1. Biggest challenge is finding contractors who are actually as good as their portfolios. I am not sure if this is a case of portfolio fraud or simply not a good enough interview process on my part, however, after working with some providers, I just can't believe all those 5 star ratings are real.
2. Too many contracts bid without actually reading or understanding the requirements. The best people I have found actually addressed each requirement point by point.
3. Too many contractors provide too little value. I expect them to manage everything they need to do on their side, and not just be the hands on the keyboard. Too many times have I had to put THEIR test plan together because they had no clue how to actually test their work.
My approach has simply been to hire lots over the years and then rehire people proven to be good. It's a crap shoot initially though.