Software Development Outsourcing Hub

Chapter 7: How to Solve Common Problems in IT Outsourcing Cooperation

Paavo Pauklin
February 15, 2024

Building a strong IT outsourcing relationship can be a daunting task. Yet, achieving seamless cooperation is often the key to success. 

Previously, we took a deep-dive into how to manage a software outsourcing team. Now we’ll flag some common hurdles in IT relationships that are important to prevent and address.

Here we’ve summarized the most urgent strategies to limit the risks of outsourcing. We’ll go over deal breakers, mistakes and more, so you can get results-driven collaboration.

Understanding the Landscape of Cooperation Problems

(Source: SmallBizClub)

Issues with cooperation typically originate from a broken partnership. Some problems that can cause irrevocable differences include:

  • Communication barriers
  • Unclear project scope
  • Misaligned expectations
  • Cultural differences
  • Undefined security protocols
  • Lack of quality control

Ultimately, when you don’t discuss certain key topics in advance, it can be difficult to correct as you go. A “wait and see” approach can lead to serious delays, extra costs and quality problems. That’s why it’s so vital to plan and define your relationship as much as possible.  

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Proactive Strategies for Cooperative Problem-Solving

Ideally, you should address cooperation challenges head-on. A proactive approach early in the project lets you create a shared framework. In general, key strategies for avoiding friction include:

  • Doing due diligence about your partner
  • Creating open communication lines
  • Forming a positive work culture
  • Crafting a detailed project scope, change management protocols and exit plan
  • Defining an end-to-end timeline (including discovery, QA and testing, maintenance, etc.)
  • Identifying potential project risks in advance
  • Focusing on constant revision to protocols as needed

Below, we’ll outline specific ways to implement these types of strategies. Overall, staying proactive and transparent can smooth over any hiccups along the way. 

Possible Deal Breakers in Software Development Outsourcing

Deal breakers in software outsourcing are those that lead to major problems. For example, going over-budget, facing delays or losing IP/data could be devastating. Understanding these deal breakers can help you prevent them in the first place.

Scope Creep and Changing Requirements

IT projects are known to be dynamic. Even so, excessive changes and additions lead to both extra costs and delays. 

Avoid scope creep by realistically estimating your project scope. Do initial market research, interview stakeholders and define your priorities upfront. Be sure to have well-defined change management too, so that it’s easy to request new or revised features. 

Inadequate Communication and Feedback

Communication processes should be highly detailed. Include regular check-ins, top PM tools and clear KPIs in your plan. Define your feedback loops, including the schedule and stakeholders who should be involved. 

Foster a collaborative work environment as well. Regardless of cultural backgrounds, your team members should feel comfortable and valued. Empower your developers with clear expectations, autonomy and a positive company culture. 

High Risk Levels for IP and Security

Your partnership should cover all bases of your IT health. If you haven’t discussed IP and security in-depth, you may face critical issues down the road. 

Ensure your business is protected through rigorous security protocols and disaster plans. You should also clarify IP ownership through NDAs and other paperwork. Aligning expectations for these high-risk areas will reduce your liability long-term.

Poor Work Quality

Finally, one of the worst outcomes of IT outsourcing is a low-quality end product. Elevate the caliber of your project by:

  • Including a discovery phase 
  • Aligning expectations for quality standards early
  • Ensuring ongoing agile feedback loops
  • Scheduling QA and testing during the project

Doing so will get your IT teams on the same page and ensure regular quality checks during the project. 

Biggest Mistakes to Avoid When Outsourcing Software Development

In addition to major deal breakers, prevent typical mistakes during your project. Businesses just getting started with IT outsourcing tend to fall into these traps. Here are top mistakes to keep in mind as you plan your project. 

Neglecting Due Diligence in Partner Selection

Don’t rush into hiring a software partner. Do your due diligence and research every aspect of your potential provider. The initial process should stay internal, so you know full project parameters first.

Once you understand your requirements, a robust partner selection process should include:

  • Verified portfolio and experience
  • Aligned technical specializations and resources
  • Realistic budgeting with a focus on value
  • Shared business ethics and work styles
  • Well-defined team processes and methods
  • In-depth interviews with various team members

In general, glean as much information as possible to make the best decision for your business. 

