Top 10 Reasons Outsourcing Product Development Fails and How to Avoid Them

First, let me ask you this: why even bother with outsourcing when you have skilled experts in your own team?

The wrong attitude towards outsourcing could be the primal reason your outsourced product development fails. To avoid failing, you first need to get into the right frame of mind for outsourcing. And that means you need to be convinced that outsourcing a particular task is the most feasible option, all factors considered, before you actually outsource it.

So, what exactly is outsourcing, and why do you need to consider outsourcing projects or tasks to an external agent when you already have an internal team of talented professionals?

Simply put, outsourcing is a term used to refer to the process of delegating your task to an external entity, which will then complete the job in exchange for payment within the stipulated deadline. You may decide to outsource for a multitude of reasons, the top among which is getting extremely talented professionals to work with you at lower costs than actually hiring them.

The first reason that would prompt you to look into outsourcing is pretty simple. Maybe your core team doesn’t have the skill set to tackle a niche project task. What if you have a popular restaurant and you want to scale up and expand your online presence?

You would need a mobile application, and you would need to outsource it to a reliable app development company for a great finished product. I mean, you can’t expect passionate chefs to suddenly pick up coding now, can you?

But what if your core team can pick up the required skills to finish off the task you’re planning to outsource? With the right training and efforts, you can definitely enhance your team’s skill set and have them handle the tasks you were planning to outsource, right?

Now you need to consider time and money.

Sometimes, it’s best to outsource something because there is a time constraint in place. Other times, it’s pointless to spend a lot of time on a task that is not repetitive in nature. Why bother investing in the time and effort (not to mention money) required to train your team to pick up a skill needed to finish a one-time task for your business?

If you’re looking at just the financial aspects of outsourcing, anyone can tell you that it is much cheaper. It comes with next to zero financial obligations to the third party you outsource to (other than reimbursing them for their work, of course). Think about it.

You get access to the best and brightest around the globe without having to put them on your permanent payroll. No health insurance coverages, no pension funds, no paid vacation leaves. And once you are done with the contract, you need not worry about notice periods and exit procedures. You pay for a service, you get the service, no strings attached.

The advantages of outsourcing are numerous. You can improve the productivity of your internal team by making them more focused on their routine tasks without adding more new tasks for them to figure out. You and your team can focus on the main prize: growing your business with the right planning and strategies.

You can prioritise and delegate the less prioritised tasks while keeping your internal resources engaged with the most important tasks, such as planning and strategising to grow your business. The list goes on.

If you are convinced that outsourcing selected tasks is a good idea, you also need to know how to do it the right way to avoid some common mishaps faced by most while outsourcing.

Read on to understand the top 10 reasons outsourcing your product development fails and how you can avoid these costly mistakes.

1. You Did Not Find the Right Team

Failure to find the right team to outsource to will obviously result in the failure of your project, unless your internal team manages to salvage it somehow. While finding the right team to handle your project, quality over quantity should be your first priority. Do not look at it from a purely monetary standpoint. Hiring a team just because they are cheaper will help you save some money today, but you will lose much more than just a tonne of money in the long run.

You can ensure you hire the right team by checking out the portfolios of prospective candidates and going over their previous work. Do they adhere to your usual standard of work? If so, and only if so, go over their references and make sure they are in order. It is also advisable to assign them a simple task to assess the quality of their outputs.

Also Read: How to Find the Right Outsourcing Partner for Your Startup.

2. You Were Not Sure of Your Project Requirements

If you do not know exactly what you need, then put a pin in that project, irrespective of whether or not you are outsourcing it. First, you need to be clear with your business needs and project requirements so that you can communicate the same to your team in clear, concise words.

You can’t outsource a task and expect to wing it as and when required unless you are willing to take the associated risks. Get a clear idea of what you want, more importantly,

like,

What you need, for your business. What are your expectations of the team you outsource to in terms of your project? What does your final product look like? What are the features and functionalities that you would like to incorporate in your product? Only once you have answers to all the important questions regarding your product development should you start your hiring process.

Check out How to Optimise Your Team for Business Growth.

3. You Did Not Make Your Scope of Work Clear Enough

The scope of work is usually discussed before a project commences in full swing and the project planning is done accordingly. If you do not make the scope of your work clear to the team you outsource your project development to, it will raise a lot of problems as the project progresses. You cannot simply add more tasks after signing a contract, as this will mean additional billable hours.

What you can do is to make sure that your scope of work is well-defined and properly articulated to the external team. This will let the team know what you need out of the product development process and improve the overall efficiency of the work.

4. You Forgot to Clarify Roles

You know your part. You are the project owner, and you have outsourced it. But what about the other stakeholders? Is everyone aware of their individual roles as well as the collective responsibilities they are expected to shoulder?

