Companies want to outsource my contract to Asia. Why wouldn't I outsource my development myself?


November 11th, 2015

I am in pre-development, trying to research good companies to work with. It seems that they want to outsource the work they would be doing for me to Asian companies while I still pay an American pricetag.

Why wouldn't I contact companies in Singapore, Korea and other Asian countries myself to discuss my development needs?

Mark Wing Client Engagement Director at Small Back Room

November 11th, 2015

I guess it does depend on whether the middle man is adding value.

Let's assume it is highly likely the value added work is being done locally (strategic planning, and managing the quality of deliverables, etc) and that he is then outsourcing several component deliverables from different overseas providers, which he then has to bring together as planned. Are you ready to do this work for him? Also, he will probably be working with providers he has an existing relationship with. They will understand the way he likes to work and he is presumably managing their delivery against his tried and tested controls. Can you do this equally well?

Steve Owens

November 11th, 2015

For the same reason you hire a contractor to find and supervise all the subs - because the contractor knows how to do it really well.  

We use "contractors" (they are really no different than our own employees at this point) all over the world.  We have been doing it for 15 years.  It took a long time to find these people, and even longer to figure how to get them to work as a team.  Even knowing what to send "outhouse" and what must be done "inhouse" is an extremely important decision, and is not obvious.

I have seen a lot of people waste a lot of time and money thinking they can replicate this in a month or two.  It always looks a lot easier than it is.

Joe Walling CTO, software developer, software architect

November 12th, 2015

Jan, I guess we will have to disagree on your premise regarding cost. While in my early years I had some projects where it actually cost me more to use off-shore developers, my recent projects have been much more cost effective using our current approach. I am able to do the projects for about 60% of the cost of all US talent. This includes all costs associated with the project.

While I have never outsourced to Asia, i currently source off-shore developers from Eastern Europe and have found developers that are every bit as good as the American developers I work with. I have been able to find developers that write and understand written English well. The developers I work with know when to say no or question things in the specs.

I agree that it adds some challenges, but in my case, it allows me to take on projects that my clients could not have afforded otherwise. 

Jatinder Singh

November 11th, 2015

You could and you will save a ton of money. My company has developers in India and we have presence in US. We can do the development for you at India prices in US. If you are interested, please contact me at jatinder at hatchPlan.io. Check our web presence at hatchPlan.io. Best, -J. Sent from my iPhone

Stephen Mitchell

November 11th, 2015

It can be very difficult to find The Right people to outsource to. And then there is the problem that you don't have trusted people "in the room", whereas they likely do.

Anyone can outsource. Doing it effectively is a much bigger question.

Alexandra Titova Head of Sales and Marketing @ Eastern Peak: Custom App Development

November 12th, 2015

Brent, you definitely can. If one is fortunate, it will help you save lots of money. 

However, as other participants mentioned, you should also take into account the risk of losing much more money than what you have saved.

In order to benefit the most from taking all or some of your development offshore by yourself, you should understand the pitfalls and learn how to avoid them. As a quick overview of the most common pitfalls, take a look at this article. Hope it will help.

Feel free to contact me with any questions. I'm with Ukrainian software development firm that offers outsourcing services. Whether you want to try a small test project or just get a quick professional advice, please do not hesitate to contact me.


Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

November 11th, 2015

I am in agreement with Mark Wing and Steve Owens. The trick to outsourcing is to have immediate access to quality people in the remote location, and to know how to manage them effectively.

I haveworked with several remote teams in Asia. If you can precisely and unambiguously define what you want in an unambiguously testable way (like: "exactly the same appearance and behavior as our already working IOS native app, but for Android" and passes our existing regression test suite"), then working with most offshore developers will be pretty easy, but if your specs are very nebulous and you are figuring them out as you go, working with remote Asian teams can actually be challenging and more costly than US development as you pay lower unit costs but take many more turns to get it right.

A good outsourcing company can add already identified team members that they have prior experience with on very short notice, and when ongoing support is required they can usually draw upon the original developers again for fixes and enhancements, They should be able to cover the added costs of the experienced project manager(s) out of the savings in programmer costs so their prices are competitive with local US programmers who would not require such magement, but might be in short supply.

You definitely can manage such a team yourself but you might not do it as efficiently. So make sure that is what the outsource companies can deliver for you, not merely quick access to remote bodies that you will find challenging to manage.

