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7 outsourcing nightmares -- and how to avoid them

Bob Violino | Nov. 20, 2012
Poor communication, shortsighted contracts -- don't get derailed by an IT outsourcing agreement gone awry

Applet Studios recently switched to U.S.-based programmers after a nightmare experience with its latest outsourced application development project.

"We had one app live in the App Store doing well," says Chad Grills, co-founder of the company, which creates and sells Web and mobile applications. "We lined up all the promotions and advertising for the Android version, which was being built by( contractors outside the country."

Grills exchanged several emails with the contractor, which assured him that development was on track and the app would be delivered within a week. At the end of the week, Grills received no deliverables and emailed the company again. The contractor responded five days later, saying that the developer had been sick.

"I was understanding and asked for an update on the app," Grills says. "They said it would be pushed back another five days. I was frustrated at this point, but pushed back our advertising just in time."

Some 10 days later, the offshore development team sent a completed application.

"I started testing the app, and to my horror, it was a cruel joke," Grills says. "The screen, features, fonts were nothing like the detailed descriptions and iOS code I had sent."

Things didn't go well from there. The app was delayed another three weeks, still full of problems.

"Our advertising opportunity came and went," Grills says. "The marketing window for action closed, other projects couldn't be pushed back, and we had to scrap the app. Worse, the contractor didn't understand why I was upset."

Applet Studios is now much more meticulous about hiring outsourcers for development work and uses U.S.-based contractors whenever possible.

"The contract we signed with our contractor protected us for a portion of the development costs," Grills says. "However, it couldn't help the fact that we had a huge marketing opportunity/venue that we missed. With the app market being as crowded as it is, a missed marketing opportunity can destroy an app's chances at success."

Outsourcing nightmare No. 3: Offshore communications breakdown

 Predominantly a Web-based business, California Contractor Bonds has outsourced its IT overseas for the past few years, primarily to India.

"In the beginning we had several huge problems (in designing and maintaining our website that were primarily based on (communication problems," says Jeremy Schaedler, president of the company, an online provider of license bonds for contractors in California. "There seemed to be a constant flow of discrepancies between what we were asking to be done and what was accomplished."

What Schaedler learned is that for design, the best form of communication is written instructions combined with diagrams whenever possible.

"Too much is lost in verbal communication," he says. "Outsourcing IT( overseas is a great way to get quality programming talent at a fraction of the domestic cost, but getting a quality product depends on establishing a clear method of communication."


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