Risks involved in offshore outsourcing

[hanusoft]

Any big deal with a firm comes with certain risks. Risks that can be eliminated if the development stages are followed according to a well- designed process model.
The risk that reflects immediately is the misunderstanding of the customer’s product requirement. In case of Offshore Software Development also, no risk can be avoided if there is lack of proper interaction between the client and the service provider. A proper understanding can be built by analyzing the requirements with the client.
From your knowledge of Offshore Outsourcing, what are the risks involved? Feel free to post your suggestions on the topic.

[Ribosi]

You need to verify that whoever you're doing business with can actually get the job done.

Software development can be a huge risk no matter if the outsourcer is offshore or not. While I've worked with plenty of outsourcers who knew their stuff, much of our development queues today are clogged with repairing work of others. I'm not saying all outsourcers are bad either, just that you have some assurance that the company/people you select to do a job can actually get it done within your budget.

One of the things we do to offer this assurance, as about 80% of our web development clients are new to us, is to offer web development services with nothing down. Development work is done on our servers and, if the client is satisfied with the result, they pay for it when they see it working and we then move it to their servers. We do this on quick sites as well as multi-phased projects. This completely eliminates the financial risk of the client while at the same time ensuring that they're paying for what they expect to be paying for - in addition to removing the risk on our side of a client not paying for code that we've installed already.

Lots of development companies want to charge you something up front. We feel this is the wrong way to go. The argument here is that it weeds out those who are not serious. We're of the mind that if we've used standardized code to build up the framework of the site (which is your first step in actual coding), all we're really out is the time it took to set that up, as the code itself is reusable. This reduces the time it takes to set up a similar site in the future, so in the long run, the time gets paid for anyway.

So, that's my advice: Pay for what you know works. If the outsourcer really knows their stuff, they won't have any problems working under these conditions.