You get access to top talent, move faster, and avoid the overhead of building an in-house team from scratch.
But, it’s not without risk.
Miscommunication, hidden costs, missed deadlines, they all add up. And if you’re not careful, your “shortcut” turns into a detour.
The good news? These risks are avoidable. You just need to know what to look out for and how to stay ahead of them.
In this article, we’ll break down 8 major outsourcing risks and show you exactly how to handle each one.
Let’s dive in!
Table of Contents
Communication and cultural barriers
Communication is everything in software development.
And when you’re outsourcing, it’s the first thing that can go wrong.
Different time zones, different expectations, different ways of thinking can all mess it up.
And suddenly, what felt like a small misunderstanding turns into missed deadlines or broken features.
In fact, poor cultural compatibility is one of the main reasons why outsourced projects fail.
You might think everyone’s aligned. But unless communication is constant and crystal clear, you’re setting yourself up for trouble.
Here’s how this plays out:
A developer doesn’t understand the priority of a feature
A designer misinterprets feedback
A product manager assumes something’s being handled when it’s not
This isn’t a tech problem – it’s a communication problem. They’re perfectly capable of understanding these things.
But, unless you can clearly deliver feedback and communicate what you want from them, they’re more likely to misunderstand you.
If you get communication right, everything else becomes easier.
And if you don’t, even the best developers in the world can’t save your project.
How to handle communication and cultural barriers
Talk directly to your team – If you can’t speak to the actual developers and designers, you don’t really know what’s going on. Make sure you have access to the whole team.
Hold daily standups – Keep them short, 15 minutes is enough. It will keep the team in sync and stop small issues from turning into big ones.
Establish a clear reporting structure – Assign a project manager on your side to keep communication clear and things moving.
Loss of control and visibility
Outsourcing can feel like you’re giving up control.
Your product is being built somewhere else, by people you don’t see every day. You start wondering:
What are they working on?
How’s progress going?
Are they solving the right problems?
Outsourcing shouldn’t feel like you’re throwing tasks into a black box and hoping something good comes out.
A lack of visibility can slow you down, eat up your budget, and damage trust. You won’t catch problems early because you can’t see them coming.
And when issues do surface, you’re already behind.
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You don’t want to be stuck with a bunch of half-built features, stitched together without structure with no documentation and no backlog.
That’s not a process – that’s chaos.
You shouldn’t have to guess where your project stands. You should know exactly where it is, every single day.
When outsourcing works well, you won’t feel like you’ve lost control. You’ll feel like the team’s sitting right next to you, every day.
And that’s why choosing the right outsourcing partner is so important.
How to maintain control and visibility
Insist on transparency and full access – You should have direct access to the project board, time tracking, source code, and documentation. No exceptions.
Demand full team visibility – You should know who’s working on what, not just through a PM filter. Names, roles, responsibilities, everything should be clear.
Define clear KPIs – Measure success (or failure) based on clearly defined metrics and deliverables.
Quality and performance issues
You can’t afford to ship broken software. Period.
Slow load times, constant crashes, and bugs that show up in every release aren’t just technical issues – they’re product killers.
They cost a lot of money, too. Poor software quality costs U.S. companies $2.42 trillionevery year.
And the longer your team takes to fix these bugs, the more expensive they are. They can be up to 100x more expensive to fix post-deployment than at the start of development:
Inconsistent quality is one of the biggest risks when outsourcing development.
Especially if the team you’ve hired is juggling multiple clients or cutting corners to hit deadlines.
Sometimes, it might feel like interns are writing the code when you were promised senior engineers.
Here’s the truth: building high-quality software takes discipline. It needs:
Structure
Clear definitions of “done”
Automated testing
Rigorous QA
Without these things, you’re just pushing code and hoping it holds up.
Quality should never be optional. There’s no excuse for sloppy code, not when your reputation is on the line.
Work with a team that holds their own work to a higher standard, because quality is the one thing you can’t afford to compromise on.
