Outsourcing Web Development to other countries can create the Illusion of Saving Money
A lot of people talk about saving money by outsourcing to foreign countries such as India. However, my personal experience is that it actually costs way more than doing it in the US if you are a resourceful entrepreneur.
I’m sure there are some firms out there that are truly good and cheap. I also know that there are way more US development firms that overcharge, but if you can find the cost efficient in the US, the effects are much better than the good in many foreign nations.
This post is not about how the miscommunication, off hours and what not could make development more expensive. No, I’m talking about pure projected spending at the beginning. Here are my experiences:
Outsourcing to offshore teams I estimates takes 3x more hours than my in-house developer
There was one point where I seriously looked for an outsourced company as backbone developers for Viralogy. After looking around, I found a firm that seems really professional, has been around for close to a decase with dozens of engineers, and built all the websites for National Geographic in each country.
More importantly, their programmers charge $10-15/hour. Compared to a full-blown traditional development firm in the US, that’s a tiny fraction of what it would cost. It all sounded very promising (besides a tiny bit of that language barrier).
However, very safely, I asked them to do an estimate of a project that we were working on. My in-house programmer previously made an estimation, which was about 88 hours(which he didn’t exceed much afterwards). The foreign firm gave me an estimate too, and it was shockingly 350 hours.
How could it be so different?
After weighing the cost, we decided not to use them.
Another outsourced offshore firm is by far the best out of a dozen firms my friend worked with
Almost a year later, I was talking to a entrepreneur friend who seemed to have a lot of experience working as and with software engineers. He recommended me an Indian firm too. I told him about my last experience and I was skeptical about it.
He told me that it’s normal that most of the offshore development firms are terrible and not well trained, but sometimes you can find that one good one that is just smack better than everyone else. He said he worked with over a dozen of them and finally found that one firm that is reliable and substantially stronger than the rest.
I thought, hmm, well if a person has been through the trial and errors and found a good firm, then why not check them out.
They told me they charged $18/hr. More expensive, but not mighty terrible. But from my last experience, I asked them to do an experimental project first.
Outsourced Firm II estimated a project to take 20x longer than my friend in the US
My friend wants to create a minimum barebones job listing site that is focused on startups called Mart of the Start, and asked me for help/reference. I looked at the screenshots and decided it was easy enough and could be finished within a week.
I then forwarded these screenshots to the off-shored firm and asked them to first give me an estimate.
Now I rarely get astonished, but this number pretty much astonished me.
That’s 215 hours x $18/hr = $3870.
True, this is a relatively normal price for a full website, but like I said, this is a super simple website. I estimated this to take less than 5 hours for a really experienced web developer. The firm told me it would take 35 man days.
OK, think that the project is harder than I believe it to be? After this offshored firm game me these numbers, I immediately referred my friend to another friend I have who I know is reliable and charges $25/hr.
After looking at the project, my developer friend in the US said that he would charge around $200-300 and finish it over a weekend.
The funny thing is, after I told the offshored firm this and said that I can’t work with them, they said, “Thank you for the response. We however would like to mention that a test project just to check our coding capability can certainly reduce the efforts by around 50%.”
Oh, now you realize I’m evaluating you and so your “efforts” can decrease by 50%? What is that? Also, even if they were 50% off, they were still ripping us off. And remember this is supposedly the good offshore firm that was WAY better than the other dozen that my friend worked with.
Still consider offshoring your development but be extra cautious
Again, I’m not saying all these firms are bad and would make you lose money. There are certainly firms in the US that charge $150/hr and would say it takes 100 hours to complete. There must be some good solid firms in various countries that would accelerate your business like no other.
However, I want to remind all of you not to get fooled by the hourly rate they pose. Just because they are working from foreign countries and the hourly rate is low, doesn’t mean they are saving you money.
Anyone else have experiences with outsourced development firms that you want to share (any country) so the rest can learn from?