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6 Biggest Challenges in Outsourcing Software Development

Software Development Outsourcing Challenges

The IT outsourcing industry was estimated to be $66.5 billion in 2019 alone. It’s one of the biggest global industries—and continues to grow.

Despite the numbers, software outsourcing gets a bad reputation. Most of it stems from people equating outsourcing with finding a low-cost overseas partner for software development. Cultural differences, as well as timezone ones, can indeed pose a threat to the success of any software development process.

This is why “nearshore” outsourcing is becoming increasingly popular. Finding a software development partner near your ZIP code removes the barriers above. More importantly, it solves the talent gap challenge that most companies face: finding and employing tech talent is hard, especially when you only need a team for a single development project.

Outsourcing can cut recruiting time and costs significantly. Your software development partner already has a team in place, so you don’t have to worry about recruiting individual developers and carving up the budget to pay competitive salaries.

Still, this doesn’t mean that local software outsourcing is without challenges. Let’s take a look at some of the most common ones and their solutions.

What to Look for in an Software Development Partner

Learn how to find the right-fit partner for software development outsourcing.


6 Top Software Development Outsourcing Challenges (and Their Solutions)

1. Finding a Software Development Partner You Trust

In this context, “trust” means more than having an iron-clad MSA in place and making sure that your partner has the expertise to successfully complete the project. Trust also refers to finding someone who is willing to dig in to understand your industry, your company, your customers, and your goals.

Oftentimes, software developers have a reputation as people who live and breathe requirements. But for a software development project to be truly successful, your partner needs to take the time to learn about your business and the bigger picture in which the software needs to fit. 

The Far Reach Solution: Our team is made up of skilled, strategic product owners, software developers, and other experts with years of experience learning new businesses and helping them solve their unique problems. Whenever we take on a new project, we allocate time specifically for discovery and analysis so we know the software we build will help you meet your business goals.

2. Communication Issues

Communication is often the most cited challenge in outsourcing software development. In a way, it’s perfectly understandable: you take two companies with two different cultures and two different communication styles and you expect them to work as one. 

Slight bumps in the road and minor snafus are to be expected. However, major communication issues can seriously harm the entire project.

The Far Reach Solution: We’ve spent more than a decade perfecting a communication style that’s easily adaptable across industries and partners. Far Reach is an agile/scrum development team, which means that effective communication runs in our blood. Our processes are clear and transparent, and clients are integrated right into them to ensure streamlined communication.

3. Scope Creep/Failure to Understand the Scope of the Project

Scope challenges are often related to trust and communication, but it’s so pervasive that it deserves a line item of its own. Software projects are notorious for going over budget and beyond timelines.

Many software development companies work in silos and the developers themselves have little knowledge of the bigger picture. Without a broader view of what they’re trying to accomplish, they often don’t have enough relevant background to ask “why” or bring up ideas, which can lead to rework, unnecessary features, and overages.

The Far Reach Solution: We know the software we build doesn’t exist in a void—it’s part of a larger business strategy and it needs to fit within it. We work in small teams, where we’re always up to date on each others’ progress and on the project as a whole. Our software development process doesn’t involve fixed scopes—we work in priority order, in iterations, to build what’s most important, even as the project changes.

4. Project Management

Typically, your software development partner is in charge of project management. Issues in this area arise when there is a lack of communication, mismatched expectations, and ill-defined processes.

A good project management process should help the team manage both the short-term priorities and the long-term ideas. There should be clear plans for the work that’s happening in upcoming sprints and what’s needed to get that work done.

The Far Reach Solution: We use the agile/scrum methodology, paired with centralized project management tools, to ensure work is documented, progress is clearly tracked, and issues are caught and addressed as early as possible.

5. Project Delays

Outsourced software development projects rarely meet their initial deadlines. This happens for two primary reasons:

  • The initial expectations are unrealistic

  • The project keeps changing (new features are added, existing features are changed, and so on)

In a way, this is normal. Things change rapidly and when your industry or your business makes a shift, you want that to be reflected in the way your software works. However, those shifts can cause unwanted delays. 

The Far Reach Solution: We work closely with our clients to set realistic initial expectations. While it might be easier to promise that everything can be done within a month, we prefer to give fair and honest estimates. 

Delays caused by changes in the project requirements are harder to mitigate. However, starting with an MVP and working in iterations, we anticipate that changes will happen and account for them ahead of time. Instead of launching with a full product 18 months down the road, you start with an MVP that’s functional and can start to optimize your business processes sooner rather than later.

6. Project Ownership Challenges

Who is responsible for what in outsourced software projects? When clear guidelines and expectations aren’t set from the get-go, you get a lot of back and forth between the client and the team about who’s in charge of what.

As the project evolves, there are a lot of small decisions with a big impact to be made. Initial scope definition and requirement gathering are crucial for the success of any project, but so is on-going, bi-directional communication—a fact that some outsourced development partners seem to forget.

The Far Reach Solution: Our team makeup includes an in-house product owner as well as a client product owner, each of whom has clearly defined responsibilities. It may seem redundant to have two people with the same role for a single project, but our decades of experience have taught us that this setup ensures ownership of the project on both sides and helps avoid miscommunication. 


Software development outsourcing isn’t without its challenges. But then again, what business endeavor is?

All of the challenges above (as well as the countless others that haven’t been listed here) can be avoided by choosing a partner that’s right for your business. Look for small teams of experienced software developers that take the time to understand your business and your goals before writing a single line of code. 

Have you experienced the challenges of outsourcing software development? Or maybe you’re looking to outsource for the first time. Either way, reach out!