“Offshoring” is the practice of using a contract labour force that is located in a global area that offers cheap workers. Those workers (and their employers) claim that they are skilled journeymen but in reality, they are mostly what we in North America would call “junior apprentices” who lack the experience and expertise to write their own code. In the software industry right now, those workers are typically located in India, but there are other places as well.
A Couple Quick Stories
Story #1: In the spring of 2016 we placed a bid on work for a customer who was a large education institution. The story goes that our bid was 3 times larger than the bid that they picked. The winning bid was a one-person company local to the customer and the dev team was contracted offshore. The RFP was clear about timelines (delivery in the early fall of 2016), functionality, expected user volume, etc. In the spring of 2017 I happened to run into the customer and asked about the project. It still wasn’t delivered, the functionality under test lacked promised functionality, and it was alreayd way more expensive than our bid was entered at.
Story #2: In 2013 we ran into a project who had some software that they had already developed by a “basement developer”. They had a large institution interested in licensing it, but the customer wanted a real development company standing behind the software before they signed on. We had a look at the software and gamed out a scenario where we would rewrite key parts of it on top of our DECK DecisionWare platform to ensure stability and quickly get to MVP (Minimal Viable Product) with the project capital available. From there, future functionality can grow on that stable footing as the first and other customers come online.
Communication with the primary dropped from daily while we were scoping, to every couple weeks then monthly as negotiations between our customer and their customer continued. Communication fell further as the negotiation intensified – once every 6 or 9 months. The last contact being about 1.5 years ago.
We reconnected over coffee last month. The end of the story goes that about 14 months ago, an agreement was signed and the institution took over redevelopment of the software. Their internal IT group offshored it. The primary was embarrassed about how the project went in the hands of the institution and the offshore company. He was able to kind of share that the price was “over 3 times” what we sketched out on a napkin back at the start of the project – even though the offshore company is more than 5 times less than our hourly rate. He wouldn’t go further into details (rightly so).
These are two recent stories that we’ve been directly involved in during our 12+ years in business. There are lots more. And there are scores upon scores of these stories that I hear about from other software company owners. These cautionary tails started rolling in way back in the early 90’s when I began my career in high tech software development.
Why?
If the stories are not new, why do IT departments fall victim, and WHY, for the love of all that is holy, do they repeatedly fall victim?
I’m not sure I can answer that. I’d love to have the magic words to say so that customers don’t get ensnarled in this pitfall of wasted money and time so frequently. I have three guesses on this:
- They feel that one day, the promise of cheap labour is actually going to bring a project in cheaper than their experience tells them.
- They really don’t understand how much effort a professional company like Spieker Point puts into assessing the project to ensure it’s in our sweet spot; and how little an offshore company truly strives to understand the nuances of their project.
- In our global world where you can quickly get a product from the other side of the globe, there is little experience and confidence in “living locally” – when the opposite is true…
We Don’t Offshore
We don’t offshore software development. We have a VERY skilled team right here in our office. During our Sprint meetings, our standup meetings and over lunch, we debate the correct approach to the customer’s requirements. Our experience, skill, knowledge and dedication to the profession – all added to our DECK DecisionWare product at the core of the project – allow us to be very close with our bids, and produce a world class product on time for our customers. When a question comes up, we talk to our customer.
Story #3: at the end of a project with a Health Authority, we were in a finalization meeting with our customer’s lawyer. At the end of the meeting, he leaned back in his chair and said: “Listen – I’ve never seen a big project go like this – on time & on budget. I wish all of the projects I see come across my desk were like this – actually, I’d be out of a job, so scratch that. I’ve been suggesting to my client to nominate you for an award, but we can’t find one that would be appropriate. I just thought I’d mention that this has been a very good project!”
We’re Not Pushy. Is That Now a Bad Thing?
At least once a week I get a phone call from some company in India who wants to be our offshoring partner. I take a couple minutes to explain that we don’t offshore, and would they kindly remove us from our call list. They typically get pushy and defensive, and I get more aggressive protecting our stance. Then I realize that it’s not worth it, say “goodbye” and end the call.
I wonder: does this technique from the same offshoring companies really work with the IT departments in large institutions? To get more business, does Spieker Point really need a pushy cold calling effort?
I have lots more to say on this subject, but I see I’m already a couple hundred words over what people tell me the limit should be for a blog post. Let’s continue the conversation in the comments, or feel free to contact me via email.