Startups in the United States have increasingly turned to offshore software development and staffing to meet their technical needs. While outsourcing software development can be an effective way to reduce costs and increase access to specialized talent, recently, we have heard horror stories from clients about negative experiences they had before they started working with DashTechs. In this blog post, we will explore two recent issues that startups have faced with offshore software developers: holding software code hostage and unexpected changes in pricing.
Holding Software Code Hostage
One of the most frustrating issues that startups have faced with offshore software developers is having their software code held hostage. This occurs when the developer refuses to release the source code unless certain demands are met. This can be devastating for a startup that has invested a significant amount of time and resources into building a software product, only to have the developer hold the code hostage when they need it the most.
There are several reasons why offshore developers may hold software code hostage. One common reason is when there is a dispute over payment. The developer may refuse to release the code until they receive payment in full, even if there is a dispute over the quality of the work performed. Another reason is when the developer wants to secure future work with the startup. By holding the code hostage, the developer can ensure that the startup continues to work with them in the future, as they are the only ones with access to the code.
To prevent this issue from occurring, startups should take steps to protect themselves before engaging with offshore software developers. One way to do this is to include language in the contract that specifies that the developer must release the source code upon completion of the project, regardless of any payment disputes. Additionally, startups should consider working with developers who have a proven track record of delivering quality work and have positive reviews from previous clients.
Unexpected Changes in Pricing
Another issue that startups have faced with offshore software developers is unexpected changes in pricing. This occurs when the developer increases the price of the project after it has already begun, or when the final cost of the project is significantly higher than the original estimate. This can be a major problem for startups that have limited budgets and need to carefully manage their cash flow.
There are several reasons why offshore developers may change the pricing of a project. One common reason is when there are changes to the project requirements. As the project progresses, the developer may discover that additional work is needed to meet the requirements, which can lead to an increase in the price. Another reason is when the developer underestimates the complexity of the project, leading to additional work that was not accounted for in the original estimate.
To prevent unexpected changes in pricing, startups should be clear about their project requirements and expectations from the beginning. This includes providing detailed project specifications and asking the developer to provide a detailed estimate that includes all potential costs. Additionally, startups should consider including a clause in the contract that limits the amount that the developer can increase the price without approval from the startup.
If done correctly, offshore software can definitely be an effective way for startups to access specialized talent and reduce costs. At DashTechs, we understand these issues and make sure that these never occur with our clients. We believe that communication and clarity are key during contract negotiations through the entirety of the project.