A Comparison of Staffing Models
Many startups and small to medium size enterprises utilize off-shore for a variety of reasons, with the largest reason usually being cost. Companies with limited funds, companies with restricted budgets; or, simply companies struggling to compete in a weak economy, are all candidates for outsourcing outside the home country. Some companies simply look to the largest off-shore provider - India. While others seek and learn about both alternative off-shore and near-shore destinations.
Excel SoftSources encourages companies to evaluate all criteria before making a final decision on location. The figure below describes some factors, that should be considered, when looking at outsourcing to a foreign provider.
Cost Savings
Direct labor wages vary greatly depending on location, skill-set, experience and perceived value by the labor markets. Typically, firms can realize savings on direct labor between 20 to 50%. However, this does not mean that this savings falls directly to the bottom line. Other factors should be considered beyond direct labor wages such as:
- Travel time - outsourcing projects to foreign locations requires project oversight. In the startup phase it is important for management to travel to the offsite location to communicate requirements, conduct interviews, provide motivational speeches and much more. While the project is in execution, it is also important to periodically appear in-person, not to spy on progress (or lack thereof) but verify that all aspects of the project are running according to expectations. If there is no live interaction between on-shore management and off-shore development, overall project risk increases.
- Productivity - Hours earned versus hours burned is a very important project management concept. In laymens terms, this means how much time will be wasted on non-value-add activitities versus value-added work that generates usable assets or deliverables. In certain locations, due to distance, language, or cultural gap, there is a higher inherent burn rate. So, the location and/or provider generally will cost more over the life of your project.
Excel SoftSources provides competitive pricing models and the management structure required to reduce project waste.
Effort and Schedule
Time to market is often a critical success factor on many software initiatives. Thus, the cliche of executives expecting the project to be finished in X amount of months, but in reality the project can only finish in X plus Y amount of unestimated month. There normally is a variety of root-causes that contribute to this negative variance in different degress. When it comes time to use an offshore provider, history shows that several key factors, which can affect schedule, are important to consider:
- Resource availability and retention: It is true that off-shore firms have the ability to maintain deeper benches and by some have been fictionalized by large towers in Banglore, India, with armies of programming drones. However, if the project incurs high resource turn-over - or - if there are simply no resources available, you are open to delays and at-worst project failure.
- Requirements definition: If business requirements are not well defined by the on-shore team, or not well understood by the foreign provider, projects can experience un-needed wait-states, while the definition is clarified, or re-work when the offshore team develops a product that does not satisfy business requirements.
Excel SoftSources strives to retain top-tier resources and each client receives and American account manager who continuously serves as liason between the teams to verify the requirements are well defined and well understood on both sides.
Expertise and Quality Control
Expertise in a particular skill-set such as C# is relatively easy to find both on-shore and off-shore locations. In each case, the customer needs to decide how much they want to screen and/or test each resources to arrive at the correct mix of junior and senior resources to arrive at a baseline fixed cost or daily burn rate. Moreover, customers should decide upfront whether quality is controlled by the onshore team or the foreign provider. In all cases, the responsibility lies with the customer for ultimate acceptance. Regardless of resumes or certifications, It is best to assume that not all developers are equal.
One factor that is often underestimated is quality control. Quality control on the development side is different than quality assurance on the testing side. Both are key factors in project success. However, quality control includes things like management oversight, code reviews, source code control, migration procedures and component test to verify that the software is developed to the highest standard. There needs to be very clear expectations on both sides, on both accounts. The customer needs to choose carefully to find a foreign provider capable of meeting quality control expectations.
Excel Softsources prides itself in the ability to attract top-tier IT talent and has all required quality control tools, systems and processes in place to deliver a software product in-line with your exceptations.
Project Risk
Every software project has an inherent degree of project risk. In this case, we define risk as uncertainty or "the unknown." For example, there may be legislation in congress, its passage may impact the reportablility of your application. Thus, due to this risk, the project scope may increase and subsequent costs associated with direct labor and milestone also are shifted. Or, sometimes this risk is purely technical. Does this piece of software integrate well with that piece of software? The list goes on, but in each case, the affect is unknown and classified as a risk.
As would seem obvious, project risk generally will increase using an foreign provider, because it is simply developed in a different shop, with differing work ethics, language skills and norms. On a macro scale the inherent risk can be due to socio, economic and/or political instability. For example, in the 1990's, much of the risk of off-shoring to India was due to unstable or inadequate infrastructure. This was mitigated by reducing dependence on public services, and building self-contained development facilities, with private services such as power backup, satellite communications, water purifaction and transportation. This increased risk and total of cost of investment for many customers.
In every case, the customer should decide what degree of risk is acceptable, and what kinds of mitigation can take place to reduce overall risk. Click here to read more about risks associated with off-shore development.
Excel Softsources operates out of a development center located in San Pedro, Costa Rica. San Pedro is home to the country's largest university and all modern technology and conveniences are publicly available. Furthermore, Costa Rica is well-known for having a long history of stable and peaceful democracy. A wealth of third-party material is available which describes why Costa Rica has become a hot spot for near-shore development under "Articles."
Excel SoftSources encourages customers to make informed decisions when it comes to all factors related to working with a foreign provider, because Excel values long-term relationships over quick-wins.