Return to Archive Runtime - The Software Outsourcing Newsletter for Executives and Investors from Accelerance and Steve Mezak In this issue: Do you know the best way to select an offshore vendor to develop your software? Is it like hiring an employee or purchasing office supplies? Did You Ever Purchase an Employee? A bad experience with outsourcing in the past can really give you a sour attitude about trying it again. Some people have a visceral reaction whenever they hear the "O" word - Outsourcing. Perhaps they tried to "purchase" outsourcing services in the past and negotiated such a "good deal", they just about guaranteed they would get poor results. Hiring an outsourcing vendor is like hiring the employees for your internal software engineering team. Yet many companies go about selecting an outsourcing vendor as if it is a purchasing process, seeking the lowest price possible for the service. Did you ever purchase an employee for your engineering team? Of course not. Hiring an employee takes a careful evaluation of candidates through interviews and reference checks followed by a reasonable negotiation over salary. Sometimes you have a choice between two or more employee candidates. Do you negotiate hard so you can hire one of them at the cheapest possible salary? Probably not. If you do, you risk hiring an employee that will only stay until a better job comes along elsewhere. And then you have to start the long hiring process for a replacement all over again. It is the same for an outsourcing team. Negotiate too hard and there is little incentive for them to perform well. I often hear stories about people that get bad results with their outsourcing. Sometimes the story is about meager results on a smaller project that is taken on by large outsourcing company. Of course to you a team of ten engineers is not a small project. But try to get the time of day from a large outsourcing company that takes on your project, when they are normally looking to bag projects needing a hundred engineers or more. Other times outsourcing fails because a smaller outsourcing team takes on your project at a low bid out of desperation for new business. Wow! You think you are getting a great deal at $8 per hour. Until you start getting crappy code that doesn't run and it takes days to get responses to your emails. If your outsourcing vendor has a very low rate, you need to understand why it is so low. Are they desperate? If so, do you really want to work with them? Will the rate go up in a few months, after you feel locked in and hesitant to face the switching costs? And just because your outsourced engineers are far away doesn't make them any less human than you or me. They may tend to be agreeable because of their cultural background. If you negotiate a deal that is too good for you or if you treat the outsourcing team members like dirt, you will get the results you deserve. In the mid 1990s, a friend of mine, let's call him Romeo, was an early employee at a Silicon Valley startup. Romeo was negotiating with the founding CEO for his starting salary and stock options before coming on board. The CEO had raised a small seed round of initial funding and offered Romeo a very low salary. "But I have six kids." Romeo said. The CEO said, "Yes, I know, but what does that have to do with how much I pay you?" The CEO had a point. After all, the salary should be commensurate with the value the employee brings to the company. On the other hand, any smart negotiator knows you have to take the other person's perspective into consideration. Romeo took the job and stayed at the company for a while, but was completely discouraged during the last six months before he left to join another company. *** Hiring an outsourcing team is like hiring employees, and it pays to be fair and equitable. Think of the offshore team as your own team, one that you carefully hire and manage over time to get excellent results. Otherwise you face getting software of poor quality and having to go look for a new outsourcing vendor again. And that will cause you months of wasted time.   Vision Resources Are you wondering how you will find and select an expert offshore team to develop your software? Use the Accelerance Vision Resources(sm) outsourced vendor selection service and cut the time of your vendor selection process by as much as 90%. Vision Resources leverages the 17 Accelerance teams in 14 countries around the world. Click here to learn more about Vision Resources and how to get started with outsourcing quickly. Accelerance delivers impartial & expert strategies and services for risk-free outsourcing of your software development.   Until next time, Steve Mezak Accelerance, Inc. Risk-Free Outsourcing www.Accelerance.com 213 Garcia Avenue Half Moon Bay, CA 94019 1-650-712-8990 Contact me by email (c) 2005 Accelerance, Inc. All rights reserved. You are free to use material from the "Runtime" eZine in whole or in part, as long as you include complete attribution, including live web site link. Please also notify me where the material will appear. The attribution should read: "By Steve Mezak, CEO of Accelerance, Inc. Please visit the Accelerance web site at http://www.Accelerance.com for more information and resources on outsourcing and creating great software products."