If not, this will lead to a lot of unnecessary confusion, which in turn will stall the project delivery. Specifying roles clearly is crucial when you’re outsourcing work, and your team is not in the same physical workspace as you.

You can do this by setting up a kick-off meeting for starters. Ensure that everyone is aware of their own roles and the roles of the other team members. You can give a brief overview of the designations of everyone involved as well and the tasks they handle. Once these roles are defined, you will know who the go-to person is for a specific project task, which will avoid confusion as the project progresses.

5. You Did Not Plan Smart

As always, planning plays an important role in the success or failure of your product development. It becomes even more crucial to plan well when there are third parties involved.

Without proper planning, your project does not have a proper direction that the team can head in and this will result in chaos and confusion at one point or the other.

You can avoid this mistake only with meticulous planning. Plan down to the last detail, and set realistic goals that are achievable in the timeframes you set. You can even draw up a project roadmap that can be followed by your team to facilitate better coordination and seamless execution of the project without too many hiccups.

Read the Top 11 Time Management Tips for Entrepreneurs to Boost Their Productivity.

6. You Were Vague About Deadlines

Playing fast and loose with deadlines is a big no-no in any scenario, not just outsourcing. There should be no ballpark figures and abstract timelines when it comes to serious project deliveries. Without rigid deadlines (after leaving buffer room while planning), there is no motivation to finish your project. You are creating an air of unimportance around your project when you don’t specify proper deadlines.

Make sure you steer clear of this mistake while outsourcing your product development and set out proper deadlines to show how serious you are about your project. Map out all the milestones that will come up with all the parties involved and make sure everyone knows when the project deliveries are expected.

7. You Did Not Facilitate Effective Communication

Communication is key to guiding any project to success, be it an internal one or an outsourced one. Good communication is especially crucial in the case of an outsourced project as there will be geographical differences between the teammates.

Without clear communication, your project is doomed to fail from the start. How else will you put across thoughts and ideas and improve the product based on feedback?

You need to introduce all stakeholders and the externally outsourced team and make sure that everyone is comfortable. Everyone at the table will be expected to work closely together till the project completion, so make sure they are at ease with each other by setting up an interactive and engaging space.

This will ensure clear and effective communication between all your stakeholders and the outsourced team and set the tone for future communication.

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8. You Did Not Track Your Project Progress Properly

While outsourcing a product development project, it might be hard to stay connected every minute of the day as you work from different places. It is up to you to figure out a way to keep yourself in the loop. Not tracking your project progress with a keen eye can land you in hot water some time down the lane.

At the same time, you must avoid micromanaging your team as it will hamper their ability to grow as individuals and as a team. Micromanaging has also been shown to create stressful working environments, which in turn brings down your team’s morale.

You can ensure that a lack of continuous assessment is not a reason for your project to fail by organising regular progress update meetings to track the team’s effectiveness. Implement strategies to make your team accountable for their work and make sure that all milestones are met.

Even if you choose to stay agile (which we highly recommend), make sure that each stage of the product development is completed in a timely fashion. You can always go back and make tweaks as and when required.

9. You Did Not Take Feedback from Your Stakeholders

Do not outsource wantonly. Hold discussions with your core team before you outsource your product development. Ask them what they can handle and what they can’t, and take their needs into consideration as well before outsourcing. After all, they are industry experts, and they will be able to help you decide when to outsource and when not to.

It is up to you to give those involved in your product development a voice, including the team you outsource to. The bigger your talent pool, the more ideas and perspectives you are exposed to. Taking feedback from all your stakeholders will also improve your chances of innovating your final product. Remember, there is no “I” in “team,” and you are part of a team.

10. You Did Not Give Equal Importance to the Outsourced Team

Not giving your outsourced team enough credit need not result in a clear failure of your project. The team will hand in a minimum viable product as their professional reputation depends on successful project deliveries. But in a way, failing to get the best work for your efforts is also a type of failure.

Do not make your outsourced team feel less important than your core team just because you don’t foot their insurance premiums. They are also integral to your product development and ultimately play a part in the business journey of your company.

You must treat your external team as equals and be considerate of their schedules as well. If any internal conflict arises, be ready to resolve them immediately and without bias. You can make your outsourced team put forth their best work only if you instil a sense of loyalty in them.

Conclusion

The success or failure of an outsourced product development project ultimately depends on the agency you outsource your project to and the rapport that you build with them. Your final product will be highly reliant on the expertise, determination, creativity, and passion of the team you hire to outsource your project, so make sure you get the industry best like NeoITO if you’re looking to develop tech products successfully.

Suggested Read: A Complete Guide To Outsourcing Mobile App Development