5 Common Challenges Companies Face When Outsourcing Software Development

According to a 2025 Deloitte study, around 60% of U.S. firms hit roadblocks in outsourcing software development, mostly from expectations that weren’t lined up right from the start. Outsourcing sometimes helps with cost-cutting and opens doors for an international talent pool, but it also has some challenges.  

In this blog, we’ll dive into five big challenges that companies face when outsourcing software development. These are the outsourcing risks in software development that trip up many teams. We’ll break them down with real talk, including a quick U.S.-India example for each, to help you spot common outsourcing mistakes early. Then, we’ll talk about how Global Capability Centers (GCCs) in India can flip these issues into wins. And finally, a bit on how firms like JumpGrowth step in to make it all smoother for U.S. companies.  

Challenge 1: Communication Barriers 

Communication can make or break a project. Honestly, when you outsource a project across borders, there is a high chance that their approach and way of communication will be different. Apart from this, time zones also play a crucial role in enhanced communication, and there will be differences in how people express ideas. That’s where things get sticky with outsourcing software development. In the U.S., we might direct about feedback, while with your outsourcing professional, they might use these phrases commonly to keep harmony. 

Here is a real U.S.-India snag: A New York fintech startup outsourced their payment gateway rebuild to an Outsource software development team. They emailed, “Speed this up,” expecting minor optimizations. The Indian devs, interpreting it broadly, revamped the entire flow solid work, but it caused a three-week delay. Classic outsourcing software development problem when messages aren’t crystal clear. 

Per a 2025 survey by Everest group, communication glitches affect around 30% of companies with outsourced providers. To sidestep this, tools like Slack for instant chats and detailed briefs go a long way. 

Challenge 2: Cultural Alignment 

Cultural differences are not merely about food or festivals; they have a strong impact on the daily collaboration of teams. When U.S. companies outsource their software development to another company, they sometimes might not notice that hierarchy is one of the major factors in the decision-making process. Outsourcing teams may carry out their leaders’ wishes, and U.S. teams may engage in open discussions; this results in either stalled ideas or unexpressed tensions.  

A 2025 report highlights cultural mismatches as a key outsourcing risk in software development, especially when outsourcing cross-borders.  

Challenge 3: Time Zone Challenges 

Time zone is one of the biggest challenges in making the operations and workflows smooth, especially when your outsourcing partner follows a different time zone with a 4–5-hour gap. In outsourcing software development, this means feedback loops stretch, and urgent fixes linger overnight. 

Challenge 4: Quality Assurance 

Cost-cutting means nothing if you’ve got to compromise with the quality. Although outsourcing talent is strong most of the time, without tight sighting things can break anytime, standards can vary. All these things can result in bugs or misaligned deadlines. 

Being over a decade in the industry, we’ve seen many IT folks who say that on-site kickoffs make a world of difference. Recently, we had a chat with an e-commerce player in Texas who outsourced his app development. Although the outsourcing team followed specs but missed U.S-specific user flows. In the end, he had to do rework but not only cost time but also fortune.  

Challenge 5: Talent Acquisition and Retention 

Since the post-pandemic era, there has been a disruption in the IT market and in the competitive market; finding and keeping skilled developers is no joke. If you resolve all the challenges, then outsource partner retention is a big challenge. Sometimes, the outsourced service provider ghosts you into the most important phase, which can completely mess up your project.  

Recently we had a chat with one U.S. healthcare firm who said that their outsourcing partner ghosted them when are about to release the crucial updates. Due to which they have to start from the very beginning, which just completely destroyed their users.  

So, these are the 5 common challenges companies face when outsourcing software development. These challenges not only eat up your saving but also delay the project timeline. Keeping all these challenges in mind, U.S. firms are now slowly titled towards building their GCCs in India and there are many reasons behind it. 

What Are Global Capability Centers (GCCs)? 