Mohammad Siddiqui Staff Completions Engineer (Wolfcamp) at EP ENERGY

November 11th, 2015

Brent, I would not recommend working with any company that is outsourcing the work (especially software), here are couple of things to think about 1) IP, NDA is honored by companies that are USA based and you can take them to court if they infringe IP to other companies. If your work is outsourced how are you going to exercise the NDA? being offshore how do you know they will not sell your code to some other competitor 2) Outsourced programmers generally when asked todo spec deliver ABC, deliver ABC. What I have seen fromcompanies that hire US programmers they when asked to deliver ABC, come back and say; hey why do you not these additional features, have you thought about this and that and help deliver a superior product spec of ABCDEF.I hope you get the picture, outsourced programming shops deliver on spec, anything out of it they will say was out of scope as it was never specified (but we can do it, will just take longer). Long storyshort I have been through this and have decided to take one ofmy side evening software projects devawarded here in the USA (Austin, Tx). It costs more but the quality is great and the bugs are to a minimum (Pls not you will have bugs, but you want to try to catch them early and be minimum on the finished product, as your product gets one shot from the consumer.)

Saying that I will say I am sure there are some good development shops offshore, if you plan to go that route make sure to check 3-5 references.

Good luck!

Joe Walling CTO, software developer, software architect

November 12th, 2015

Yes Brent, you can. However, make sure that you understand the risks, many of which have been covered above. Here are a few questions to ask yourself and if you don't know the answers off the top of your head, then you need to find someone you can trust to help with the technical aspects. If you don't know these answers, it will be a very costly learning experience.
  • Do you know how to properly screen for technical competency? 
  • What questions do you ask to see if they will be able to commit ample time to your project?
  • Do you understand the cultural implications of this locale? Some cultures can never tell you no, and believe it or not, that is not a good thing. One of the most popular regions US companies outsource to is also one of those most likely to result in a failed project because of these cultural issues.
  • Do you have ready access to a pool of proven developers?
  • Do you have systems in place to support the managing and monitoring of the developers?
  • Do you have systems in place to manage the entire life-cycle of the project, to control the source code, and to automate the build process?
In general, I would not expect to pay an American price tag for overseas developers and if this other company is doing so then they may be getting greedy. However, don't expect to see bargain rates like $10 to $15 per hour when going through another company. If the company is sourcing quality developers and handling the project infrastructure (servers, source control, ALM tools, etc...)  I would expect to see contract rates of $30 to $50 per hour for an offshore developer. This is well below the $75 to $120/hr I see in my area of the US and is also below the cost for a good full time permanent US employee when you take into account benefits and other overhead costs.

If you hire the right company, there will be very open communication and the company will ask many questions and provide advice based on prior projects they have done. My company provides a mix of US based and off shore developers and QA. This way, you get great communications and project management with an overall lower cost since the non US talent is billed at half the rate of the US resource.

I have written an ebook that covers much of this. You can get a free copy here. Feel free to contact me if you have any questions that the book may not adequately explain.

Jan McCleery Software Evangelist and author of "It Starts with an Idea"

November 12th, 2015

I've built my own software start-up and have worked at a company where I implemented an offshoring capability. That company eventually transitioned all development work overseas, so I've worked extensively in that environment. I've analyzed the true costs of offshoring as well as the product results from onshore teams versus offshore teams.

What people are saying is true about the real costs, risks, and difficulties of doing offshoring yourself. Then, even when done right, the results aren't up-to-par with what you can accomplish using onshore developers. Offshoring adds burden to any members of the local team (like yourself) who has to do more written work to communicate and/or lengthy evening phone calls, made more difficult due to overseas infrastructure issues and language barriers.

One question I ask is, why go offshore? It will cost you as much, once you add in the hidden costs needed to create a "successful" offshore team. Even then, the results will not be as good as if you hire the developers yourself and all work locally with you, in the same place, collaboratively. You will need a good architect, though, regardless and good development processes.

Which raises the second question, why are you going to another company? Is it for them to provide that architecture direction and development leadership? If so, then I would find a company has the best reputation and let them decide what to onshore versus offshore. Don't expect any cost savings, though, regardless of their onshore/offshore mix.

For my start-up, it was more cost effective and productive to stay onshore. I talk about that experience, what you need to think about when creating a new product (from the architecture and development methodology standpoints), and my thoughts about offshoring in my new book, "It Starts with an Idea," available on Amazon.