How do you minimize risks when you outsource software development?

Published on: March 05, 2021
Last updated: October 18, 2022 Read in fullscreen view

Recommended for you

01 Oct 2020 Fail fast, learn faster with Agile methodology 864
18 Oct 2020 How to use the "Knowns" and "Unknowns" technique to manage assumptions 813
14 Oct 2021 Advantages and Disadvantages of Time and Material Contract (T&M) 703
15 Oct 2022 Project-based team model for one-off and pilot software development projects 672
19 Oct 2021 Is gold plating good or bad in project management? 671
19 Oct 2021 Software development life cycles 614
28 Jul 2022 POC, Prototypes, Pilots and MVP: What's the differences? 523
08 Oct 2022 KPI - The New Leadership 514
19 Apr 2021 7 Most Common Time-Wasters For Software Development 513
18 Jul 2021 How To Ramp Up An Offshore Software Development Team Quickly 454
12 Oct 2022 14 Common Reasons Software Projects Fail (And How To Avoid Them) 444
19 Mar 2021 Selective Outsourcing of IT Functions - a new trend in business outsourcing 443
16 Dec 2021 Why outsource Python development of your project? 432
08 Feb 2022 Software Development: Fixed Cost or Opportunity Cost? 411
19 Oct 2020 The hidden costs of outsourcing software development 408
28 Dec 2021 8 types of pricing models in software development outsourcing 388
13 Oct 2021 Outsourcing Software Development: MVP, Proof of Concept (POC) and Prototyping. Which is better? 384
10 May 2021 What are things you should look for in a good IT outsourcing company? 380
03 Oct 2020 Outsourcing Your MVP Development - Streamlined Solutions for future 373
14 Dec 2021 The Top 10 Problems with Outsourcing Implementation and How to Solve Them 364
31 Oct 2021 Tips to Fail Fast With Outsourcing 359
29 Nov 2021 Memorandum of Understanding (MOU) for Partnership Agreements 354
11 Jan 2024 What are the Benefits and Limitations of Augmented Intelligence? 354
15 Aug 2021 TIGO Rate Formula - Things the partners should know 353
12 May 2021 The Real Cost Between Outsourcing IT vs In-House: A Quick Comparison 348
06 Oct 2021 Intellectual property issues with outsourcing software development 345
28 Oct 2022 Build Operate Transfer (B.O.T) Model in Software Outsourcing 340
23 Sep 2021 INFOGRAPHIC: Top 9 Software Outsourcing Mistakes 338
12 Dec 2021 Zero Sum Games Agile vs. Waterfall Project Management Methods 335
01 Sep 2019 Outsourcing Software To Vietnam: Facts, benefits and limitations 326
10 Dec 2023 Pain points of User Acceptance Testing (UAT) 322
24 Nov 2021 What is the Actual Cost of Hiring Cheap Developers? 320
06 Feb 2021 Why fail fast and learn fast? 311
22 Mar 2022 8 Mistakes Marketing Agencies or Consulting Firms Make When Outsourcing Web Development 307
03 Nov 2021 7 phases of Odoo Implementation and Development: Can they be outsourced? 300
13 Oct 2021 Why Outsourcing Software Development Services Is Gaining Traction With Non-Technical Leaders? 286
31 Dec 2021 Outsourcing Software Development to mitigate the impact of COVID-19 284
01 Jan 2023 4 New IT Outsourcing Pricing Models to consider in 2023 282
04 Oct 2021 Product Validation: The Key to Developing the Best Product Possible 280
13 Dec 2020 Move fast, fail fast, fail-safe 280
12 Oct 2021 Vietnam outsourcing path - the silk road connecting ASEAN with the developed countries (EU, US, Japan...) 279
21 Oct 2021 Advantages and Disadvantages of IT Outsourcing 278
25 Nov 2021 Low-Cost Software Development: Buy Nice or Buy Twice? 267
02 Mar 2021 Estimate the Cost of Software Development 262
04 Jan 2021 VIETNAM AS A BIG ATTRACTIVE DESTINATION IN THE FIELD OF OUTSOURCING 260
03 Nov 2022 Top questions and answers you must know before ask for software outsourcing 253
01 Mar 2022 Top 5 reasons why outsourcing to Vietnam is a smart move 252
12 Jan 2023 Top 10 Trustworthy IT Outsourcing Companies in Vietnam 250
20 Dec 2021 What is Hybrid Mobile App Development? 246
17 Feb 2022 Prioritizing Software Requirements with Kano Analysis 244
05 Jan 2022 What Outsourcing Engagement Model is Right For You? 242
04 Oct 2022 Which ERP implementation strategy is right for your business? 242
01 Jan 2023 Top 5 IT outsourcing countries in 2023 235
01 Apr 2021 IT Outsourcing to vietnam: Why It Is A Good Choice? 235