Think of GCCs as your company’s right wing located in a different country, most probably in India (due to low cost of living and a vast pool of IT talent). This wing will be handling everything for you, including R&D and software development. GCCs give you the options of a vast pool of Indian talent at a much lower cost, and honestly, when it comes to India, we all know they are growing rapidly in IT. India produces over a million IT professionals from well-established institutions, like IIT and IIM, every year.  

Why GCCs Are the Smart Way to Tackle These Outsourcing Challenges 

Unlike traditional outsourcing, where you hand over the task to a third-party, GCCs are your own branch of professionals solely working on your vision and following your approach. You set them up as dedicated hubs, fully integrated with your U.S. operations, which not only gives you more control over processes, but you can also ensure robust quality and employee-friendly culture to retain the top talent.  

GCCs tackle all the Outsourcing challenges from day one. For example:  

• For communication barriers, GCCs let you build shared protocols with your branding and tools that reduce misreads and enhance communication.  

• Cultural Alignment? You’ll setup the GCCs with your vision and approach so you can invest in training the talent with blend of U.S. directness with Indian collaboration styles. 

• Time zones still exist in GCCs but not as a challenge but as an advantage. With GCCs, different time zones mean 24/7 workflows that will minimize delays. 

• Talent retention? GCCs offer stability with career paths tied to your company, lowering turnover compared to vendor hopping. 

According to a survey, in 2025, over 1,500 GCCs thrive in India. IT hubs like Bengaluru (Bangalore) and Hyderabad have delivered top quality by cutting the cost by 30-50%. In a nutshell, GCCs are like a genie for U.S. businesses that can provide rid of the Outsourcing challenges and help them to reach the pinnacle.  

Here’s a table comparing typical outsourcing risks to how GCCs address them: 

This setup turns outsourcing risks in software development into manageable wins. 

 How JumpGrowth Can Help U.S. Companies Build GCCs in India 

If GCCs sound like the fix, partnering with experts smooths the path. At JumpGrowth, we’ve guided U.S.-based companies through our GCCs in India. We focus on aligning your goals, whether cutting costs or ramping innovation, with India’s talent pool, while dodging those outsourcing software development problems. 

We start with assessments to match your needs, then scout top devs and set up infrastructure. Our cultural bridging programs get teams synced fast, and we embed QA frameworks to keep quality high. It’s about creating a seamless extension of your U.S. ops. For more insights, check out our GCCs building approach.  

Wrapping up 

Outsourcing software development is not a bad approach but with its challenges, it can sometimes break your project or put you in total chaos. GCCs in India not only help companies to overcome outsourcing challenges but companies can reach the new heights of success. With GCCs in India U.S. based companies can turn outsourcing headaches into growth drivers. For deeper knowledge about our GCC, check our page.  It has got valuable guides to get you started. 

FAQs 

Q1: What costs come with setting up a GCC in India? 

A: Upfront, figure $500K to $2M for space, hires, and setup. Salaries are 30-50% lower than in the U.S., with ROI in 1-2 years via efficiencies. India’s tax incentives sweeten it, as does the budget for training. You can reduce the upfront costs by contracting through and forming a GCC with a vendor like JumpGrowth. We offer GCC setup services and minimal and no upfront costs without any hassle of creating any legal company of your own.  

Q2: How does Indian talent stack up to the U.S.? 

A: India’s 5M+ pros match the U.S. in skills like AI and cloud, especially with vetting. Gaps exist, but GCCs allow focused training for top results.  

Q3: Tips for time zone management in GCCs? 

A: Overlap 3-4 hours daily, use async tools. It turns the gap into a productivity boost for outsourcing software development teams. 

Q4: Data security in Indian GCCs? 

A: Strong laws protect but add NDAs and audits. It’s a risk, but managed well in the GCCs. 

Q5: Biggest outsourcing mistakes to avoid? 

A: Ignoring culture or skimping on planning leads to 20-25% failure rates. GCCs help by  

giving control.  

Q6: ROI timeline for GCCs? 

A: 12-18 months typically, starting with labor savings.