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Software Development Outsourcing: Our Story
- m0ck 6y agoThe lengths some companies go so they don't have to pay fair wages...
- api 6y agoSometimes companies will spend more trying to not pay fair wages than they'd spend just paying fair wages. I've seen it with software outsourcing numerous times-- they outsource at great logistic expense and then get crap that has to be rewritten, yet still consider it a win because the wages were lower.
- dastx 6y agoThis is probably similar as self-hosting some services vs letting someone else deal with it. Hosting something like Elasticsearch requires a lot of knowledge and understanding. If you run it yourself it's free! So you end up doing it yourself, but really you'll need to spend engineering hours on it. Engineers being one of the most expensive expense in a business, you've suddenly not really saved much, and you'd have been better off having Elastic do it for you, and you could have started using it in less than a week rather than months.
- rgbrenner 6y agoTo add something similar: I've seen non-tech companies that have no ability to evaluate or mentor tech staff, hire 3-4 junior people at the lowest rate they can find... they all struggle and have no one to ask, tons of incomplete or barely working projects... The workload could be done by 1 competent mid-level dev... costing half what they're paying for those people. But the company is happy because they got a good deal and didn't have to pay "ridiculous" tech salaries.
- polka_haunts_us 6y agoWe had a project last April where the lead dev was getting a lot of abuse from management about "Why isn't it done yet, I thought the outsourcer already did all this". I've never wanted to scream at someone more in my entire employment history. It was taking so long precisely because the outsourcer did all of it, and he was having to spend all his time undoing it. It actively cost more money and dev time than if they had never hired them in the first place.
- JPKab 6y agoYeah, I get the feeling a lot of times that outsourcing is popular with dysfunctional companies because it shifts a portion of the labor, and thus the resources to managerial staff in the rich country, and the remainder is spent on the actual talent. If you're a US based manager, this is great. You suddenly become that much more valuable to your employer, even though the customer will lose out. Plus, you don't have to deal with that smart chick down the hall who knows how to code and makes you look really dumb and lazy in meetings getting more glory with the bosses. The more bureaucratic the org and removed from customers the success criteria are, the more likely it'll get outsourced.
- ChrisRR 6y agoIt's more like maximising their profits by paying lower but fair wages in other countries. Even a developer in the EU could cost half that of silicon valley, and I don't think many people here would consider they're paid unfairly.
- formerly_proven 6y ago> Even a developer in the EU will cost half that of silicon valley Is there another Europe I missed?
- bjornsing 6y agoI do (consider myself paid unfairly)! :)
- rawland 6y ago"They were doing great work for us but eventually, there was a business event where they left."
- robjan 6y agoThe lack of transparency is huge red flag which would make me unlikely to want to do business with this company.
- the-pigeon 6y agoYour entire staff would never ever leave at once UNLESS you really messed up big. Thinking anything otherwise is ridiculous nonsense. This specifically reminds me of when a company I worked for fired my two developers by making it so they couldn't clock in. They didn't have the respect to tell them to their faces or to tell me who they reported to! Yet they seem surprised when I quit the same day.
- CyberBank 6y ago>>I’ll tell you a story of when we were developing a product here States-side. We worked with one very gifted development team and we put all of our eggs into that basket. They were doing great work for us but eventually, there was a business event where they left. ------- "Business event" aka budget cuts? Benefit cuts? Change in leadership? Bad leadership? People in the US often do not leave if things stay the status quo, managed well, and are given appropriate accolades for their performance. Absurd way to deflect blame and justify cutting fair wages
- ghaff 6y agoThe level of double-speak is off the charts. Also "It is very expensive to spread intellectual property and know-how amongst the number of US-based resources."
- 4cao 6y agoIt gets even better than that: "unfortunately, the economic benefits [of outsourcing to Argentina] started to fail when the Argentine economy started to improve."
- rmsaksida 6y agoIf only those pesky third-worlders would stay poor for longer...
- sgift 6y ago> We are in Ukraine now, where the talent pool is abundant and economic conditions are favorable. They are probably routing for the Russo-Ukrainian War to continue as long as possible. Makes for more "favorable" conditions too. The worst event for them would be if Ukraine joined the EU, with all that pesky labor protection laws.
