Reverse Outsourcing – A Growing IT Trend
I never thought that I would see reverse outsourcing occur so quickly and so fast as I have in the mobile development market this year. For all of you that might be unclear, “Reverse Outsourcing” is as it sounds, jobs and IT projects coming back to the U.S. from overseas.
Last year our firm lost a decent amount of new business projects to outsourcing overseas. In many cases the prospects knew that the firms were outside of the U.S. and they were comfortable with taking the risk. They were getting projects quoted at half or 2/3rd of the rate that U.S. based companies offer, and who can argue with that during tentative economic times?
In some cases the prospective clients were told that the firm was U.S. based, and in many cases they were, but the actual design and programming was being conducted in India, China or Eastern Europe. For straight up database or software programming I notice that these arrangements work out quite well. Where I have witnessed a serious breakdown is when the overseas contractor is creating a user interface and logic flow for a website or mobile app that is aimed at a Western audience.
The cultural connection is just not made on multiple levels which include project time zone lag, language issues, unrealistic expectations, unsatisfactory break testing, final code not transferred, and in a high number of cases the project just is not finished at all. So even if the overseas firm is charging five times less I am seeing projects that take 9 months to complete instead of the average 2 -3 months costing the client more in budget and opportunity cost at the end of the day than if they had gone with a U.S. firm.
In the mobile application development market we are seeing a trend of about a 70% failure rate of projects going overseas. Many of the complaints that we receive indicate that these firms are jamming so many low cost projects through their system that a good amount of them get “lost” in the process.
This really boils down to detailed project management and communication with the actual developer. If you cannot speak to, and communicate with the individual programming and designing your project then you should think twice about working with that particular firm.
One other unfortunate aspect of this trend is that when the project does fail you have little leverage or recourse from a legal point of view to get your designs and source code. Even if the firm is administratively based in the U.S. I have seen clients suing them to no avail. The mind boggling part of many failed projects is that the overseas firm seems to get 80% or more finished with the project and then they just “fall off the earth” as several of our clients have expressed.
Obviously there are some outstanding overseas firms that you can work with. However, before you go with a firm that is based overseas to save money I would caution you to get references, look at past projects and be mentally ready for time-lines and project expectations not to be met.