Software Sweatshop

So most of the companies I talk to get 800 calls a week from offshore companies. They're either working with a solid team already, or they aren't interested in building an offshore team at all. It's not for everyone, but outsourcing works very well if you find a sharp team and are willing to invest a lot of time and energy in developing a relationships and processes with your offshore team.

Afterall, some of the world's top software engineering teams work in remote, distributed environments. The key to working with an offshore team is finding someone that is not only technically competent, but that can add real value. A body shop of developers hacking away at your specs creates is worthless. You might save a few bucks, but it's commodity work for what will most likely be a commodity product.

A condensed version of an article about offshore outsourcing advice from Baseline Magazine. The point is that outsourcing seems easy, but anyone that's done it knows it's no cake walk.

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When outsourcing, organizations that focus on short-term cost reductions often rush through projects without adequate planning, due diligence or consideration of the long-term implications of the inevitable changes in business requirements or offshore market conditions. This not only causes them to overlook most of their savings opportunities, but often leads to project failure. However, an organization that knows what to look out for can avoid the mistakes that others have made in the past, mistakes that can be understood in the context of the seven deadly sins: pride, sloth, avarice, lust/extravagance, envy, gluttony and anger.

• Pride
  Many organizations succumb to the sin of false pride and plunge headlong into an offshoring initiative without performing due diligence. They assume that they (already) have the internal capabilities necessary to plan and manage an offshore operation, when this is often not the case. They also seriously underestimate the management resources required to successfully set-up and run such an operation.
• Laziness
  You can't just move an inefficient operation offshore and hope that lower salaries will result in cost savings. "Lift and Shift" doesn't work, and, when the process is inefficient it will, in fact, often increase the personnel resources required to do the job, wiping out the cost savings the organization expected to achieve.
• Greed
  Many organizations will not be concerned enough about the ultimate fate of the business, or, even worse, possess disdain towards the offshore operation. This makes it difficult for the offshore operation to retain knowledgeable and productive staff, leading to quality problems and cost overruns as greater numbers of inexperienced resources need to be thrown at the problem.
• Lust/Extravagence
  The desire to solve a problem by taking on more, cheaper personnel is extravagant and wasteful and has serious implications for service quality. It's important to remember that many offshore operations have lower productivity and excessively high turnover, reducing cost savings. Don't give in to the impulse to compensate for low productivity with more bodies: It's a false economy. Before you offshore the process, make sure it is efficient. If necessary, re-engineer and improve the process first. Furthermore, even after your processes are off-shored, it's important to continuously apply performance improvement initiatives.
• Envy
  Don't assume that offshoring automatically comes with big savings and be envious of your peers who are already doing it. Most of the claims you'll find by the promotors of the strategy don't take into account the lower productivity that comes with offshore personnel, higher communication costs with an offshore team, and the additional overhead required to govern an offshore process. Actual savings are often only half of what is claimed.
• Gluttony
  Don't offshore as much as possible as quickly as possible, like a glutton, with the ill-formed belief that this will maximize savings. Don't overlook the average organization's capacity to digest change, and even smaller capacity to digest offshore change -- because organizations that offshore too much too quick often spend the majority of their time firefighting. The key to success is selective offshore outsourcing, following a careful analysis of what processes are the most likely to lead to savings if outsourced.
• Anger
  Don't blame the outsourcer when the savings don't materialize, especially if you committed one or more of the sins above. Blame-wise, at least half will always rest with you, and if you committed multiple sins, all the blame rests with you.