Does Outsourcing Programming Really Save Money? 653
itwbennett writes "In a blog post titled 'Why I Will Never Feel Threatened by Cheap Overseas Programming', John Larson tells the story of a startup that shipped its initial programming to India, paying $14 per hour, with predictably disastrous results. Larson concludes: 'I have yet to see a project done overseas at that sort of hourly rate that has actually gone well.' But in this not-uncommon tale of outsourcing woe, is the problem really with the programming or with unrealistic expectations?" The comments on Larson's blog post (originally titled "Why I Will Never Feel Threatened by Programmers in India") seem to me more valuable than the post itself.
Agree (Score:5, Interesting)
I've seen the work infosys and wipro do. They are the high end of Indian programing sweatshops yet everything I've seen from them stinks. They promise the world but don't deliver any better than a first year degree student could in any developed country. Except a first year student would be cheaper, has the same time zone, and speaks the same language.
Outsourced Programming Flaws (Score:5, Interesting)
Having been involved in many outsourced projects, a number of problems tend to crop up again and again:
1. Offshore programmers frequently lie about their programming skills
2. Competent Indian programmers tend to do fairly well if given very explicit instructions, but are at a loss if something unexpected comes up. They tend to be less adaptable and nimble than U.S. programmers.
3. It ends up taking longer than estimated, even for simple projects.
4. Hand-holding and rework end up eating up all time and money savings.
5. By the time an offshore programmer has skilled up enough to actually be useful, they leave for a better position. (Especially true for India.)
To my mind, outsourcing programming is a management fad that is (hopefully) already falling out of favor due to poor results.
Re:Faulty Reasoning (Score:4, Interesting)
It might take a few years, but you'd think that eventually they'd catch on that these projects are costing more to maintain and start teaching that in business school. If it's just for throwaway one-off programs then outsourcing probably isn't so bad though.
Re:Faulty Reasoning (Score:5, Interesting)
My company outsourced a piece of a project (GUI redesign). The result looked good and met the requirements but turned out to be inadequate. No error conditions were handled, any change to the test cases caused it to fail. However, since they brought it in on cost and schedule they were given a larger piece as a follow-on. We ended up rewriting both the GUI and the second piece and were late by a year. You can blame the spec (they did) but no US developer that had to support the finished product would have done shoddy work. I think the outsource company did it deliberately because they expected to be paid to fix all of the problems.
Re:Faulty Reasoning (Score:5, Interesting)
I think you're overestimating the rationality of people when it comes to economics. People don't actually do things that are cheaper and more efficient. Most people in management will spend $100 chasing $2, and they'll get rewarded with raises and bonuses for doing it.
Re:Outsourced Programming Flaws (Score:5, Interesting)
That's it, exactly. Same experience with Malaysia and Korean devs and managers. The answer is always "Yes, yes, of course, we will do that, no problem," to any question. I understand that it's partly cultural; it's considered rude to just say no. But it goes way beyond that: they will lie straight to your face (or over a video link) and actually get tetchy about being questioned, even when they have a track record of failures and screw ups behind them.
Other fun things to deal with are the rapid staff turnover, the guarantee that they'll take the code you paid them to write with them to a competitor, and that you might find that you don't even have a copy. Keep the source repository under your control, and no commitee, no payee.
Re:Faulty Reasoning (Score:5, Interesting)
Those who tried in 2010 are feeling the pain now.
I am not finding any shortage for American Software Developers work for good developers.
I think a lot of the rub is the fact the businesses are no longer tolerant like in the 90's to those unprofessional quirks of those IT people and expect a more professionalism in their organization. So the Jeans and Tee-Shirt are being replaced by Slacks and a collared shirt. Working flex time is pushed more to 9:00-5:00 and we are no longer getting Huge Salaries just to write HTML.
Re:Faulty Reasoning (Score:5, Interesting)
In response to the suck speculation. I know some really good Chinese programmers in Beijing, Shanghai and Guangzhou. They're not going to work for $14 and hour, unless you throw in a percentage of the company's shares and some serious pandering from management. Crap Chinese programmers cost about RMB¥5000 a month, about US$5 an hour, but prices climb extremely sharply after that. Outsourcing companies will hire those crap ones and pocket the difference, every time.
There's nothing intrinsically wrong with Chinese, Indian or whatever programmers. It's just the Chinese companies, and I assume Indian companies who actually need to sell their own product want to hire the good engineers to get the job done and so they are in demand in the market and thus expensive. To an outsourcing company however, maintenance is an externality, they don't care if something is well engineered, just if it meets the requirements to the letter, or at least appears to then its good enough, so anything will do.
