Top 3 Reasons Why Outsourcing Software Development Overseas Is No Longer a Good Idea

Glenn Sixbury News, Software Development

For well over a decade, many companies have touted overseas outsourcing as a surefire way to reduce custom software development costs. They point at significantly lower hourly rates and stand in line to collect big bonus checks. Then they quietly go about looking for their next job while the bottom line still looks rosy.

Outsourcing looks great on paper. Toss in some numbers, shuffle them around, and point at the ones you like. That’s why so many companies jumped on the bandwagon and rode it for all it was worth.

Now those same companies are abandoning their policy to outsource software development overseas. Why?

We’ll start with the biggest reason first.

1. Communication

Communicating effectively and efficiently is imperative to a software development project’s success. That importance continues to grow as software systems become ever more inter-reliant on other software systems for success. Few pieces of business software function well in a vacuum.

As business software evolves, systems such as Microsoft Dynamics, Salesforce, and QuickBooks are only as useful as their ability to integrate with other software systems. Often multiplatform or multi-technology solutions are the systems that work best. As business software moves forward, total costs are related less to design and coding and more to successful interoperability.

These disparate systems are often integrated using custom software. To be successful, these integrations require understanding of more than requirements. They require understanding of business culture and business goals.

The last obstacle to effective communication when using overseas development teams is simple logistics. Different time zones, different work habits, and different levels of expectations all contribute to create a narrowing of the communication stream.

2. Hidden Costs

Some costs are harder to measure than others. One of those hard-to-measure costs relates to the advantages provided by face-to-face proximity. Human beings are social creatures that work best when enjoying the benefits provided by belonging to a like-minded community.

Costs also increase when attempts are made to overcome the difficulties created by trying to supervise overseas software development. Outsourced developers have little reason to concentrate their efforts on efficiency. On the contrary, revenue is directly related to the hours required to finish any task. Since these hours are undervalued and under-compensated, the only way to increase revenue is to increase the hours charged for a given task. As we examine low-cost hourly development, regardless of the source, this is precisely the result we observe.

3. Security

Legal protections and recourses are often limited, especially in overseas countries specializing in software development. In many cases, contracts, non-disclosure agreements, and compensation for damages are irrelevant. Protecting your software investments can prove to be difficult or even impossible.

Just one breach of security can wipe all the savings gained from using overseas development. In addition, many government contracts restrict all software development to domestic sources.


The reasons listed above aren’t limited to overseas outsourcing, but distance as well as language and cultural barriers often exaggerate the problems.

Next time someone suggests outsourcing your software development overseas, consider local development instead. Research the pros and cons and let them decide. Then give Stasyx a call and we’ll show you how we can help solve your outsourcing problem.