Return to Archive Runtime - The Software Outsourcing Newsletter for Executives and Investors from Accelerance and Steve Mezak In this issue: Which region of the world is best for your outsourcing? Learn how to compare regions in this issue of Runtime. The Cost of Outsourcing Is All Over the Map Did you ever have a friend that blurts out random comments that are out of the context of your conversation? I had friends like that in High School in the 1970s. Back then we had a sarcastic question we would ask in response to these random non sequiturs. “What does that have to do with the price of bread in China?” In other words, I had as much interest in their random comment as I did in the cost of wheat-based products in some far off land, which of course was no interest at all. Now it is thirty years later and I still am not very interested in the price of bread, but many of us care deeply about the cost of outsourcing software development in China, India, Russia and many other countries. The most popular reason American companies decide to use offshore outsourcing is the cost savings. But the raw hourly cost of software engineers should not be your only region or vendor selection criteria. First of all, there can be hidden costs. For example, travel costs to and from your outsourcing destination. This can be ignored for small projects where you have no need to visit. But for medium and large sized projects that last a long time, travel at least on a quarterly basis is recommended. The cost of sending multiple people in both directions adds up in both dollars and travel time required when you outsource to the other side of the world. Second, costs can vary widely amongst vendors within a region. Cost alone cannot be used to narrow your focus on one region of the world or another. Your choice of region will likely be dictated by other factors. For example, one Accelerance client wanted to outsource to China because it was going to be a large market for their product. They wanted to have a development center there as well as a sales office. Another client wants overlap with their workday in Boston and Latin America is the best region for them to consider. If you have no preferences or preconditions that dictate the region for your outsourcing then you will want a way to quickly compare different regions of the world. Then you can focus on vendors in the region that you think is best. But how do you compare one region with another? One country with another? Or even different cities in a given country like India? One client expressed frustration with comparing regions this way: "I found myself staying up past midnight collecting statistics like the population of Sofia, Bulgaria. I am not sure all this data will help me select an outsourcing destination, but I will certainly make a good contestant on Jeopardy!" Here are several business, political and social factors to use in comparing regions: Outsourcing business in the region * Is there government support and incentives for outsourcing? * Who else is outsourcing there already? * How many vendors are there? * How many software engineers graduate each year in the region? Language & cultural differences * English skills * Time zone overlap with your workday * Familiarity with western business practices Special considerations * Special technical expertise available in the region * Track record for intellectual property rights * Physical security and political stability It is a common approach to select a region first and then source vendors in the region. However, your success with outsourcing will be more strongly influenced by your selection of a vendor and your own ability to direct and manage the outsourced software development process. When you have no preference for a world region, you should look at vendors from multiple parts of the world. Focus on your vendor selection process. You will find good quality and low cost vendors in all parts of the world. *** The Runtime Bottom Line: Focus on region selection first if it is important to you. If necessary you can compare multiple regions of the world as the destination for your outsourcing. Ultimately, your success with outsourcing will be dictated by your selection of vendor rather than region.   Vision Resources Are you wondering how you will 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 members of the Accelerance's 17 teams in 14 countries around the world. Click here to learn more about Vision Resources Accelerance, Inc. delivers impartial & expert strategies and services for risk-free outsourcing of your software development. Visit our web site at www.Accelerance.com 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."