- nefitty 6y agoIt’s a little mind blowing to see an atomic version of how business interests end up favoring outcomes that are negative for an entire country. If many of these small businesses end up dependent on low-wages, political instability, etc., it doesn’t seem far fetched to imagine that in aggregate they start institutionalizing lobbying efforts to maintain these circumstances. This introduces possible outcomes like failed states, and counter measures like authoritarian strongmen to maintain modicums of stability. This can then lead to greater, unintended geopolitical consequences. And it all stems from a bunch of businesses trying to shave a few dollars off of wages...
- deleted 6y ago[deleted]
- bironran 6y agosite down, alt: https://web.archive.org/web/20210202154500/https://ascendixtech.com/software-development-outsourcing-our-story/ https://web.archive.org/web/20210202154500/https://ascendixt...
- flatline 6y agoWow - nearly unreadable with the giant cookie prompt. The web is practically broken in so many respects nowadays, yet it's at the center of so much of what we do.
- tekstar 6y agoTook down their entire site, too, not just their blog. Better get those devs on the phone!
- eagle323 6y agoThe site is up now
- wpasc 6y agoI can't read the article (502 error). Here's what I learned about companies who outsource.
- mistrial9 6y ago> Error 502 Ray ID: 61b53661fb0d1ee4 • 2021-02-02 16:15:42 UTC outsourced web services?
- serjester 6y agohttps://web.archive.org/web/20210201220621/https://ascendixtech.com/software-development-outsourcing-our-story/ https://web.archive.org/web/20210201220621/https://ascendixt...
- sand_castles 6y agoIt makes perfect sense for a private business, even though it's a disaster for the state in the long term.
- rootsudo 6y agoWow, they listed hourly rates for China and Argentina but abruptly drop it for India, lol! The article speaks against my experience and working alongside some talented people in Argentina, China, India and surprised they didn't list it - The Philippines. The hourly rates also don't seem likely for what "they're" paying them, but more what the end client is. I don't see $35/hr common in China for a BPO/offshore provider, see that as what is being billed to the end customer. And at that point, $35, 45, 60/hr dev rates for Dynamics CRM and Salesforce, might as well employ locally. You're not saving much, if at all. Geez. But the cherry on top: "A funny fact about offshoring to Ukraine is that we, as Americans, wake up when the sun is up. But when I came to the office, no one was there. They are not getting there until 11 AM – 11:30 AM. (Editor comment: it is not always the case, in fact, the majority of Ukrainian developers prefer starting their day at 9 AM – 11 AM)" Lol, what is this. What. It's simply hilarious this is even there at all.
- robjan 6y agoThe hourly rates are quite meaningless anyway. If you look for the cheapest price, the offshore providers will give you fresh grads who muddle through the work with little guidance and supervision. This is especially true for clients who aren't perceived to be particularly important in the long term.
- isbvhodnvemrwvn 6y agoIt's easy enough to see what the money gets you in Ukraine, since developers there are paid in USD or EUR anyway. And the outsourcing company takes a big cut of what you pay.
- throw1234651234 6y agoThis is completely false in my experience. Ukraine is among the top countries for IT talent, end of story. USSR education (until recently) coupled with very low COL make it a top destination. That's going to decline as most Ukr devs move out of the country though.
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- deleted 6y ago[deleted]
- testesttest 6y agoLol. Now your server is returning 500s. Fitting.
- eagle323 6y agoYeah, too many requests. Now it is up and running.
- Terretta 6y agoIn the 00s, we made a good living stepping in for U.S. clients to fix boondoggles from primarily U.S. consultancies and India consultancies. Through that experience, we reached by and large the same regional conclusions, and think they hold largely true today. Canada is not mentioned in the article but should be, as well as Nigeria, Ghana, and the like. I recommend figure out first how to be productive and secure with local work from home, then how to remain productive with multi-timezone distributed teams, and only then consider near- and off- shoring but in a dedicated not staff-aug model.
