One of the biggest challenges for entrepreneurs is how to best develop your product or website quickly. To save money when I started Yigdigs, I initially chose an offshore development company.
To interview and select an outsourced development team, I leveraged Odesk, which is what I call an “outsourcing facilitation” website. I included Odesk in my top ten tools for entrepreneurs back in December. When you outsource, you have an option of going with a company or individual consultant(s). I chose a to go with a company, reasoning that if an individual person’s skill set wasn’t enough, he or she could tap the expertise of someone else in the company.
What I found was that using an offshore dev company has limitations. Surprisingly, first and foremost is the expense. An offshore development company wants to bill as many hours as possible, keeping development resources working 40-50 hours per week. But some weeks it’s unclear if those 40-50 hours of time are being spent optimally, even when managing tightly. Conversely, when you work with an individual consultant that is not tied to a company, you tend to pay more precisely for work done. It may be 36.5 hours one week and 42 hours the next. And I’ve found that the time logged tends to be more accurate and representative of the work accomplished, rather than an arbitrary blob of time.
Whether working with an offshore company or individual, the biggest issue is communication. The developer may want to chat on IM with you rather than speak live on a phone call because he is more comfortable typing rather than speaking your language. Additionally, the tasks you assign have to be very detailed, and written out daily. The way I describe this for folks is imagine you have a local employee that is on a performance improvement plan. Meaning, they are not performing well and therefore you are micro-managing their assignments because either they are going to raise their level of performance or you are going to let them go. That is essentially how you need to manage an offshore development resource on a regular basis.
I’m not saying that’s a good or bad thing, it just is what it is. When working with offshore developers directly, you just need to go into it knowing this is what you should be prepared to do. And it takes a lot of time to manage someone “on a plan” vs. a person that is one of your top performers.
The amount of time involved in managing offshore resources led me to investigate local engineering options. The biggest hesitancy people have about local resources is that obviously they are more expensive. While offshore developers will work in the $7-$12/hour range, a local developer could be anywhere from $35/hour up to $150/hour. That’s a huge difference.
However, there are some corresponding huge benefits. Language is the biggest. What may take two pages of detailed description with an offshore resource will sometimes only require a quick five minute conversation with a local developer. Over time that adds up to big time savings for you to concentrate on other aspects of your business. However, it can also add up to a fast burn of cash.
Therefore, what I recommend that works best is a hybrid approach. Use local development resources for the heavy lifting and for when you need to clearly communicate the bigger picture. Then augment your local team with offshore development for getting the detailed job done with tasks that are broken down into smaller bite-sized chunks. By opening a direct line of communication between your local and offshore developers, you can streamline the description of tasks since they speak the same (programming) language.
By leveraging a hybrid model of a local developer as a team lead and one or more offshore developers, you get the best of both worlds. The benefits are clear communication, your time saved, your developer’s time saved (from miscommunication and do-overs), and cost effective use of your onshore and offshore development resources.
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