5 ms·

> why the heck outsource to places like India You vastly underestimate just how cheap outsourcing is

voidlogic 9y ago
Maybe he does... BUT I used to work for a consulting firm that would sometimes bid against far east outsourced providers when local firms had projects. This is anecdotal but over and over again, this was the scenario: 1. local firm collects bids 2. As courtesy firm tells us we were 2-5x more expensive than winner, winner is in far east. 3. 1,2,3 years latter firm returns to us asking if we can re-submit but on a more shorter timeline (maybe the project would have been 2-3 engineers for 6 mo) 4. We come back with a new bid that is 8-12x more, has a bigger team than we would have used orgiinally, less favorable risk analysis.. 5. They paid us to take them on! Often-times we had to throw away almost everything their Bangladesh contractors had been working on for years (fundamentally bad schema, no unit tests, bad bad code)...
- fpoling 9y ago
  I have similar anecdotal evidence from Norway. A bank outsourced running IT systems to a company from India. A year later they hired a local company to fix/redesign things.
  - seanp2k2 9y ago
    Yep, many people who have been in the industry have heard this one before and/or inherited the project-from-hell that has been touched by half a dozen offshore dev firms and basically needs to be scrapped. There's a reason why we aren't all jobless while other countries take all our tech jobs; it's highly-skilled labor, which means that the quality of the end product is directly influenced by the skill of the workers. The time differences and language / cultural barriers (I forget the name for it, but IIRC there was something in Indian culture around ~"my part is done" which is part of why e.g. There's so much trash in the cities -- basically it's not your problem -- please correct me if I'm misunderstanding or misrepresenting this) certainly don't help set up these situations for success.
biztos 9y ago
One thing I've struggled to understand, even after years of working with a great team of relatively low-cost engineers in India, is this: If engineers in India are, say, 5x cheaper fully-loaded than in the US; and some of them are awesome engineers; why are there not startups in the West competing to pay the rock-stars a Western salary but have them stay in India? With all the close ties between the Indian IT sector and Silicon Valley I would expect it to be common practice especially among startups to try recruiting the best away from, say, InfoSys by simply paying them what you'd end up paying an inferior engineer locally. As far as I can tell this is not done very often. Anybody know why? Or am I just not aware of it?
- zitterbewegung 9y ago
  I don't think startups would have enough funding or the time to take advantage of it. MVPs would be done by the founders because of the time constraints (setting up a whole outsourcing setup would take a bunch of time). Also, if you fully outsourced all the startups tasks then your group that your outsourcing to doesn't need you. If a startup was well funded and has larger projects I could see that though.
- dasil003 9y ago
  The three big challenges I see are how to identify the rock stars, management culture, and time zone. It's possible to overcome all of those, but you'd need significant expertise hiring and managing Indian teams. The hardest part would be to build a team of true startup hustlers, because the outsourcing industry has not been built around those types of people. Traditionally you have to have very strong top-down management and clear requirements since the mentality on the other end is to do what your told, avoid giving bad news, and maximize billable hours. This is something that large companies with established products can do a lot easier than startups. In general the reduced execution risk is not worth the cost savings because you don't yet have a business, you are trying to build one. The safer bet for a startup very tight team working hand in glove where every employee is obsessed with the high-level product.
- Cozumel 9y ago
  They just don't have the technical ability their western counterparts do, obviously some do but finding them is a crapshoot. Also if you pay people too much they won't stay with you and that will be a much bigger issue when you can pay someone more than they would otherwise be getting (even if it's costing you less) There's also control, if you outsource your whole project then why do your workers even need you? They could just do it themselves and cut you out completely.

Maybe he does... BUT I used to work for a consulting firm that would sometimes bid against far east outsourced providers when local firms had projects. This is anecdotal but over and over again, this was the scenario: 1. local firm collects bids 2. As courtesy firm tells us we were 2-5x more expensive than winner, winner is in far east. 3. 1,2,3 years latter firm returns to us asking if we can re-submit but on a more shorter timeline (maybe the project would have been 2-3 engineers for 6 mo) 4. We come back with a new bid that is 8-12x more, has a bigger team than we would have used orgiinally, less favorable risk analysis.. 5. They paid us to take them on! Often-times we had to throw away almost everything their Bangladesh contractors had been working on for years (fundamentally bad schema, no unit tests, bad bad code)...

fpoling 9y ago
I have similar anecdotal evidence from Norway. A bank outsourced running IT systems to a company from India. A year later they hired a local company to fix/redesign things.
- seanp2k2 9y ago
  Yep, many people who have been in the industry have heard this one before and/or inherited the project-from-hell that has been touched by half a dozen offshore dev firms and basically needs to be scrapped. There's a reason why we aren't all jobless while other countries take all our tech jobs; it's highly-skilled labor, which means that the quality of the end product is directly influenced by the skill of the workers. The time differences and language / cultural barriers (I forget the name for it, but IIRC there was something in Indian culture around ~"my part is done" which is part of why e.g. There's so much trash in the cities -- basically it's not your problem -- please correct me if I'm misunderstanding or misrepresenting this) certainly don't help set up these situations for success.

biztos 9y ago

One thing I've struggled to understand, even after years of working with a great team of relatively low-cost engineers in India, is this: If engineers in India are, say, 5x cheaper fully-loaded than in the US; and some of them are awesome engineers; why are there not startups in the West competing to pay the rock-stars a Western salary but have them stay in India? With all the close ties between the Indian IT sector and Silicon Valley I would expect it to be common practice especially among startups to try recruiting the best away from, say, InfoSys by simply paying them what you'd end up paying an inferior engineer locally. As far as I can tell this is not done very often. Anybody know why? Or am I just not aware of it?

zitterbewegung 9y ago
I don't think startups would have enough funding or the time to take advantage of it. MVPs would be done by the founders because of the time constraints (setting up a whole outsourcing setup would take a bunch of time). Also, if you fully outsourced all the startups tasks then your group that your outsourcing to doesn't need you. If a startup was well funded and has larger projects I could see that though.
dasil003 9y ago
The three big challenges I see are how to identify the rock stars, management culture, and time zone. It's possible to overcome all of those, but you'd need significant expertise hiring and managing Indian teams. The hardest part would be to build a team of true startup hustlers, because the outsourcing industry has not been built around those types of people. Traditionally you have to have very strong top-down management and clear requirements since the mentality on the other end is to do what your told, avoid giving bad news, and maximize billable hours. This is something that large companies with established products can do a lot easier than startups. In general the reduced execution risk is not worth the cost savings because you don't yet have a business, you are trying to build one. The safer bet for a startup very tight team working hand in glove where every employee is obsessed with the high-level product.
Cozumel 9y ago
They just don't have the technical ability their western counterparts do, obviously some do but finding them is a crapshoot. Also if you pay people too much they won't stay with you and that will be a much bigger issue when you can pay someone more than they would otherwise be getting (even if it's costing you less) There's also control, if you outsource your whole project then why do your workers even need you? They could just do it themselves and cut you out completely.