Overlooking Cultural Sensitivities

Diversity is good for business, though you should stay mindful of cultural sensitivities. Align your team language and cultural differences with strong management. For example, clarify expectations early, create documentation and unify teams with shared goals. In case of time zone differences, set up asynchronous communication channels. And when in doubt, over-communicate to foster culturally aware and transparent teams.

Ignoring the Human Element: Team Dynamics and Morale

Healthy team dynamics are vital to project success. A positive environment does wonders for collaboration, productivity and overall work quality. 

Keep up morale by integrating teams from the start. Offer robust onboarding and knowledge transfer. Set up communication channels and tools to maximize efforts. Have talented managers on hand to motivate teams. Schedule daily/weekly check-ins to discuss any issues. And to strengthen ties, don’t forget to do team-building exercises, as needed. 

Strategies to Plan an Amicable Exit With Your IT Partner

Keep in mind that 50% of outsourcing relationships end within five years. That’s why you should plan for cooperation coming to an end. Doing so will safeguard your business and limit risks. 

Early Warning Signs of an Impending Split

Knowing when it’s time to say goodbye can be difficult. If you recognize any of these red flags, it’s likely time to split with your partner soon:

  • A poor-quality software product
  • Missed deadlines and project delays
  • Extra costs and/or lost revenue
  • Communication breakdowns (i.e. slow turnarounds, vague responses, etc.)
  • A lack of shared values (i.e. transparency)
  • Overall distrust and lack of enthusiasm

It’s also possible that you have a good relationship with your partner, but are looking for something new. For example, you may need a different type of expertise or a fresh perspective to stay innovative. Either way, if you notice these early signs, be proactive and start looking into how you might part ways. 

Contractual and Legal Considerations

Shield your business from legal disputes by understanding your obligations upfront. Check with your stakeholders to evaluate the risks, which may involve:

  • Contractual constraints (i.e. exit clauses)
  • Potential costs/losses
  • Intellectual property rights
  • Transition plans
  • Asset recovery
  • Impacts on current projects

From here, you can create an exit plan that minimizes your losses and enables your business to get back on track.

Smooth Transition and Knowledge Transfer

Protect your business continuity with a meticulous transition plan. Define how you will handle knowledge transfer, asset recovery, ongoing maintenance and more. 

During this stage, it’s a good idea to hire a transition manager. Communicate regularly with stakeholders so that nobody feels in the dark. As part of this process, undergo ongoing monitoring of your exit plan and weekly reports. Depending on the plan’s details, anticipate getting extra help or overtime to cover needs. 

Getting Closure With a Partnership

Wrapping up a partnership can’t be done overnight. You may need to spend some time with closing activities. For example, conduct exit surveys in order to determine what you could do better next time. Your staff may also appreciate getting emotional closure through a wrap-up event. No matter how you parted with your IT partner, try to stay positive and build bridges. 

Successfully Collaborate With Your IT Teams Today

Successful cooperation is at the heart of any software project. Use our strategies to build strong rapport and limit the risks of outsourcing. By understanding common mistakes, you can set up fail-safes to keep your business on track. 

Partner selection is a critical part of this process. As you search for high-potential providers, get in touch with Netcorp. We emphasize trust, transparency and technical expertise in all our projects. Learn more about how our seasoned teams create world-class products today.

How to Solve Common Problems in Cooperation
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Paavo Pauklin
Executive Board Member

Paavo Pauklin is a renowned consultant and thought leader in software development outsourcing with a decade of experience. Authoring dozens of insightful blog posts and the guidebook "How to Succeed with Software Development Outsourcing," he is a frequent speaker at industry conferences. Paavo hosts two influential video podcasts: “Everybody needs developers” and “Tech explained to managers in 3 minutes.” Through his extensive training sessions with organizations such as the Finnish Association of Software Companies and Estonian IT Companies Association, he's helped numerous businesses strategize, train internal teams, and find dependable outsourcing partners. His expertise offers a reliable compass for anyone navigating the world of software outsourcing.

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