As of 2020, over 30,000 Australian companies actively outsource portions of their operations to offshore teams. These include countries like India and the Philippines. And one of the most popular services being outsourced is software development.
Outsourcing platforms like Freelancer, Fiverr, and Upwork have made it easy for talented individuals to connect with businesses in Australia, the US, and Europe. And many business owners directly engage with highly-skilled cheap labour on these platforms to get the job done.
If you are running a small business and need something done quickly like a simple logo, business card, or a basic website, you may be able to get the service that you need at a low cost by working with freelancers on any of these websites. In fact, many business owners even use these platforms to hire freelancers to build their websites, do SEO, or build application software for their businesses.
The question is: is that smart? While outsourcing may seem cost-effective at first glance, it may result in much greater costs later on, especially for software development. In this blog post, we will go through some of the risks and cons your business faces by directly outsourcing your software development.
Cyber security is always a major concern for businesses, and even more so now, where everything is interconnected. A data breach for any business could be fatal for its reputation, or -- at the least -- very expensive. In Australia, for instance, the Privacy Legislation Amendment Bill 2022 now enforces data breach penalties of up to AU$50 million from AU$2.22 million.
So when you decide to get your software developed by a solo developer or a small team overseas, you’re opening your business up to vulnerabilities. You need to ask yourself these questions:
Sure, you might think you’ll find great people with upstanding ethical values, but at the end of the day, will they have the right system to keep your data safe? Cybersecurity must be geared towards fostering a chain of trust, where you engage your vendor to make sure they have the same adequate security system as your security architecture. Additionally, your security is only as good as its weakest link. And the reality is, your freelance developer -- in most cases -- will be your organisation’s weakest link.
In stark contrast, working with a good software development company can help mitigate security risks. A good software development company like iVersion has the right IT system to secure developer machines, run antivirus programmes and disk encryption, and protect your data.
Signing a simple NDA (Non-Disclosure Agreement) or IP (Intellectual Property) agreement on Fiverr or Upwork does not guarantee anything. If you have a unique idea for software or IP, you will need to think about protecting your IP if you decide to hire a freelancer for software development.
Again, the security systems -- including employee access management, audit, and data protection -- that they have in place will play a major role in the resulting protection they can extend to your source code and ideas. In fact, their physical security also needs to be examined: how is their office secured from theft?
More importantly, if your hired developer breaches the IP agreement, how would you prosecute them? What will be the legal complexities involved in navigating international law? How much will the entire process cost, compared to engaging a company in Australia or the US with better legal protection?
When it comes down to it, working with an in-country security team offers better protection from both physical theft and intellectual property theft than choosing a remote software developer. Hiring an Australian company means gaining access to the comprehensive legal coverage accorded by Australian laws for your unique software or IP idea.
With outsourcing, quality may also be compromised. Compared to hiring an in-house team, you can't have complete assurance that your remote software devs will follow standards. Software testing, after all, is complex. The process can be cumbersome, involving a lot of back-and-forths, with bugs discovered during the latter phases.
When you work with a freelance software developer, you cannot guarantee that they will be held accountable to fix bugs and security flaws later on. You also can’t be entirely sure that they can be trusted to update your code down the track.
Additionally, the lower rates you’ll be paying can factor into the resulting quality of the work. If you're gunning for lower wages, you might have to accept that they come with poor results. And some foreign workers, for instance, might cut on their own costs and not test properly, even if you pay them to do that.
Conversely, with an Australian software development team, you're working with people you can actually see, and you can better ensure comprehensive support throughout the entire project phase with proper contract terms.
Many companies outsource overseas because many foreign workers are proficient in English. But non-native speakers with limited exposure to Western sensibilities can still struggle with the language. English proficiency may prove to be not enough to catch specific nuances and subtleties, and this can seriously hurt on-time delivery and work quality for your business.
Additionally, you need to manage cultural differences. Asians and Westerners, for example, have very different ways of doing things. In the long run, these differences can translate to complexities in working together. Indians, for example, have difficulty saying no; Aussies, on the other hand, tend to be very direct, especially in expressing disagreement.
While these may seem like harmless matters, in reality, they can be quite costly to your business. If your offshore team lacks clear communication skills, it may become difficult for them to understand your software requirements and create a lot of forward-backward conversations, which will waste a lot of resources. Cultural differences can also negatively impact work ethics and quality.
Similarly, according to a report from Forbes Insight, miscommunication can have a direct negative impact on profitability. And trade between countries can decrease as a result of language barriers and cultural differences.
Finally, delegating your software development needs to a freelancer means giving up control over your operations and settling for limited transparency.
Let's say you're launching a new business website and you have already set your launching date. You want to make sure the project planning phase is meticulous, and you're hoping everything will go smoothly. You also want to cut costs, so you choose your offshore team.
Project planning and execution start. You talk to them about your requirements, and you stay in constant communication with them about the progress of the project. You get regular updates about milestones. And you’re fairly confident that you’ll be completing the project by the deadline based on their updates.
Then your launching date draws near, and you check and realise that all those things your team said were already done? They need fixing. Plus now, your remote team is experiencing inclement weather so you can't contact them easily.
This is something that can happen when you outsource software development. You get limited visibility into what they’re doing, and you will need to make do with what they’re only telling and showing you.
Yes, you can establish guidelines to make sure that your organisation and your remote team stay on the same page at all times. But it’s difficult to enforce quality from the get-go, which can result in too many bugs and the never-ending cycle to fix them. Some freelancers may also not have the right set of skills to carry the entire process through to completion; they may get stuck on one or two things, which can go on for weeks.
Additionally, some freelancers might move on to other projects as soon as they get paid, even if they haven't actually completed the project yet. And the end result? A possible delay in project delivery, unhappy clients, and potential profit loss.
Outsourcing may work when you need a quick business card design, a new promotional video, or a blog post. However, outsourcing software application, mobile app, or website carries too many risks, even if you might have a working software. There is just no way for you to be sure of getting IP protection, data security, and reliable support. And what may save you a few dollars today may end up being the fatal mistake that incurs big fines or enough reputation damage to bankrupt your business.
At iVersion, we believe that getting the best value from your investment does not mean finding the cheapest development/designer team. This is why we make sure that our clients are getting exactly what they're paying for with the calibre of services that we provide. With our experienced and skilled team, you can look forward to positive results, more opportunities for growth, and better operations. We also have strong security and quality control systems. When we build software, we build it to establish a long-term partnership based on reliability and trust.
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