If you’re new to offshore development, the task of researching and vetting an offshore software company can seem daunting. But it doesn’t have to be. In reality, successful offshore development projects only require two tasks: understanding the types of offshore software companies, and understanding the type of client you are. If you know those two things, you’ll be a great candidate for offshore development.
In this article we’re going to cover the first step in successfully offshoring your next project: understanding different types of offshore software companies.
Large, Enterprise Offshore Software Companies
This category of software vendor is broad, and ranges in size from 50 to around 500 employees. Therefore, there are a wide range of companies within this category, and quality and style can vary dramatically. It’s really all about management. To grow an offshore software company beyond around 50 developers is extremely challenging and requires expert management. So unfortunately, it is fairly common to see large companies plagued with poor management. But you can always find a diamond in the rough too.
The dreaded “body shop” model is frequently seen in India and now China. This model is when a company hires junior developers right out of college, then farms them out to overseas clients. Typically these fresh new developers are on the job without sufficient training, management, or leadership. As they rise up the ranks, they receive a promotion without any knowledge of how to manage technology clients. Attrition rates of up to 50% mean that clients who haven’t lucked into a stable, skilled team within the company usually don’t fare well.
Not all vendors in this range, however, are “nightmare” body shops. There are good companies in this range that do solid work. In fact, they can be a good fit for clients who want to invest the time and energy to outsource large projects at low rates. It takes time, however, to find the quality companies in this noisy market segment.
Clients who are looking for the Offshore Development Center (ODC) model may do well in this range. The ODC model (also known as team augmentation of extension) is one in which a client hires and manages and offshore resource or team on their own. This can work because an ODC client can interview and choose their resources, then keep them 100% dedicated to their own projects.
Premium, Boutique, and Expat Run Offshore Software Companies
This is probably the best type of vendor if you are a small business, individual, or startup client looking for quality work from a legitimate provider. These companies tend to be expensive by offshore standards (expect to pay between 40% and 70% of what you’d pay for the same service on the domestic market).
There is good reason for this, though. A quality offshore software company who delivers quality work, has good communication skills, good business ethics, and is a stable and productive team will really stand out in the chaotic offshore market, and can therefore command a higher rate. These kinds of vendors remind us that a lower rate isn’t actually cheaper if they take twice as long to deliver.
This type of offshore software company tends not to advertise on Craigslist, bid on Upwork, send spam, or otherwise solicit business because they are already in high demand (or soon will be). To find them, you’ll need to find a trusted resource who knows them or search online for vendors with characteristics associated with a desirable boutique firm, and contact them directly.
Upstart Companies and Freelance Vendors
This category falls between the boutique/expat run vendors and the bottom feeders. This type of offshore software company be tough to summarize as the range of skill and experience is very broad. In this category, you’ll find both experienced and amateur freelancers, brand new companies with just 1 or 2 partners, and up and coming companies that are quickly outgrowing the category.
The difficulty in finding good vendors in this category cannot be overstated. These vendors are just getting their start, so they’ll usually be found on Upwork, Odesk, or similar marketplaces. Meaning you’ll need to find diamonds in the rough by interviewing and carefully evaluating each vendor. This can be a difficult and time consuming task for the experienced client, and a nearly impossible one for the inexperienced.
With that in mind, this is where some great deals are to be had for savvy clients. If you are able to find up and coming vendors who have terrific skills but haven’t managed to raise their rates yet (and thus graduate from this category), you can get great work at a low rate(that is easier said than done). This category is not for the faint of heart. Most clients are better off searching for vendors in the boutique/expat category. They may pay a bit more, but the chance of success is much higher.
Bottom feeders are exactly what they sound like. They are unvetted, and unproven. After all, there is no certification or licensing procedure needed to offer development services online. The distance between clients and vendors makes it easy for anyone to put up a website, start placing ads or bidding on Upwork, and taking their first client based on some vague claims of expertise and experience.
This is the category where the offshore nightmares usually happen. Particularly when a bottom feeding vendor works with a bottom feeding client (more about that in our next post).
You’ve may already hear from these vendors through unsolicited messages via email or LinkedIn. They advertise with wordy and flowery claims of unlimited skills and experience. You’ll also be running into these vendors on Upwork, worker, and other marketplaces, including Craigslist. The bottom feeding vendors are always making noise — ironically that’s the easiest way to identify them quickly.
Bottom feeders are hungry for work and will usually offer exciting but questionable benefits. Rock bottom prices, 24/7 availability, the ability to start on your project immediately, may seem like perks, but could be too good to be true. Be wary of teams that promise expertise in every platform/technology available, and promise unrealistic deadlines and results.
As you are evaluating clients, do your best to ignore this type of offshore software company. Otherwise you’ll learn an expensive and frustrating lesson in “you get what you pay for.”
Before you begin your search for offshore software companies take stock of what you’re looking for. Are you willing to risk delays for the lowest hourly rate? Will you pay a premium for a job done right the first time? Do you want to establish a long-term relationship with a top-notch offshore development team?