Why would you go with a Chinese outsourcing company then? Well, I am in the business of making good software, but here's how it would go if I wasn't. I'd fly you on a junket and you'd stay in a 5 star hotel, paying for a few extra nights because who wants to go on an overseas trip without seeing the sights. You'd come to my office in Beijing, it is big, has a lot of people in it and they look like they are working hard. I would then precede to show you some professional looking slides and give you some serious false impressions as to what we have delivered in the past and I'd deliver it with such unerring conviction you would have to believe it. Then I would take you out to dinner, Peking duck, abalone and alcohol, I would invite some girls from the office, receptionists etc., who would smile at you and blush when you try to speak English with them, that's just what Chinese girls do, but you feel like they're into you. Then I would take you to do something else, grand sights, more booze, or a really, really good prostitute.
Now, this is what a Chinese sales guy will give your manager: optimism, presentation and vice. What can you give him? Well, results presumably, but they come later. Up front you can only give him cautious estimates and a list of things that can go wrong. Why would anyone but a non-idiot manager choose a local team of engineers who know what they are talking about when he can have a free holiday to an exotic country and hear some really pleasing things?
Outsourcing companies are there to make money, pure and simple. Nice things cost money, that can be good engineers (local or overseas) or it can be the sales team and what the sales team and their junkets and presentations.
By they way, I'm obviously not North American, but I've worked with American engineers, a few of them have been really great, most of them have been quite ordinary, kind of like what you get here in terms of ability, but usually a little more methodical and steady. The advantage is mainly that you know what you're getting when you hire locally (or find your own talent overseas rather than relying on an agency).
Re:Faulty Reasoning (Score:5, Interesting)
I sometimes wonder if it's that business is *evil* or if they simply don't know. I know it's easy to assume they're evil, but the more I work in this field, the more i think it is simply that they don't know.
Almost all of our business folks come from either a finance background or are a product of the industrial revolution.
Finance... well all they want is to plug in some equations and compare numbers and that's the end of their thinking.
Industrial management is all about GOOD PROCESS and fungible parts. You need a few skilled people to design the process and assembly line... then the people are replaceable cogs. 95% process, 5% people is they key to success in the industrial age. Because R&D costs are typically small relative to the manufacturing costs, R&D was typically allowed to do its own thing. If costs needed to be made, why cut the R&D... there's plenty of manufacturing workers (fungible parts) to cut.
Now what do you when manufacturing is no longer a key component of your business. As in software. When business looks at costs... the only thing they can replace the manufacturing worker with in their minds is... the people in R&D. They're the ones making things. They cannot conceive of a world without fungible parts. Even though the fungible parts have all been automated (the whole point of computing). The compiler does the manufacturing. Yes, there are still some parts that are not fully automated, but that's just waiting to happen.
They simply take all their old industrial age management techniques and try and apply it. Remember it is 95% process, 5% people. This is why you get such an emphasis on project manager, product manager, technical manager, programmer, workflow... They are trying their hardest to just build a process that will make projects successful.
Now some companies do get it. The industrial revolution is over. You need to learn new skills. So the big tech companies for example... get it. It is 95% people, 5% process. It has more in common with a guild of craftsman or a profession. They luckily only need to deal with the madness of finance people. But at least they've rid themselves of industrial age management.
And it is changing. The big companies that DO software do get it and have changed. Increasingly they're making their products into services (yay... cloud computing)... I don't see much of a future in outsourcing itself. Which I guess means if you feel threatened by outsourcing... I'd feel just as threatened being on the outsourcing side.
Off shoring is another issue all together. If they can get very skilled people in another country for cheaper...they will and that is not the same as outsourcing.
Re:Faulty Reasoning (Score:5, Interesting)
Absolutely. A huge problem with dealing with outsourcing is that the specs required are nothing like what people are used to. Your average Indian contracting company will work to the spec and nothing but the spec. If the spec does not say that function calls should be checked for error returns, they will not be. If the spec does not say what each and every error message must be you will get a single question mark for the ones not clearly specified.
My wife has worked with this sort of thing. Management was very happy in moving all the programming jobs to Ireland and India while (short term) keeping the spec writing in the US. What was never understood was that the volume and detail level of the specifications needed to increase 5-10x from what it was. This might have been obvious to anyone that had dealt with outsourced programming before, but it was never factored in.
Of course the end result was that the added costs for spec writing and design ended up pushing those jobs offshore as well. If you are going to spend 10x as many hours on a job, it might as well be done at a cheaper rate. It will be humorous to see what happens to this in the end, but it will take a long while to collapse.