08 Oct 2024 Vietnam: The Rising Star in Global Outsourcing – Trends and Costs for 2025 235
01 Jan 2023 Top Software Development Challenges in 2023 229
21 Aug 2022 Forbes: IT Outsourcing Hotspot: Vietnam, A Small But Mighty Powerhouse 225
18 Aug 2022 What are the consequences of poor requirements with software development projects? 224
10 Mar 2021 The 7 Biggest Mistakes to Avoid Before Outsourcing a Web Development Project 219
10 May 2021 Project Audit and Second Opinion Services 218
06 Nov 2019 How to Access Software Project Size? 214
01 Jan 2023 Software Development Outsourcing Trends to Watch Out for in 2023 210
16 Mar 2021 Outsource Data Engineering Services - TIGO Streamlined Solutions 209
01 Oct 2022 Vietnam is a favorite supply of IT outsourcing services to Japan 205
10 Nov 2022 Poor Code Indicators and How to Improve Your Code? 200
04 Apr 2024 Unlock Vietnamese-Japanese outsourcing potential 199
01 Dec 2023 Laws of Project Management 195
31 Aug 2022 What are the best practices for software contract negotiations? 194
11 Mar 2023 Common Pain Points in Software Development Outsourcing 191
26 Dec 2023 Improving Meeting Effectiveness Through the Six Thinking Hats 180
21 Oct 2022 Outsourcing Billable Rate 179
02 Nov 2023 What are the pros and cons of iIT outsourcing? 175
01 Jan 2023 Why is Vietnam the Top IT Outsourcing Destination of 2023? 174
01 Mar 2023 Bug Prioritization - What are the 5 levels of priority? 171
17 Oct 2020 How Outsourcing can Improve Time Management for Better Business 169
08 Aug 2021 Why Nearshore Software Development is better than In-House Development? 167
01 Feb 2023 [InfoWorld] Is your outsourcer agile enough? 165
01 May 2024 Warren Buffett’s Golden Rule for Digital Transformation: Avoiding Tech Overload 164
13 Jan 2023 What are the Hourly Rates in Offshore Software Development? 155
09 Jan 2021 How can outsourcing enable business agility? 153
01 Jan 2024 What The World Is Flat Means to IT Outsourcing 149
03 Jan 2023 IT Outsourcing Costs: Is outsourcing really cost-effective? 147
01 May 2023 Streamline Your Business with Outsourcing 145
01 Jan 2024 Tech Partnerships: Choosing the Right Software Outsourcing Firm in Vietnam 144
01 Jan 2024 Hiring Tech Talents in Asia: An Overview of Skills, Costs, and Potential 142
05 Sep 2023 The Cold Start Problem: How to Start and Scale Network Effects 140
08 Jan 2024 Outsourcing on an As-Needed Basis 136
01 Jan 2024 12 reasons for software development outsourcing 135
17 Jan 2024 What are the benefits and challenges of using multi-sourcing or single-sourcing strategies? 134
15 Nov 2023 IT Staff Augmentation Types and the Best Choice for Your Business 133
05 Jan 2024 Easy ASANA tips & tricks for you and your team 132
01 Jan 2024 Software Outsourcing Questions for 2024 132
28 Oct 2022 Expect the unexpected in 2023 - How Outsourcing Can Help? 132
07 Nov 2024 Outsourcing Crisis Looming: Will Trump's Policies Transform the Global IT Landscape? 130
07 Nov 2022 Why Design Thinking can save the outsourcing industry 128
10 Jan 2024 Facts Chart: Reasons for outsourcing 118
06 Mar 2024 [SemRush] What Are LSI Keywords & Why They Don‘t Matter 111
09 Sep 2022 Close Collaboration and Communication Can Overcome the Challenges of Distributed Teams 109
12 Mar 2024 How do you create FOMO in software prospects? 97
06 Dec 2024 Steps For Integrating Sustainable Practices Into Business Operations 89
14 Mar 2024 Why should you opt for software localization from a professional agency? 85
02 May 2021 Outsourcing Software Development: Avoid 8 Mistakes 81
12 Aug 2024 Understanding Google Analytics in Mumbai: A Beginner's Guide 70
21 Aug 2025 Top 30 Oldest IT Outsourcing Companies in Vietnam 53
01 Jun 2025 10 Sustainable & Unique IT Outsourcing Companies in Vietnam 51

It’s impossible to outsource without taking any risk. But that’s not because outsourcing companies are bad. It’s because everything includes some inherent risk. Even if you build an in-house team of handpicked developers, you can’t guarantee that none of them will share your internal information with competitors or do something that may harm your company’s reputation. And even pros can make coding mistakes that may cost you a lot.

