F.A.Q on software development outsourcing

Software development outsourcing has long been accepted in the IT industry, but there is still no unified recipe on how to find the right partner.

While large enterprise has the benefit of outsourcing advisors, SMB companies and startups have many questions, especially when considering outsourcing overseas.

We’ve put the most common questions into a short, helpful guide.

Is software development outsourcing overseas cheap?

Thanks to  the tech talent shortage among IT companies in the US it’s definitely cheaper and faster than creating an in-house team with the same level of expertise.

However, you can’t expect to find highly skilled developers for  $2/hr. There is a difference between outsourcing and cheap-sourcing.

When you outsource wisely, along with the cost reduction, you get time-to-market acceleration, top talent access, and the advantages of external expertise (don’t underestimate this!).

But if you hire strictly by price, using the cheapest labor you can find, you shouldn’t be surprised when confusion, delays and a buggy final product are the result. As in most things, you get what you pay for.

What are average software development rates overseas?

This isn’t a valid question. It’s like asking ‘how much does a programmer cost’? Let’s look at why this approach doesn’t work.

The average salary for a software developer in San Francisco, according to PayScale, is $98,300, but that’s the average. There are programmers making as little as 60K, most in the $90K range, and still others at $130K +/-.

Does that help you help you understand how much your finished product will cost? Probably not.

When you talk with contractors, you need to be specific about your product, the specific features you want, and within what specific time-frame, not ask what your average rates, etc.

After all, when you decide to outsource, price should not be your first question. Cut your list of providers based on their ability to build what you want and only then compare prices.

Where to outsource software development?

Again, generalizing is not a good idea. If you dive deeper into outsourcing discussions, for example Ycombinator:Lessons from Outsourcing to India, China and the Philippines or Kissmetrics:Should You Hire an In-House Developer or Outsource Overseas? you will see that most experiences differ not from country to country, but from company to company.

If you don’t have any strong references or special insight, then look for a reliable partner anywhere. It’s a good move to interact with several companies regardless of their location and then  decide which company suits your needs best.

What are risks of software development outsourcing?

We will be writing a detailed post about risks in the future, but here are some basic risks to give you an idea.

  • culture
  • management
  • time-zone
  • communication

While most client companies are concerned about “another part of the world” risks, very few consider the possibility of their own in-house team’s lack of communication skills.

Keep in mind that at least half of management and communication risk can be prevented by a well-prepared in-house team. Ask yourself

  • Can you/your team articulate a clear vision?
  • Do you have coding standards your developers adhere to?
  • Do your managers give clear tasks?
  • How strong are the established communication processes within your own company?

If your developers are deciding what they will do next at the water cooler you will probably have problems communicating with a remote team.

The more organized your side of the relationship the better results you will get.

Are offshore software developers as good as domestic?

There is no nation on earth that can claim they produce only excellent coders; there are great, good, average, and poor coders everywhere.

US developers like to claim they are the best programmers, but Hacker Rank (a platform with a 2M+ skilled developers community that helps companies evaluate developers based on their skills) has better stats. You may be surprised to see who does rank at the top.

Is it safe? There are so many bad stories…

You’ve probably heard a lot of horror stories about outsourcing overseas. I won’t argue; the negative stereotype of offshore software development is based on many bad outcomes.  Some were the result poor tech skills, some failed due to client error, and others were a combination of the two, but these are the same reasons that domestic outsourcing fails.

Software development overseas helps many companies get faster, less expensive, high quality results. If not, why would software outsourcing grow at the speed it has?

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