Same company bought a building and all the upper level people were congratulating the VP that pushed the deal through because the building was already wired for networking. Of course it was wired for Token Ring and they were using 100BaseT Ethernet so ever bit of wire had to be ripped out and redone, but that was long after the congratulations. Probably cost them 2-3x what a bare building would have, but nobody figured that out until much, much later.
Re:Faulty Reasoning (Score:4, Interesting)
Yeah one of my friends said that there is a cultural thing in some countries like India where people refuse to admit that there is a problem, even when they're calling you for help about their problem. He works with hardware rather than software, but it's the same idea.
This story is backwards... (Score:4, Interesting)
I'm sure there are geek teenagers in my neighborhood that would take 10$/hr to write code for my professional software product.
If I do, is the story really that they are bad coders? No, the story is that I don't know how to run a business and I have shit for brains.
If you executives/management can't put talent in the seats for the positions that count you will fail. End of story.
Re:Agree (Score:4, Interesting)
...The biggest problem I have run into is cultural, you'd have better luck getting someone to work in Green Bay during a Packer game in the US, than you would during a hockey game in Canada. Also their sense of urgency is much more "American rural north" rather than "Manhattan" so there are occasional mismatches in expectations.
Hmmm, you do realize that outside the western US, Germany, Japan and some other uptight countries, this is actually the "normal" way of life for the largest part of the world? Some call it "quality of life".
Most of them seem to be drunk most of their "off" time so good luck with oncall.
This may or may not be true. In France, people drink wine almost like water. Germany and Belgium are known for their beer. Scandinavian countries' weekeend passtimes is drinking any alcohol they can get their hands on, so would you call all of them "drunks"? Again, this labeling thing mostly seems the problem with the uptight and stressed out USians - the rest of the world works just fine as it is.
Re:Faulty Reasoning (Score:5, Interesting)
Re:Faulty Reasoning (Score:5, Interesting)
Mod parent up. The number of people that discount the short-term thinking of outsourcing cannot be overstated (parse that - hopefully I wrote it right).
I have looked time and again for over 10 years (having been laid off twice - once directly attributable to outsourcing and the second time to the current downswing) as to when this wave of outsourcng will change.
PHBs will look at the bottom line alone.
Let me give you an example. At a bank I worked at, we had a memo right from the top - for every local hire, there MUST be at least 7 overseas - otherwise the local hire is not allowed. I found the quality of work being done there sucked! Of the 800 odd people on various projects, there were more than 700 offshore - the rest were onshore - and I was privy to those rates. Offshore rates were 1/5 of the onshore equivalent. I remember one of the local bosses railing at one of the onshore representatives of the minions at the quality of code being delivered. It seems if a zero was entered into a field instead of a non-zero number, the web app would crash (or it was something equally stupid - please don't hold me to actual issue).
Given that these banks took such a large amount of money from US taxpayers, the least they should do is to ensure that any new jobs they have are given to onshore people. Instead, they have gone extreme - and are offshoring more than ever. Ingrates R Us.
Background: I am originally from India, one of the original outsourcers and have seen, with mine own eyes, the precipitous fall in quality of the offshore developers. Until about the mid- to late- 90s, things were not so bad. But Y2K changed all that. All and sundry became s/w developers. And the rest, as they say, is history.
Re:Faulty Reasoning (Score:5, Interesting)
> It might take a few years...
Yup, I've been hearing that since 2000. How much longer do you think? 20 more years? 50? A century? I don't think so. Show the PHB two salary numbers, he's going to pick the lower one, never mind any other factors (e.g. overall cost).
Actually, it's already happening. US companies that are moving IS jobs over seas are behind the curve. Companies that shipped jobs over in the 1990s are starting to bring them back.
One reason out-sourcing/off-shoring doesn't same money is management. You need on site management where ever the programmers are, but you still need the management structure at the home office to oversee projects.
Another reason is just we just haven't figured out how to work in remote teams. There certainly are exception, instances where teams of people geographically separate have turned out a successful project. But those are the exceptions. In most cases, conference calls and shared desktops just can't replace sitting next to someone and looking over their shoulder at the screen.
Re:Faulty Reasoning (Score:4, Interesting)
A long while back I had got transferred from SE to a tech job within the marketing department, and had to at least wear a sport coat and tie. (I bought a Harris Tweed.) I learned fairly quickly that a business suit is just a toolbox. Some of the outer pockets are mostly for show (or some very thin materials - notes, etc., maybe a few business cards), but the inner pockets are designed to carry the tools of the trade - daytimer, wallet+checkbook thing, business cards, etc. Keys and some other personal items go into the pants pockets. Properly designed suits (and sport coats) are what allows men to carry all that stuff around without a purse. So it's just like a mechanic's toolbox.
