When it comes to outsourcing developers, a handful of project managers and startups run the risk of poor quality service in order to save a quick buck.
Back when the prospect of outsourcing developers was first introduced to the tech industry, the sticker shock of hiring freelancers was no longer an issue. Although sticker shock wasn’t an issue, the overall quality of the work and missed deadlines at the end of the day ended up becoming the issue.
When one thinks of outsourcing their development team, many people focus on the one overlying reason for doing so. It’s cheaper. But when the project manager actually calculates their return on investment, this is not necessarily the way to go. Although you cut costs, you also run the risk of cutting the quality of work the developer you end up hiring will execute. This doesn’t mean that every cheap developer you hire will be bad but there is always more risk with this.
According to studies, “nearly 50% of employers that outsource say the quality of their service providers and a reactive versus proactive attitude are the most frustrating issues to deal with.” So how much are they really paying the developers that they choose to outsource?
When it comes to weighing out your ROI and how much money you actually spend on a developer, which is more beneficial and ultimately, cheaper? Let’s do the math.
“You get what you pay for.”
At the end of the day, deadlines need to be met, coding needs to be done and one thing that remains a constant is quality. More and more companies are shifting their focus to finding quality developers rather than finding the cheapest developer. In order to retain quality assured by working with some of the best local developers, one needs to take into consideration many other factors than simply cutting the cost of outsourcing.In case you’d like to skip ahead…
Cheaper is Not Always Better
Back when the prospect of outsourcing developers was first introduced to the tech industry, the sticker shock of hiring freelancers was no longer an issue. Although sticker shock wasn’t an issue, the overall quality of the work and missed deadlines at the end of the day ended up becoming the issue.
When one thinks of outsourcing their development team, many people focus on the one overlying reason for doing so. It’s cheaper. But when the project manager actually calculates their return on investment, this is not necessarily the way to go. Although you cut costs, you also run the risk of cutting the quality of work the developer you end up hiring will execute. This doesn’t mean that every cheap developer you hire will be bad but there is always more risk with this.
When it comes to outsourcing web developers, try to lead your search with quality and the price as something secondary.
If you’re debating whether or not you should take the plunge and begin to outsource developers for your team, Pangara can help. We help our clients to better understand what next steps are necessary and if outsourcing a developer is something you need should pursue. We’ve done the research for you so that by the time you’re finished reading this, you know what your next step is going to be. So, what do you say, shall we begin? Let’s start with this unique scenario painted by author and tech expert, Robert E. Galinas.The Short-Sighted CIO
Galinas paints a unique scenario titled, The Short Sighted CIO in his blog post here. He demonstrates the actual savings one can have when they outsource a cheap developer vs. spending a little bit extra for more quality (the narrative has been condensed for length purposes).Once upon a time, a CIO needed a mission critical software application developed. It was going to revolutionise his company and give it a powerful competitive edge. He knew he didn’t have all the resources he needed to pull it off in-house, so he sought third-party help. The top outsourcing companies quoted him bids far in excess of what he’d budgeted. He was frustrated and stressed. A friend told him to look into outsourcing the project to an overseas firm, somewhere in Asia. The friend made a point to tell him, “Just make sure you never pay more than $40,000 a year or $20.00 an hour for offshore work.” Those numbers fit into his budget perfectly! He initiated a vendor search, instructing his staff to find a short list of offshore firms, but with the explicit instructions to make sure that developers didn’t cost him over $20.00 an hour. In no time, he was able to find several offshore development shops that would write code for him for only $16.00 an hour! That would even bring him in under budget by almost 20%. He was going to be a hero AND save money.
Contracts were signed and the project began.
Many months later, far longer than the CIO thought it would take to develop his software, he didn’t get exactly what he’d imagined in his mind. He learned the hard way that with $16.00 an hour, developers aren’t System Architects, Business Analysts, and Project Managers. They aren’t critically needed to ensure that requirements are well-defined, the software gets architected and designed properly, and processes are setup to ensure project success. He learned that $16.00 got him very junior developers. Many with barely a six-week certificate in basic programming to their credit and spoke little to no English. That rate also didn’t afford him the best Quality Assurance testers to ensure the application was built right and functioned properly. In fact, when bugs were found, it took even longer to go back and retool the product to fix them. Some pieces had to be completely redone. What was supposed to take only six months took well over a year and it still wasn’t right. The company was never revolutionised. Their biggest competitor beat them to market with a product very similar to what they were trying to build and they did it six months faster and captured a leadership position. The CIO was summarily encouraged by his CEO and board to “seek other career opportunities,” which he ended up doing….Unfortunately, this scenario is more common than one may expect. Many business owners make these decisions with the sole purpose of saving a quick buck, which ends up costing them dearly—and unfortunately, in more ways than one.