How to prevent quality and performance issues
Ask for their QA process up front – If they can’t walk you through their quality assurance approach in detail, that’s a red flag.
Use automated testing and CI/CD – This is the baseline. You should expect continuous integration and deployment pipelines with built-in testing at every stage.
Continuously monitor performance and quality – Use tools like SonarQube to track code quality and technical debt.
Data security and privacy breaches
When you outsource, you trust a third-party with your source code, infrastructure, and user data.
If something leaks, it’s not just a tech issue – It’s a business disaster. A whopping 47% of organizations experienced a data breach in the last year because of third-party access.
And it will cost you a pretty penny, too – in 2024, the average cost of a data breach reached an all-time high of $4.88 million.
That’s just the average. In some industries, like healthcare, the average cost is more than double that number:
The thing is, data breaches don’t just cost money. They damage your brand, break user trust, and invite legal trouble.
And the worst part? Most breaches aren’t sophisticated attacks, they come from careless mistakes.
Like if a developer pushes sensitive credentials to a public repo. Or when a test database with real user data gets exposed.
Remember, you’re only as secure as your weakest link.
And if you’re outsourcing development, you need to make sure your partner takes security seriously – they should have relevant security certifications like ISO/IEC 27001.
You need to choose partners who treat it like a top priority, not as an afterthought.
How to prevent data security and privacy breaches
Include security in your contract – Include NDAs, data protection clauses, and clear responsibilities for breaches. It should all be spelled out from day one.
Implement strict access controls – Use role-based access controls and limit access to sensitive data unless strictly necessary.
Audit their security infrastructure – You don’t need to be a security expert, but you do need to know what systems they have in place. Ask questions and dig into the details.
Compliance and legal risks
Outsourcing doesn’t mean you’re outsourcing responsibility.
If your software breaks a law, you’re the one on the hook, not your development partner.
Whether it’s mishandling user data, violating accessibility rules, or shipping a product with licensed code you don’t own – it’s your liability.
Here’s just a few of the regulations that you’ll have to follow:
Not following these regulations can cost you an arm and a leg.
Take GDPR, for example – fines can reach €20 million or 4% of global turnover.
And it’s not just about money. These violations damage trust, scare off investors, and slow down your growth.
So even if you’re working with an external team, the responsibility stays with you.
Which means you need a partner who understands your industry, your market, and your legal landscape – inside and out.
How to handle compliance and legal risks
Explicitly define IP ownership – The code, designs, and documentation should all be yours, without exceptions.
Make sure they understand your market – If your product touches finance, health, or sensitive user data, your partner needs to know the local regulations.
Ask about their legal entity and jurisdiction – If something goes wrong, where do you even file a claim? Make sure you know who you’re dealing with.
Hidden costs
Outsourcing can feel cost-effective – until it’s not.
You get a great initial estimate and you sign the contract. And then the problems start.
One extra feature here. A small revision there. Suddenly, you’re over budget and behind schedule.
Outsourcing can look cheaper on paper. But the real cost isn’t just the hourly rate.
There are hidden expenses – some predictable, some not. If you don’t plan for them, your budget will blow up fast:
They’re directly related to your outsourced partner’s quality of work.
So, the best (and only!) remedy is hiring the right team.
But, you should still plan for them upfront regardless.
Clearly define your project’s scope, plan for long-term expenses, and insist on full cost transparency.
How to handle hidden costs
Insist on full cost transparency – You should know exactly what you’re paying for – ask for time longs, task estimates, and rates by role.
Plan for long-term expenses – Development costs =/= total cost of ownership. Budget for long-term expenses like maintenance, updates, and potential redesigns.
Include change management clauses – Set up a simple process for how extra work gets estimated, approved, and billed so your costs don’t spiral..
Delivery delays
Delivery delays can kill your project.
Missing your launch window can mean losing early users, missing funding milestones, or falling behind competitors.