Suit coats used to have watch pockets, but those are no longer necessary. It might be interesting to re-introduce a similar pocket for the cell phone. Although that might be better in an inner pocket, with a pickpocket preventative of some kind - maybe a mechanism that keeps that pocket closed unless the arm is raised into the position to remove it?
It has long been the case that (except for the fashion plate 'shiny suit' types), the more expensive suits were built in such a way that you could carry more in them without it showing. A very good tailor will ask you "Which side do you carry?", which refers to which side you put your wallet in. The tailor will adjust the suit to hang straight when the wallet is in that breast pocket, so it's hard to tell that it's there.
Re:Faulty Reasoning (Score:4, Interesting)
Ten or fifteen years ago, Fortune Magazine (IIRC) published a study of the occupants of the 'head shed' - Chairman and C-level down to VP level executives. They found that a large majority of the whole set had graduate degrees, mostly MBAs. But taking only Chairman and CEO, a majority did not have college degrees, and quite a few did not graduate from high school. Those folks were the ones who had whatever it takes to go out and build a company, and hired the rest. Steve Jobs and Bill Gates are examples. Hewlett and Packard may also be examples - they had degrees, but were electrical engineers.
Based on this, I concluded that the drop-out path is much higher risk and requires more self-determination but has higher rewards if you make it - and a job at McDonalds awaits you if you don't make it. Taking the MBA path you are more likely to do well, but unlikely to do extremely well. Some take the ski jump, some ski down the fall line.
Interestingly, a study I read a long while back said that entrepreneurs have a much higher than average incidence of ADD - along with explorers, fighter pilots, and creatives of all types. :D
Re:Faulty Reasoning (Score:5, Interesting)
That's not what public companies USED to exist for. They USED to exist ti make profits and pay dividends. Now, every shareholder imagines themselves to be a daytrader and insists that if the stock price doesn't go up, then the company is doing something wrong.
They might as well be aliens (Score:5, Interesting)
Re:Faulty Reasoning (Score:4, Interesting)
You put on a suit as an engineer and you'll find it hard to get a job in California. On the East Coast though it opens up a lot of doors. It really does depend on locale.
Re:Faulty Reasoning (Score:4, Interesting)
Re:Faulty Reasoning (Score:5, Interesting)
Ha. I used to know (distantly) the scion of a self-made man (I've known several of those, actually). The founder of the company started out during the early days of the Depression. He was homeless, no education, either 1st or 2nd generation immigrant. He walked along the roads picking up bits of metal, and carrying them to the scrap recyclers to make a dime. He slept under bridges. Soon he found enough materials to build a little push cart, and he was able to pick up and bring more scrap in each trip. (I don't know but I assume he also picked up and sold or used stuff that was too good to go to the scrap guys.). Eventually he scrounged up enough money to buy a truck. By then he was able to afford a room in a small fleabag hotel.
By the time of WWII he had a rather successful business, recycling metal.
After WWII he got in to scrapping out war materiel - old ships, jeeps, etc., cutting them into pieces and sending them to the steel plants for reuse. By the time I was sentient Zidell Explorations was a huge presence on the waterfront in Portland OR, running a half mile or a mile along the waterfront. There were always from four to six old ships, military and commercial, getting torn apart. By the late 1960s most of the metal was getting loaded onto ships and sent to Japan, where it was turned into Toyotas. Zidell was one of the largest companies in Oregon by then.
He died. His son had no interest in the business AFAIK. From what I was told he just bought houses and cars, and white powder, and women. He was, by all accounts, a very rich and very bad MF. He did spend some time in jail, IIRC for felony assault.
And thus, just as in The Good Earth [wikipedia.org], the money recycles back through the system. Others made lots of money selling him toys.
Folks who grow up rich have a very serious disadvantage - they don't have that driving motivation to NOT BE POOR. So they don't work that extra hour. So, generally, they end up working for someone else. They may get paid a lot, but they are still working for the guy, or the family of the guy, who built the company.
And that is the point. Except for the very biggest corporations that were formed out of mergers, back in the day there was one person, or a few persons, who started from almost nothing and BUILT THAT SUCKER. And those are the CEOs and Chairman of MOST corporations. I'm not saying they are nice people - but most of them are indeed self-made, still to this day.