According to studies, “nearly 50% of employers that outsource say the quality of their service providers and a reactive versus proactive attitude are the most frustrating issues to deal with.” So how much are they really paying the developers that they choose to outsource?
When it comes to weighing out your ROI and how much money you actually spend on a developer, which is more beneficial and ultimately, cheaper? Let’s do the math.
Galinas puts it in perspective below with another brief scenario:
A software developer that costs $16.00 an hour, but takes a year to complete a project; or a software developer who costs $25.00 an hour, but who can complete the same task in six months?There are 52 weeks in a year, times 40 hours a week, times 16 equals $33,280. But 26 weeks, times 40 hours a week, times 25 equals, $26,000. Wow, the developer that costs 36% more per hour actually was 28% less expensive when it came to the actual deliverable price.
Outsource or Keep Them in House?
Still debating about whether outsourcing web developer or keeping them in-house is the best option for you? Did you know that, “in the last two decades, outsourcing has been steadily picking up steam as companies of all sizes jump on the bandwagon.” It’s inevitable in this day and age that outsourcing is and will continue to be an extremely large part of the tech industry. And not just in the tech industry but across all other industries too. Now, let’s say you have a new product idea and you’re ready to wrangle up some developers and get things moving. The ultimate question that’s been lingering in the back of your mind comes into play. Should you outsource your development team or should you keep them in-house? You’re curious about outsourcing but you’re not really sure where to begin and you are a little nervous about the risks involved. This is one of the ultimate questions startup owners, CEOs and brands are asking themselves all around the world. What you first need to decide is if you’d prefer to handle specific tasks in-house for your project goals or if it’s more beneficial for you to delegate them to outside companies or developers. Let’s go over some hard-hitting points for those considering to outsource their team.
Savings
Did you know that you can save up to 20% of total development costs when working with a digital team remotely instead of hiring developers in-house? Ok, you’re probably thinking it’s too good to be true, right? One of the main reasons why you can save money is because of different labor costs in various countries you choose to outsource from. When it comes to hiring in-house developers, there are a lot of added costs that you need to consider, i.e. acquisition and retaining costs, employee benefits, supplies, and the list goes on. When you hire outside through a third-party company like Pangara, these are no longer your problems. All you have to do is focus on what you do best and let the us party take care of the rest. When you decide to hire in-house devs, you have to remember about the acquisition as well as retaining costs. In the end, they can always quit. If and when this does happen, you’ll have to start the whole process again. When you outsource your developers, it’s our problem. All we do is provide you with as many resources as you need and deliver you cutting-edge, and amazing digital products. Easy, right?
Experience
You can rest at ease knowing the developers you’ve chosen to work with outside of your business have been doing it for years. Most third-party companies will require a strict qualification process that vets their network of freelancers against the sea of freelancers that are already out there. Pangara’s network of freelance developers is not only reputable but it is also extremely competitive when it comes to hiring top tech talent. Our unique qualification process ensures that our clients only work with the best of the best developers out there. So no need to worry about working with inexperienced developers or under-qualified freelancers.Process and Tools
Process and tools are very important to keep in mind too when it comes to outsourcing a developer. A few points to ask yourself…- Is the lost cost developer using a mature development process and state-of-the art tools like a more expensive developer typically would?
- Does the low cost developer have access to proper revision control, regression testing, integration, and are they being overseen by seasoned technical leads and project managers?
- Is he or she participating in ongoing training than the more expensive developer? Typically not.
Save Money on Education
When you hire in-house developers to join your team, just like with any other employee, you will need to invest in their development in hopes that they continuously educate themselves, stay on top of the latest technologies, and continue to grow and challenge themselves as a professional. These opportunities for personal growth can get expensive when the costs of conferences, webinars, courses, workshops, and books start to add up. You don’t need to worry about this when you choose to outsource web developers.No More Worries
When it comes to hiring and firing employees at your company, there are a lot of steps that can make the process much trickier than it should be. HR has to get involved and what seems like should only take a few hours ends up taking weeks to get all of the paperwork processed and finalized. When working with a third-party company, you can easily break the agreement if you’re not happy with your developer and save yourself the hassle of all of the messy paperwork!
