10 Reasons Why Offshore Outsourcing Projects Fail, and How to Avoid Making the Same Mistakes


Offshore outsourcing projects fail for many different reasons. There is no specific reason for its failure as it depends on a lot of variables. Outsourcing software development, web design and website maintenance is booming in the age of globalization. This exponential growth of offshore development also brings with it a lot of project failures. Offshore development is still considered to be in its early stage of stabilization.

This cross-cultural offshore industry has some negative aftermath that is to be considered wisely. Not all companies will be successful with an offshore outsourcing project. With the headlines of outsourcing success, there were a lot of failures that were overshadowed by outsourcing success. We will discuss the top ten reasons for the failure and how we can avoid making the same mistakes.

  1. Bargain Shopping – Most companies will first want the best quality from the lowest cost service provider. A company must not select a service provider on cost alone; it should also take into consideration the people, processes, and technology. A company should check the track record of the service provider before finalizing the deal.
  2. Lack of Communication – Outsourcing software development requires a lot of internal communication for smooth operation. Offshore development will rarely have any on site monitoring, so it is vital to have clear communication daily
  3. Offshore Destination Security – Some countries on the global front do not havepolitical & economical stability. There are high security threats that can overthrow any governing laws in a matter of just a few days. If your service provider does not have proper security measures then a company faces high risk of project failure.
  4. Inadequate Planning & Expectation Matrix – Offshore development will fail if a company does not have a proper plan in place in order to manage processes. Also the service provider should know the expectation matrix on quality and timeline procedure
  5. Transition Management – Test projects are not a clear indication of how your offshore development will actually be delivered. Focus on detailed reviews, workflows, and functions.
  6. Cultural Factors – Offshore development projects are bound to run into misunderstanding or language interpretation problem. Select a vendor who is well balanced in his professional attitude.
  7. Complex Contracts – Simple and short contracts preferably for a year will serve you best. Contracts that are complex in litigation will create dissatisfaction over a long period of time.
  8. Support Availability – Offshore development requires a continuous online support through out the project duration. Without adequate support, it will be difficult to resolve the problems with accuracy.
  9. Infrastructure – Outsourcing software development will fail without the support of ideal infrastructure that is equipped with the latest technological instruments.
  10. Disaster Recovery – A service provider without a strong disaster recovery plan will jeopardize your entire project. In case of crisis, he must be able to store and back up your project data for an uninterrupted project delivery.

Offshore development will turn into a disaster if the above-mentioned guidelines are neglected. Companies must avoid making these same mistakes in order to successfully outsource its project.

Nhung Nguyen is the managing director of Orient Software (
http://www.orientsoftware.net”>http://www.orientsoftware.net ) – the leading outsourcing company in Vietnam.

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