A big issue is also that many entrepreneurs are not very experienced in terms of software development, so they tend to trust blindly the partner they choose. However, sometimes companies only think about their profit and they don’t really care about quality.

So let’s talk about minimizing risks, not eliminating them.

The first question that comes to mind is as follows: "Can the selected company carry out the required tasks properly?" Many companies shout from the rooftops about their "first-level" technologies, capabilities, and abilities in almost everything digital, but a month later you simply get some piece of sh**code that ultimately costs you time and money.

Here are the things to look for when selecting a contractor:

Consider company size when choosing an IT outsourcing vendor

The IT vendor’s size often affects the outsourcing relationship so you should choose the company that would be the right fit for your needs. Outsourcing to large companies has many advantages such as professional management, more resources, greater capacities, broader and deeper expertise, bigger portfolio, and more. However, it does not mean that bigger scale meets the needs of every company perfectly.

A medium-size company with a smaller scope of work may lack attention from a large software development vendor. Every company wants to be treated as a very important customer (VIC). Therefore, many enterprises cooperate with medium-size companies to be their top clients and get VIP treatment. On the other hand, if the vendor is too small, there may be a lack of experience and resources. Moreover, for small companies, it is more difficult to staff a project, and it takes longer.

Company Website and activity

A well-made website is a good sign. If the company can’t even make themselves look good, how are they going to make you look good?

Another good sign is social media activity, which suggests that the company is ready to share its knowledge and to communicate with clients.

Participation in global industry events also tells you a lot about a company.

Another problem with outsourcing that dedicated teams address is high turnover. Usually, outsourcing firms are used by new graduates as a stepping stone into a fulltime career. You don’t get to work with the same team for a long time. This also brings in the problem of after sales services.

If you are looking to outsource your development work, I’d suggest looking at companies that help you hire dedicated teams of developers rather than ‘software houses’ that prioritize quantity of work and employees over quality of work delivered.

Case studies and testimonials

These should include general descriptions of their clients, the history of cooperation between them, the problems the client wanted to solve, the challenges that emerged, the solution itself, and the technology stack used.

It’s important to note that most of their clients require NDAs, so if you see at least one major customer in a portfolio, it typically means that you’re dealing with an experienced team.

Your contacts

Your colleagues may be able to tell you a lot about companies they have worked with.However, companies aren’t usually forthcoming about outsourcing their development, so it may be hard to find an advisor.

Public ratings & reviews

Check up a few outsourcing directories. I’d suggest clutch and goodfirms. The ratings there are trustworthy and based on real customers reviews, when in smaller listings companies are able to effect their own positions.

A few other things to take into an account when you finally select your dream team:

Require full project transparency, including the work schedule and the assignment of developer tasks. As a customer, you must have direct access to all project-related data and communication tools. Just note that no one will give you access to code before receiving a payment.
Make sure that all of the important things are included in the contract. Pay attention to cooperative terms; that is your first line of defense against scum and incompetence.
And get an NDA if needed.

Company exit

How long has the company been in the market? What is the average size of the projects they’ve worked on? How many employees do they have? Companies with fewer than 50 employees don’t usually have a competitive technology stack, and experienced developers prefer bigger companies. Still, small companies may be good in a certain niche.

Cooperate/align with long-term vendor on building effective management processess

Even if you hire the best engineering team, your project may fall under risk due to poor management. Apparently, managing remote and distributed teams is challenging. That is why make sure that the company you choose has established management system which would comply well with your management practices.

Nowadays, there are many proven ways to manage a remote team and make the working process productive and clear. For instance, you can use the Agile methodology and the Scrum framework. The Agile methodology provides continuous feedback as well as efficient ongoing communication with the whole team.

Scrum is based on active work of cross-functional teams within fixed-length iterations known as sprints. Regular stand-ups, sprint planning, retrospective, and other Scrum elements enable fast feedback, more precise work estimation, and fruitful teamwork. Also, it helps to swiftly react to market changes and manage the constantly changing requirements.

A A A A

{content}