3 Common reasons why outsourced software projects fail
With the ever increasing demand for affordable software products, it is easy to understand why outsourced software development companies are everywhere these days. Because these software development firms have become a dime a dozen, it is not an easy task to find one that can present true value to your business.
It is said that about 80% of software projects fail.
Your odds become even worse if you aren’t careful enough while selecting your software development outsourcing provider. If you give your project to a development team that is unable or unwilling to understand your specific business requirements, the final product will most likely never reach the deployment stage.
In this article, we will discuss some of the most common reasons why outsourced software development projects end up failing, as well as share some advice on how to avoid wasting precious resources on a software project that is actually doomed from the start.
1. The lowest price doesn’t mean the price is right.
If a software company’s main selling point lies in its low hourly rates, you might want to turn the other way. Most businesses that decide to outsource their software development learn this the hard way.
It is understandable why many startups and entrepreneurs choose the lowest bidder in these situations. By nature, they are generally financially limited, especially in their early stages. However, this decision eventually leads to a more costly development process, due to the lack of quality.
A code-base built with poor-quality code leads to the final product being inoperative, forcing you to transfer your project from one development team to another. The delays in development will severely cut into your budget, and result in a much longer time-to-market as well.
I know that an early-stage business wants to grab any opportunity to save money, but price should be one of the least important factors in choosing a software development agency. In stead, look for companies that:
- work by following a well-defined methodology and strategy,
- mostly receive positive client reviews,
- divide the whole project into shorter work periods, also known as sprints,
- work by hourly rates (avoid fixed bidders if possible),
- provide frequent live product demonstrations,
- communicate on a daily basis and
- possess high-level English language skills.
Choosing these qualities over low prices should help to ensure higher product quality and avoid miscommunication during development.
If you find a software agency that received overwhelmingly positive reviews from their former clients, it is still crucial to look at the full scope of their work, because, for example, the fact that they are outstanding in installing WordPress sites doesn’t mean that they can handle custom-built Java application development as well. If they have already proven that they can successfully complete projects for different industries using a wide range of technologies, they can probably be trusted to handle most challenges related to custom software development.
I think that the concept of a fixed bid is flawed, because it is rarely possible to give an accurate cost estimate based on an initial list of requirements. For making an offer, you would require very detailed specifications for the project. What usually happens is that agencies try to make a very attractive fixed offer based on a superficial project description, which is very far from realistic. These types of offers are really based on the misunderstanding of product requirements, and companies only end up underestimating the actual costs of development.
When they finally run out of budget, the development team will either quit the project, or will be forced to continue “working” on it for free. This results in a low-quality and often rushed or unfinished final product, that has no chance of surviving on the market. Another possible outcome is that the product owner simply shuts down development after he/she realizes that it is impossible to develop all of the required product functions at the initially estimated costs. The product either never gets finished, or another development team has to pick it up and put it back on track, which requires additional time and resources.
It is understandable why company decision makers would prefer to know the full costs of development beforehand, but for reasons listed above these types of projects rarely have a happy ending. Some development agencies have also been known to rush fixed bid projects in order to finish them ahead of schedule, and take the money without doing the actual work. This also results in very poor quality, and a rushed and often inoperative finished product.
Hourly rates, paired with shorter work periods let you have a more complete overview of the work that you are paying for. If the agency that you hired can’t live up to your requirements, you can take your project elsewhere with much less time and money lost.
2. A breakdown in communication can kill a project by itself.
The need for frequent communication and transparency in software development outsourcing cannot be emphasized enough. Developers must work closely together with their clients to ensure that their ideas and requirements are clearly passed onto the development team. If the software company you are working with isn’t putting an effort into clarifying your requirements throughout the planning, development and deployment phases, you are going to have a problem.
Agile development is becoming an industry standard, because it provides increased transparency an continuous feedback. Software companies that follow Agile Scrum or Kanban methodologies offer more efficient and face-to-face communication to their clients. This is the main reason why we chose the Agile approach ourselves.
You can also take some precautions here by requesting quality indicator metrics frequently, both for quality assurance and code quality. These metrics can prove useful even if you are unable to make sense of them at the start of the development project. You can either learn how to interpret them later, or show them to an outside expert.
3. A plan that can’t change with the environment quickly becomes irrelevant.
Developing the final product can easily take months or even years. Predictive development methods (such as the Waterfall method for example) lock down the requirements from the very beginning, making it difficult to change them later. While it is not always the case, these projects often result in a product that is very different from what the client and the market really requires.
Flexibility is key throughout the software development process. We find that the Agile project management model works wonders here as well. This development approach allows the software to evolve in response to changes in business environment and market requirements.
However, throwing in the word “Agile” doesn’t guarantee that the software developers actually know what they are doing. It is not the perfect methodology for every business, so make sure that the people at the development agency truly understand your specific requirements. The right team will know what is best for your project.
Through our everyday work with startups and entrepreneurs around the world that choose to outsource their software development, we encounter too many rushed and unfinished products that require weeks and weeks of refactoring work just to make it to the deployment phase.
When you choose your software development service provider, pay close attention to how they communicate with their potential and former clients, and what their clients have to say about them. Try to make sure that they are willing to go out of their way to understand and meet your specific business requirements. Always aim to find a highly methodical team that focuses on what works for you instead of only concentrating on what works for them.
If you encounter similar problems with your software development processes, don’t hesitate to contact us at RabIT software engineering, and tell us about your project.