Posted by on Feb 3, 2015 in Business Advice, General | 3 Comments
Why Shouldn’t You Outsource?

Someone on Quora had asked me:

Median salary of a Software Engineer in India is around Rs 3.6 Lakh whereas in US it is $71k(ie Rs 44Lakh) which is nearly 12.4 times that of India, but the cost of living or equivalent salary of US is considered to be only 4 to 5 times that of Indian salary. Why is it so ?

This is how I responded:

I’ve outsourced to India before. A $500,000 job costs around $50,000-$80,000 in India. However, that goes to the owner of the company, and he has to pay his respective employees. I would not outsource again.

  1. There is a major difference in economies. In America, the dollar doesn’t go as far as it does in India, as the cost of living is much higher.
  2. The outsourced company just dishes out work, and guess who has to make sure everything works? Me. Not the programmers in India, as there is a lack of quality control.
  3. I have to spend at least three hours taking screen shots of everything that doesn’t work, then I have to email it back to my outsourced company.
  4. I can’t Skype with anyone until it’s my bedtime, so there is a complete lack of communication.
  5. When I send over all the errors I find, only 20% of them are fixed, so I have to do the same thing over.
  6. I have to repeat step five at least ten times, more than likely twenty.
  7. I’m asked for more money than I have, so I have to figure out how to raise more money, yet I’m unable to earn anything because a program is held hostage by the outsourced company. I can’t even launch it because it doesn’t work.
  8. When it comes to creating infrastructure, it’s just smarter to buy American, as the quality of work is better.

So at the end of the day, I’m pulling out my hair while my six month job extends out to a year and a half, I’m finding money everywhere I can to pay the people who hold my source code that barely works, and I’m spending hours upon hours of my time, in a field in not even educated in, trying to fix all the errors in a system that I don’t know how to build myself, at hours when I should be in bed.

Sure, maybe if I had a CTO, things would be a lot easier, however it wouldn’t be by much. There would still be gaps in time, quality and efficiency. The firm I used couldn’t even implement an API correctly. Isn’t all you have to do for an API is follow directions, word for word?

I guess this is the perfect example of you get what you pay for. Try to take shortcuts and everything ends up being worse than if I just hired American programmers who knew what they were doing.

Oh, did I mention that I had to warranty my BlackBerry phone FIVE times because the app kept breaking my phone? Or that it kept crashing on the iPhone and Android platforms? Or that the website moved like a snail without a worry in the world?

In order for outsourced programmers to get paid the same as American programmers, they need to do their work faster, have better trained employees, and send over work that doesn’t have errors. Oh, they should also work on the time constraints of their clients, as opposed to their 9-5 hours.

*Results not typical. Results may vary.

Originally posted on Quora.

Leonard Kim is Managing Partner at InfluenceTree. At InfluenceTree, Leonard and his team teach you how to build your (personal or business) brand, get featured in publications and growth hack your social media following.

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  • Ashwani Raghav

    Hi kim,
    You have wrote a good article, its true for some cases but not for all. Its mainly because of company policy they told their client that they have good resource who have 5-6 yr experience on technology but normally they hired freshers who don’t have any experience in given technology. This is why thigs got distorted for some projects where employees takes time to learn and implement things.

    • Leonard Kim

      It’s like anything. Some companies are good. Some companies are bad.

  • Vatsa

    Hi Kim, nice article.

    Well it depends on which company in India do you sub-contract / outsource to. There are a million start-ups in tech space in India and not every company is reliable. I’ve worked in a few agencies out there and I’ve been disappointed in-terms of timely project completion, however some of them do deliver an impressive job. Personally I feel it’s also about the culture (understanding exactly what they mean and reading between the lines – over promise etc).

    There are several IT companies in Singapore who are outsourcing since last 15 years and are sustainable and very profitable automating their processes, would not disclose the names here though. 😀 To conclude with, its all about finding the right partners in India and that’s what I do.

    PS imagine the amount of cost you cut down just outsourcing, it’s definitely worth it. And not to forget, majority of the CEOs of top multi-national companies are Indians. 🙂

    Cheers!