Recently I dealt with a software development company that used an outsourced development model which comprised the following locations:
- India: Development centres comprising dozens of developers.
- Canada: Technical management and some development.
- USA: Data center hosting test and production servers.
My exposure to the company was relatively brief but from what I saw and heard the model was a mess. It was a mess because:
- There were software quality issues and inadequate quality metrics.
- There were network communication latency and availability issues between India and North America. Acquiring high volumes of software artefacts from India was a time consuming process and there were regular network outages.
- Language and time zone differences created communication issues between India and Canada.
- The huge time zone difference sometimes required Canadian personnel to regularly meet during evening hours when Indian personnel were available.
Pretty standard issues that have plagued outsourcing since it became in vogue.
I am sure some of their quality issues can be addressed with the introduction of better practices and tools. But I bet that a number of quality issues are directly related to the software development being done in a different country, in a radically different time and “language” zone.
I am not suggesting that all software development outsourcing models are subject to quality issues. And I am not suggesting that a well thought out strategic approach to developing an outsourcing partnership is going to yield a mess. However, I’ve been “around” outsourcing enough now to know that if the company in question added up all the hidden costs of their outsourced model (related to poor quality, management/translation overhead, communication, etc), they would likely find the costs savings to be either minimal or non existent compared to a “home sourced” model.
A “home sourced” model includes what I see as the very viable rural sourcing approach as provided by companies such as Rural Sourcing. Monty Hamilton has recently taken over as CEO, and has big plans to increase and improve the company’s presence and profile. Rural Sourcing’s labor cost is reported to be about $60/hour, around double what it would cost in India but at least half the cost of using a big consultancy. So, although the “on paper” labor rate is higher than the Indian labor rate, taking the hidden costs of oursourcing into account should make a rural sourced rate of $60/hour very attractive. Costs are certainly very important but think of the huge advantages of having your development team based in North America and within a reasonable time zone. It’s especially advantageous when developing business oriented solutions that require extensive collaboration and communication around the team of peers (and I’m including team leads and management as well in the term “peers”!). Of course, that comparison will be changing as the Indian market changes to address the current economic conditions and what I’m seeing as an ever increasing propensity by businesses to either not outsource, or to “backshore” their tech shops.
Back to the company in question that’s got itself in an outsourcing “mess”. I would love to be involved in building the business case to move that company from an Indian based development centre to a rural sourced presence somewhere in North America. I think it would be a slam dunk win for backshoring.