icon/copy-url

favicon-32x32

logo-2x

IT Consulting | Outsourcing | Vietnam

Outsourcing IT services is a well-known practice that involves hiring a third-party vendor to handle software development projects. The idea of outsourcing services has been around since the 1990s and has proven to provide many advantages, especially when it comes to time and cost savings. That said, we can’t deny the risks of outsourcing, especially when you don’t work with the right partner. Fortunately, there are ways to deal with such risks to prevent failed projects and further distress.

Read on to learn more about the risks of outsourcing to watch out for and how to deal with them.

## Top 8 Risks of Outsourcing

As mentioned, there are numerous advantages to outsourcing, from gaining access to top talents to the ability to reduce costs in the long run. In general, outsourcing is a relatively hassle-free process and you can experience a smoothly-run project throughout the partnership. However, it’s still crucial to be aware of the risks of outsourcing to prepare ahead and deal with it promptly if it does happen. 

### **1. Uncontrolled Project Execution**

No one wants to feel a lack of control when handling huge software development projects. However, outsourcing IT services will mean handing over your project to an IT partner for them to take care of. 

This can pose the risk of delays and poor results from excessively overmanaging your project or letting go of it completely for your chosen IT partner to handle on their own. 

The solution? Planning with your vendor to keep everything under control.

Before you even find the right IT service provider, you must list down the tasks and responsibilities you will hand over to them. Moreover, determine how hands-on you would like to be throughout the software development project. 

Start with a rough plan first, which includes your expected processes and results.

Once you have chosen an IT partner, that is when you can make the plan more detailed. Review your rough plans and put everything into writing, from the tasks you need done to the expected deadline for every part of the project.

Most professional IT vendors will provide a Work Breakdown Structure for you to review. This is a document where the software development project is divided into smaller parts, so expectations will be set early on. 

Besides the tasks and responsibilities, you will want to discuss ways that the IT partner will update you on the project timeline. This can be through regular meetings, reports, email updates, calls, and the like. This will also help you manage your expectations and keep you in the loop with what’s happening, rather than risking a failed partnership in the future.
 

### **2. Contract Disagreements**

A written and signed agreement between both parties is essential to ensure that the terms and obligations are met. However, poorly written contracts can leave room for misinterpretation and failed outsourcing efforts.

For instance, companies can set unreasonable expectations, especially when tasks aren’t discussed beforehand. As a result, you may be left disappointed with the process or results because your IT vendor did not perform responsibilities that weren’t specified in the contract. 

Similar to the first risk of outsourcing, you will want to address every interpretation of your project tasks and processes. That way, you eradicate the risk of disagreements over contractual terms, features, and clauses. When discussing the contract or going through the negotiation process, make sure both parties, including the decision-makers and relevant team members, are part of the meeting before the contract signing.

Because task interpretations can widely vary, team members should be encouraged to speak up or ask questions on every matter that may sound vague or complicated. While this doesn’t mean you will be problem-free, it will at least reduce the risk of preventable conflicts or misunderstandings.
 

### **3. Hidden Costs**

Another risk of outsourcing is the hidden costs aren’t considered. There are unforeseen circumstances that arise, such as unplanned software upgrades, extra services, unexpected troubleshooting, and other expenses that weren’t mentioned previously.

To prevent going over budget from hidden expenses, you must request a detailed estimation including assumptions. 

For those who aren’t tech-savvy, seek advice from an advisor with relevant experience. An outside expert will be able to see the bigger picture, discussing expenses you might have missed.

Look into all the estimates your potential IT partner provided in their quotation and check what payment terms they prefer. They may want to opt for any of the following:

Fixed Price
Dedicated teams on monthly basis
Dedicated teams on hourly basis

You may even want to consider using a time tracking software to check how much overtime your IT partner clocked in. It’s recommended to sign a Service Level Agreement and be aware of all the costs related to hosting, team visits, equipment, and more. 
 

### **4. Not Choosing the Right Vendor**

Just like availing any service, companies will run the risk of running into unreputable IT vendors. This can result in subpar quality, failed deadlines, security violations, or even losing clients. 

It all starts with a background check and getting the full scope of the software development company’s background, experience, and past projects. Do this by going through their portfolio and reading up on customer testimonials.

Don’t stop there. If you still feel like you haven’t found the right vendor for you yet, you may also ask around within your network, review platforms, and the outsourcing community for references. It’s also worth checking reviews from the software development company’s partners, ensuring that they are experienced with a decent reputation.
 

### **5. Poor communication**

The way you communicate with your IT partner can make or break the project’s success. When you or your IT partner do not take enough time or effort to establish effective communication, then you can run into problems that could have been prevented. 

Besides this, not sharing important information, lack of structure, or gaps between crucial parts in the software development process can result in members from both parties pulling the project in opposite directions. 

The best solution is to follow a more structured approach. This will help you and your IT partner see the entire process and everyone’s responsibilities. Begin doing this by building a hierarchy and different levels of communication involving specific people working on the same tasks or issues.

All details must be discussed throughout the process as well. Do this by scheduling progress reviews and having frequent, multi-formatted meetings to determine any issues as soon as possible to prevent them from worsening.

Another effective way to prevent miscommunication is to ensure that your chosen IT partner receives all the information about your company and the project from the beginning. They need to know all of your needs and demands for them to work properly.

Before the process begins, provide complete documentation, including your company’s internal strategies, databases, and guides. If possible, show them your work process and speak with the team members who will be involved. 

### **6. Security and Legal Issues**

One of the most important issues of outsourcing IT services is a security breach, which can involve cyberattacks or loss of sensitive information.

This might sound scary but it’s an easily preventable risk by ensuring you choose an IT vendor that complies with policies and regulations. 

They must be extra diligent about following regulations that ensure data protection, going a step further with non-disclosure agreements and specialized software to protect your information. 

### **7. Language and Cultural Barriers**

You may come across language and culture barriers, especially when outsourcing IT services from the other side of the world. You must practice your due diligence and study the cultural differences, along with the local laws and regulations that may influence contracts. 

There’s nothing to be afraid of when it comes to cultural differences. While other countries would have varied work styles and boundaries, both parties can have discussions and mutual agreements before the project starts.
You will also want to set standards for English language proficiency to avoid miscommunications in the long run. Choose a reputable IT partner with a good level of English proficiency, which one can check through audio or video calls. 

### **8. Mismanagement of Remote Teams**

Many companies choose outsourcing companies from other countries, which can pose a risk of mismanagement of the remote team. 

This ties back to miscommunication issues, as handling an offshore team will be different compared to managing an in-house team. To prevent mismanagement, you must first be aware of the time zones and determine overlapping hours when all team members can be reachable. Use those times to deal with all the pressing issues and receive updates on the project's progress.

Another potential issue when handling a remote team is the need for more feedback. You must step up by scheduling regular check-ins and giving praise when things are going well. This can boost your team’s morale to keep them going.

## Conclusion

As long as you plan everything out carefully, it’s easy to mitigate the risks of outsourcing IT services. It all begins with conducting proper research into finding the best IT partner that aligns with your business goals and values to avoid half of the risks and issues mentioned in our article.

 ![](https://res.cloudinary.com/innomizetech/image/upload/v1699001949/production/riskofoutsourcing_3c74aa9359.jpg) 

 
If you’re still on the lookout for the right partner, we at Innomize are here to bring our expertise and support for your software development needs. We are the leading software outsourcing company in Vietnam ready to provide top-notch solutions based on the latest practices. Whether you need IT consulting, Software Development or Cloud Computing, our team can support and bring its expertise.

Contact us today and let’s discuss your project needs.