Mayursinh Jadeja

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Business Risks in Offshore Software Outsourcing


3 Mins Read Time

By Mayursinh Jadeja

Offshore Software Outsourcing


Choosing Offshore Software Outsourcing becomes to be a critical decision and can potentially affect the next stages of software development.

Why do companies incline other global companies which are onsite and a few miles away? The answer to this question is pretty obvious that an exponential rise in offshore IT outsourcing due to lack of technical expertise across the country. In addition to this, the dedicated team of resources is growing constantly. The dedicated team of experts focuses on the management of defined business requirements and competencies within software services customised.

Let us understand the definition of offshore outsourcing: Offshore outsourcing is when a particular business hires a third-party service provider or an external organization for the management of software services not onsite and at a different location. It is the delivery of high-quality services with top-notch speed at low labor costs. The mechanism and functioning of IT Offshore outsourcing are unknown to many though it was patented a few decades ago as a part of business strategy. Research and analysis quote that companies by the end of this year 2021 are expected to grow around 400 billion dollars.

The factors that aspect offshore outsourcing are :

  • Geographical location - The suitability of the geographical location of your business is essential while deciding the geographical location of your outsourcing partner. The three types of outsourcing are Nearshore Outsourcing, Offshore Outsourcing, and Onshore outsourcing. The potential other aspects are demonstrated business profitability, cultural orientation, and the English language.
  • Core Business Values and Principles - Business values and principles along with financial stability is the prerequisite step before investing in a third-party outsourcing firm. Inquiry and communication aid the right decisions for your business.
  • Efficiency in terms of cost - Businesses don't just work on saving but building trust and creating brand loyalty is important. Cost calculations may sound tedious but they indirectly affect company turnovers. Time and Material Model, Fixed Price Model, Dedicated Development Team are a few financial engagement models.

What could be the business risks in Offshore Software Outsourcing?

Businesses that have opted for Offshore Software Outsourcing are neither a one-time decision nor a quick decision. Choosing Offshore Software Outsourcing becomes to be a critical decision and can potentially affect the next stages of software development.

  • Skill Shortage - The globe lacks talent especially in the technology sector. Firstly if you have outsourced your business needs and requirements the second question is the potential skillset to accomplish the tasks. These businesses face problems or challenges as a lack of skillset, expertise, or experience. It is advisable not just to outsource and drive conclusions but to minimize the talent gap. Talent-gap can be reduced by effective recruitment and talent acquisition.
  • Government Rules and Regulations - It is important for every firm working globally to adhere to the rules and regulations set by the government. Special care must be taken while working across boundaries. Knowledge of international law, cross-border trades, and GDPR (General Data Protection Regulation ) become mandatory and essential.
  • Globalization and standards - Adept knowledge of global policies and standards is a must-have when dealing with global markets.
  • Adherence of policy - As a part of application development when the by-product reaches the final stage be careful and progress tracking should be the main aim or point of focus. The policies must be aligned with the business requirements and goals. Service level agreements are to be signed at the initial planning phase of application development.

Now as we have understood the challenges and business risks in offshore software outsourcing. What very next comes to our mind is how to fix these challenges and find interim solutions to cater to the business requirements across industries in the most effective manner. Expertise professionals have some points or tips for offshore software outsourcing.

Take your time and be selective -


The decision on the choice of which third-party company to hire is a critical one is important to be taken with utmost care and sincerity. The first thought should be on the benefits and repercussions. The planning and forecasting should be aligned with the business goals and parameters set. Choosing a long-term partner saves on many aspects time, money and energy. Be selective in your approach and go for the best as it’s a one-time decision.

Stay constantly connected -


Communication and technology are ever-lasting myths that have not yet stopped evolving. Network and negotiation are the new norms. Now there are ample applications that connect people across the globe. The vital tip is to not invest much in onsite travel but connect people in a closed network. Monitor and ask for constant updates on tasks assigned. Create status trackers and go for face-to-face applications for regular operations.

Trust the offshore outsourcing partner -


Trust is the major factor in all businesses to excel in the services that they are offering. Any business connection works on trust. Take effective judgments that are suitable for your business requirements and needs. Transparency does wonders in long-term partnerships. Taking care of legal policies, operations, and collaboration form the pillars for any offshore engagement.

Build a rapport for small businesses -


Every offshore partner has people, skillset, and knowledge. Any service provider that has a robust team operates on coordination and team spirit. The rapport should be such that the teams involved in the business project be it offshore or onsite should make sure that they work in unison for the goals and mission. Few suggestions on how to build a rapport and a strong team:

  • Have clarity on business goals 
  • Know your teammates 
  • Have a persuasive approach
  • Communicate and clarify your doubts 
  • Work in harmony
  • Be vocal and share a genuine feedback

Conclusions and final thoughts:

Running through what exactly is Offshore Software Outsourcing, its perks, and setbacks we have come to the end of this article and conclude that every problem has a solution. Similarly, every business risk in offshore software risk has an effective tip to resolve the problems raised. Alignment of offshore software outsourced partner with the business principles will give your business a competitive advantage. Hire a team of expert professionals for your businesses as an outsourced service provider or partner. here are our company IT services.  

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