July 15, 2020
When you make the decision to outsource your software development, it makes sense to aim for the best your money can buy.
Maybe you’re looking for a specialist skill set your team doesn’t have. Or you’re working on a project that needs tech experience you simply can’t find.
There are plenty of good reasons why companies decide to outsource their software development. But when it’s time to run the numbers, there’s just one bottom line: how much it will cost? Let’s be careful about making the mistake of going too cheap...
If developers are being paid below market rates, the risk of high team turnover increases. A common tactic among cut-rate service providers is to provide an initial “A” team for the pilot project then switch to a “B” or “C” team of less experienced developers for the remainder of the contract.
A breakdown in communication or cultural understanding can also be disastrous, leading to missed deadlines or failure to achieve key goals.
In the worst-case scenario, companies realize they’re thousands of dollars down the drain and have to pull the plug – then spend that money all over again with someone else to get it right.
Going offshore should at least double the value of your money. At Accelerance, we have an equivalence benchmark of $50-$55 per hour to find a senior engineer with the level of skills and expertise that cost $100 per hour in the US.
It might be tempting to go for a deal that’s even cheaper, but every dollar you shave off the rate comes at a cost.
For $55 per hour, you know with absolute certainty you’ll be getting a senior level resource from a quality company in an overlapping time zone, with an understanding of Western culture and experience working with US companies. Not only will the salesperson you initially deal with have excellent English skills but the project manager and developers will all have great competency and fluency.
Quality can begin to drop off fairly quickly in higher priced locations. Undercutting the market rate by $10 per hour might mean you’re sacrificing a level of core competency and experience in the tech stack you need, or compromising the timeliness of delivery. Perhaps it will be more difficult to communicate with your partner team, because they’re less familiar with Western business practices, or only the senior management comfortably communicates in English.
That’s not to say it’s impossible to find a quality team for a lower rate – but you need to know where to look. And you need to decide what you’re prepared to compromise on, in exchange for those cost savings.
The Accelerance Cost v. Quality Matrix breaks down the level of team value versus developer cost to show what you'll likely sacrifice when researching your global software outsourcing team.
Accelerance has certified partners in 40 countries across the world who have met the high standards required to be part of our global network. If your project budget is tight, we can help you find a good outsourced development team at a lower price point than $55 per hour – within reason.
Options include looking to lower-cost centers in Latin America, where you can find great firms for as low as $35 per hour, or working with an offshore team in Eastern Europe or South/Southeast Asia, where rates are lower but the distance and conflicting time zones make collaborations with the US more challenging.
We want to make sure clients understand those trade-offs and that they are sacrifices they’re willing and prepared to make.