- eagle323 6y agoThank you for your comments. We shared only own our experience so talked about countries where we outsourced our software development. To date, we have two offices - in Dallas and Ukraine. For years, we worked remotely so we have in place all systems and processed. We are also a product company so we decided to set up our own office. But for a few years, we used a dedicated team model
- 0xB31B1B 6y agoAs a CTO at my company, I’ve done a lot of investigating of offshoring general cost saving for software development and my conclusions are that you can save ~50% in development costs by hiring a remote/distributed team outside SFBA/superstar cities and offering people a truly remote and autonomous job that doesn’t demand them being on their computers 9-5 and treats them like adults. We have a long track record of hiring extremely motivated and talented developers by offering them this basic non monetary compensation (freedom and trust lol). No need to worry about time zones or cultural differences, just measure folks on output and tell them it’s fine if they want to spend their afternoon with their kids and work mornings and evenings or whatever.
- toyg 6y agoThe dissonance is weird: they all but admit that they were just looking for cheap wages all along (see why they left Argentina, for example), but then they come up with bullshit ("spreading the intellectual property", lol) just to avoid saying "we couldn't afford more devs at local rates". But as someone who's not typically privy to this sort of reasoning, it's a fairly good read and I appreciate them for posting it.
- eagle323 6y agoThanks!
- bearjaws 6y agoIn my professional experience, country really doesn't matter. What we found to be most effective is clear cut punishments for poor code quality. We have a itemized list of issues that if we find, the contract would be penalized in points. Items like OWASP Top 10 count as '10 points' and items like abusing null types are 3 points. If the contractors exceed more than 15 points of issues in a month we get reimbursed a percentage of the contract. If they exceed (contractMonths * 20 points) worth of issues then the contract is cancelled. Having the 'eject button' is something we've recently added and not had to use yet, thankfully. Combining this with interviewing the contractors before the work begins has helped reduce defects and having to refactor the code that is build by them. Overall contractors are a massive time sink, our benchmarks indicate you will need 3 FTEs per 8 contractors to coordinate everything and review the work that has been completed. The quality is usually not the same no matter how much you try.
- eagle323 6y agoWow, smart approach! I can tell you that one of our clients recently hired an external tech consultant to evaluate the code and make sure it is done right. I guess it is a good approach too.
- giantg2 6y agoMy company did some outsourcing. It was terrible, and not as cheap as they thought. They tried to replace a team of 8 US personnel who supported a main workflow application. The vendor wanted to replace us with 19 resources. I think they finally settled for 12. Also, a few of those resources had to be on-shore to do the PRD support because of restrictions in the financial and PII data. The resources continuously cycle through those contract jobs so they don't retain very much expert knowledge on the system. At least I got a different job at the same company. It's too bad they threw away my expertise and I basically had to start my career all over again (it was obscure/rare tech).
- deleted 6y ago[deleted]
- ChrisRR 6y agoIn my experience, while Indian developers are much cheaper they seem to have a much different work ethic to many other countries. It seems like their approach is more to finish the task as quickly as possible, with little care to the quality. Obviously this works for a lot of products, but if you're looking for a high quality, maintainable, or safety critical product then I've found India isn't the best place to go for that. If you're looking for a product to get out the door asap and don't care about the quality of the code and/or UX, then India may be fine.
- Person5478 6y agoThe biggest issue I've seen with Indian workers is they want to be handed everything so they can be left to the mechanical aspect of typing in code. The first time you come across this it's a bit of a culture shock as I think most in the US are more used to having a back and forth exchange.
- ChrisRR 6y agoThat does seem to show up often online, where you can see blog posts, forums, youtube videos, etc. you'll extremely commonly see indian developers asking for the author to practically do their entire project, or ask for a tutorial on doing their entire project.
- bigtex 6y agoYou have seen it too! I have been noticing it online since the mid 2000's. It is not a spam bot either.
- MattGaiser 6y agoA lot of organizations would benefit from being more clear of what needs to be developed, even on this side of the world. I probably lose 1/4 of my time to unclear specs and things that PMs assume I would know. Why they think I know anything about the industry is another question.