And with outsourcing, delays can creep in quietly.
You start with a tight plan. But then feedback gets pushed to the next day, a blocker takes 24 hours to surface, and sprint goals slip – one week at a time.
And suddenly, your 3-month build turns into 6.
It’s not always bad planning. Sometimes it’s just the result of time zone gaps.
You’re asleep while your team’s working, they’re asleep when you respond.
If there’s no overlap in your working hours, even simple changes can stretch for days.
And when that happens, your fast-moving roadmap turns into an endless waiting game.
But time zones aren’t the real issue – it’s how you work around them.
With the right setup, even a 10-hour gap won’t slow you down.
How to prevent delivery delays
Set up overlapping working hours – If your team is offshore, make sure there’s at least a few hours of real-time collaboration each day to keep things moving.
Review work in progress – Waiting until something is done is risky. You should ask for access to early demos, wireframes, and partial builds to see what’s happening before it’s too late.
Create buffer time in your roadmap – Assume things will slip and plan for it from the start. A smart roadmap includes breathing room for testing, iteration, and changes.
Loss of in-house expertise
Outsourcing can solve short-term capacity problems.
But if you’re not careful, it can leave you exposed in the long run.
You offload development, the partner delivers, and everything works. But then what?
No one on your in-house team fully understands the codebase.
Your product evolves, but you’re now dependent on an external team to make even the smallest change.
That’s not just inconvenient – it’s a real business risk.
Because when you’re fully dependent on a third party, you lose flexibility and expose yourself to unnecessary risk.
Outsourcing should never mean locking yourself out of your own product.
It should be a partnership, not a dependency.
And that’s key to successfully outsourcing development.
How to prevent losing in-house expertise
Stay involved throughout development – Join sprint reviews, ask questions, and keep your internal team close to the action. Outsourcing isn’t a handoff, it’s a collaboration.
Document everything – From architecture to third-party services to deployment steps. If it’s not documented, it doesn’t exist.
Assign an internal product owner or tech lead – Even if you outsource the core build, someone on your team needs to own the vision and understand the moving parts.
Software development outsourcing risks: FAQs
You need to stay close to the work. You should:
Talk to the team directly
Get access to the tools they use
Clearly define their goals
In short, you should never feel like you’re on the outside looking in.
Yes, you can maintain quality if you outsource development, as long as you choose the right partner and clearly communicate your requirements and expectations to potential partners.
Also, you need to have clear quality standards and communication protocols in place to find the right outsourcing partner.
Of course, you can combine in-house and outsourced development, depending on your specific needs.
For example, you can outsource non-core and specialized tasks while your in-house team handles mission-critical parts of the project.
In fact, a hybrid model like that is the best of both worlds – you save money on development without sacrificing quality.
But, you need to make sure the company you choose can work well with your in-house team. Ask them if they have experience collaborating closely with clients’ in-house teams and how they handle working with them.
Looking for a top-tier outsourcing partner?
You might’ve had a bad experience before – missed deadlines, poor code, teams that just tick boxes. Or maybe you’re just done dealing with vendors who don’t take real ownership of their work.
That’s where we come in.
We’re an EU-based software development company with 12+ years of experience building complex, high-quality products for some of the biggest names out there.
And we love a good challenge – and we’re confident we can take yours on.
If that sounds like the kind of partnership you’re after, feel free to reach out and our team will get back to you as soon as possible.
Damir knows how to build partnerships that last. With 20+ years of experience in sales leadership, business development, and tech consulting, he’s helped companies grow, scale, and adapt - whether by leading teams, building businesses from scratch, or driving digital transformation. He started with a degree in history and archaeology before adding an MBA and training in negotiation, web development, and more. That mix of curiosity and drive is what makes him great at what he does.
Outside of work, you’ll find him on the trails, pushing his endurance limits, or at home keeping up with his three kids. And when he's not on the move, he's diving into the latest and greatest history books and documentaries.
