Give them necessary work that challenges them to learn and be creative. Unless you simply want faceless Skype accounts, remember that your developers are people, hired for their skill, and rely on them.


As with any knowledge workers, some of the following problems can lessen overseas developers’ work satisfaction:

  • Pure support and bug fixing work.
  • Use of outdated or ineffective technologies.
  • Insufficient explanation of project specifications.
  • Lack of availability for questions or feedback.
  • Overly specific or restrictive control over worker’ time.
  • Lack of personal meetings.
  • Low wages or poor working conditions.
  • Lack of opportunities for professional growth.

Find out about how your partner keeps developers on your team for the long term. Most of these motivation killers fall into the category of common-sense management practice, but the last two are controlled by your offsite colleague. As you build a partnership with your developers around effective communication, regular contact, and shared dedication to the project, you want an ally who focuses on their more individual needs. Office atmosphere and fun with coworkers can keep developers cheerful, while optional trainings and learning opportunities can provide mental stimulation.


Before choosing a provider, do your homework. The simple fact of the matter is that outsourcing significant development work should not be taken lightly. Make sure that your project is appropriate and ready for offshoring, and figure out how you will manage outside workers. Question both managers and developers, get references from current clients, and do whatever you can to confirm your partner’s trustworthiness and dedication to you as a new customer.

Outsourcing can help you save money and improve your results, but if you want to be sure to benefit, you will need to put in work managing your team, and you’d better find a great partner to share the load. It may certainly look daunting, but don’t give up, because many companies just like yours have successfully made the switch!

June 2013

Edward Moe, Binary Studio