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- johngalt 6y agoSummary: "we failed on outsourcing so many times that the costs exceeded any possible cost savings, even taking into account future projections." Imagine how much it cost them to build up and tear down development teams six times. Not just in real costs of contracts and such, but also the logistical costs of training the new teams, building the relationships, finding faults, correcting errors, determining alternatives, knowledge transfers, etc... Not to mention opportunity costs of all the time spent. Effective outsourcing is paying AWS/GCP or Heroku for whatever they can provide. Not trying to turn an expensive employee into a cheap one.
- eagle323 6y agoYour summary is quite good. Indeed, we failed a lot. Please note that we used offshoring providers for all locations. And only after successful work on one of our products, we decided to build our own office and hire our team in Ukraine
- JoeAltmaier 6y agoOutsourcing looks attractive only to bean counters. There are prohibitive issues that take full-time competent management, even to break even. Such as time zones, language, currency and banking, export rules, contracts, internet delays and outages, cultural conflicts. We even had politics interrupt development once (on the daily conference call, he said "We're having a revolution outside my window. I have to go.")
- deleted 6y ago[deleted]
- whatshisface 6y ago>So bill rates went up and all the reasons, or at least one of the large reasons, why people do this went away. We were not seeing the savings, an economic benefit that we once benefited from. I wouldn't normally comment about the grammar in an article... but who wrote this? >25 is the lowest average developer age. Huh? What does that even mean? I think they outsourced writing this article, too. ;)
- jiofih 6y ago“they had much better command of the English language than the ones we worked with before...”. That sounds funny in retrospect
- mromanuk 6y agoThey didn’t learn much about scaling, the site is down.
- eagle323 6y agoWe launched our new website a few weeks ago and yes, we didn't expect that much interest. But now it is back.
- senko 6y agoI've been in both sides of the table: ran a dev agency in Central Europe, as well as hired developers from various places in the world. In my experience, wages of experienced developers don't vary so much geographically, because outsourcing is a global market. Dev/agency in Ukraine, Germany, China or Argentina know what kind of rates they can get based on the skillset involved. These rates are much lower than in superstar cities, that's basic supply and demand and CoL calculation. But companies chasing extra low rates will end up with subpar team and these are the clients and agencies that give outsourcing a bad name - be it India, Nigeria or Slovenia. That's not to say rates are flat. Specialized shops/devs, people involved with prominent open source projects and those that invest in deeper relationships with the clients (and delivering higher/noncomiditized value) can charge a premium, while body shops on UpWork will bid lower amounts. Outsourcing, like many other things in busines can be great IF you know what you're doing.
- whateveracct 6y agomy CEO/cofounder is addicted to outsourcing to India. He has eschewed even considering making any first hires in the US because he would rather hire a boutique contractor from an India firm. I think this boils down to him seeing engineers as fungible legos, so the huge pay difference is just a discount on certain bricks. it's made worse by the fact that a founding team member left the project, so now he is wanting to hire yet another contractor so we don't "fall behind." i've done my part to explain the mythical man month to him but it's fallen on deaf ears. you'd think the founding engineer of the company would be considered the expert in software project management, but apparently having an MBA trumps that.
- goatinaboat 6y agoyou'd think the founding engineer of the company would be considered the expert in software project management He doesn’t really see you as a co-founder is why. To him you are just Lego too. You should reevaluate your relationship with him and with the company.
- rootsudo 6y agoThat's a really sad, but accurate assessment of that situation.
- whateveracct 6y agoyeah that's my sense too, but it's a hard thing to reckon with given that my vested stake is so large already, and the company is well beyond MVP as well.
- schedutron 6y agoThe outline map of India is simply wrong.
- iagorodriguez 6y agoDemonizing offshoring, nearshoring or reducing it to a cost saving strategy is ... terrible way of seeing it. It is about talent and talented people. And talent is everywhere. I say this because our company does nearshoring for the US from Argentina and Chile to US companies. We don't try to be the lowest price, we try to be as good as we can. If it saves our client's money, much better. But our goal is not to save our clients money: our goal is to deliver as much value as we can. We focus on frontend: we have 2 master classes a week about topics like debugging, communication, teamwork, data viz, javascript... We have english lessons to improve communication skills. We try to give back contributing to frontend libraries by fixing bugs on those libraries and sponsoring their devs. We have created open source tools like https://grid.layoutit.com/ https://grid.layoutit.com/. We put our souls on this and we are very fortunate our clients trust us and value us. We are not the only ones doing this and doing it as good as we can. The base of business relationships is about mutual benefit.
- eagle323 6y agoThanks for sharing it. We follow quite the same best practices both for our Dallas and Ukrainian offices. And yes, we are about the value as well. But usually, companies outsource either to cut their costs or to reach talent that is not available locally. That was the reason why we outsourced.
- iagorodriguez 6y agoThanks to you for taking the time ro reply back :).
- zadkey 6y ago"They were doing great work for us but eventually, there was a business event where they left." What the hell does "business event" mean?
- randompwd 6y agoblogspam. money shot quote right at the end > However, we believe our Ascendix story will help you simplify, accelerate offshoring, and become a valuable learning experience and effective guide for your company. > So, if you are looking for reliable outsourcing software development companies with solid expertise and large experience in building high-quality digital solutions, feel free to contact us and we will be glad to provide you with a free estimate of your project development requirements.
- benlivengood 6y agoI wonder if the current remote working situation is helping to normalize developer salaries worldwide. I also foresee a few more "business events" in the future for companies that try to drag all their devs back into open office layouts.
- isbvhodnvemrwvn 6y agoQuite frankly from experiences of both me and my friends - many companies might be ok with remote work, but few are ok with fully asynchronous workflows (like in many open-source projects). That alone is a blocker for distributed work beyond a couple time zones.
- mikevm 6y agoA question to those that hire contractors from foreign countries - how are you not scared that they will steal the source code and just disappear?
- goatinaboat 6y agoCan anyone remind me what is Wes Snow’s job title?
- franklyt 6y agoReally weird article, reads like a “this is why outsourcing should be illegal” post as the guy goes through a bunch of countries like toilet paper.
- Brian_K_White 6y agoIs it just me that finds it kind of funny for this author to be criticizing others' command of English and clear communication so much?
- aroman_ro 6y agoThe problem that almost nobody mentions with hiring devs in a poor country: Programmers are well paid in comparison with general population. That attracts people that have no talent/love for the domain. People that are in it only for the money. The bigger the difference in earnings compared with the general population, the more of this you'll get. I live in such a country. Offerings of 'mentorship' and training (in three months or so) for good money are plenty. They make a lot of 'programmers' that know almost nothing and you'll have a good chance of getting those if you outsource blindly (not if you verify them, ask them for a university diploma on the domain and so on).
- MrDresden 6y agoI have worked remotely each day for the last 3 years with both programmers and testers at one of the largest IT consulting firms in Ukraine. I have no perspective on the cost of doing so, but I do have some on the team work and quality of outsourcing over there. Like everywhere else in the world there is a shortage of high quality professionals in Ukraine. And specially now that more and more companies are outsourcing their work over there. My team has had abysmal programmers & testers come in (who we simply had removed from the team as a result) all the way up to fantasticly professional and capable people. It might take some time, and may cost you above the going rate, but there are certainly gems to be found over there. The main problem has been the culture. In our experience there is a lot of rigid hierarchy over there, that in the first few years kept team members from speaking their minds. Junior developers would never speak their minds, and blindly do what their seniors would tell them to do. And similarly, the seniors would never take any input from anyone who wasn't either a senior, pm/po or architect. And lets not get into the sexism that is deeply rooted in Ukrainian society and culture. This is all very different from what we are used to here in northen Europe, as each team member is expected to speak their mind completely (put professionally ofc) so as to leave no stone unturned. Once a decision has been made this way, the team can move onto something actionable as a unified front without unmentioned trepidation arrising later on (or such is the thinking at least). It has taken us three years of moving people in and out of the teams, figuring out the best composition of what people to have together and where. And even bringing outside contractors in to replace people within the contracting firm we use. So it is no silver bullet, but it can be done. I do wonder though if all that time and effort, with the cost incurred, would have been better spent simply hiring locally and building the best team we could here.