Every growing company needs software. Technology is what drives efficiencies that lead to greater
profit, and therefore most corporations will turn to creating proprietary software to sharpen their
But when software is not your core competency, you look to outsource the development of your grand
ideas. This is what has worked for millions of firms the world over. Often, sacrifices are made when it
comes to saving money by shipping development overseas. Some of the sacrifices are clear; others are
discovered when you are waist high in the project.
Let’s take a serious look at the top reasons we hear from our clients that have off-shored
overseas, then done a u-turn and offshore to small-town USA:
While it may appear at the outset that you’re saving significantly when you compare a $20/hour
coder in Asia to a $150/hour coder in the US, you can bet you’ll be getting what you paid for.
Many of our clients have pointed out that other non-price issues added so significantly to the
overall cost of the project that they would have been better off just keeping the project on-
shore and perhaps paying a bit more in wages.
Offshoring development overseas can expose companies to data leaks. Some reports show that
30% of companies that have offshored development have security breach incidents. Even those
with NDAs suffered IP loss. Your company’s USP could be littered with more than just bugs – and
the resulting court and litigation costs could put your balance sheet at risk.
Someone once described software development to me as a complex social process where
people share complicated ideas and abstract concepts. While many eastern Europeans and
Asians speak excellent English, there can still be a lost-in-translation opportunity that is further
heightened by electronic communication. Intermingling development-speak with English and a
third language can spell disaster.
The industry your business targets might be a particularly perplexing one for those outside of
the American culture to truly understand. Take healthcare, for example. The American system is
unique and comes with a plethora of acronyms and processes that most could never
understand. How, then, could they possibly write code that enables the American healthcare
system to work better? You can apply that concept to other industries as well – finance, law and
insurance spring to mind.
It’s not just the time zone that will get in your way, but the approach to both time management
and length of time to complete a project that could make the difference between a successful
outsource and a complete failure.
Impact on Jobs
The more we offshore tech jobs, the more our economy takes a hit. “But I’m not responsible for
our economy; I’m responsible for my company’s bottom line.” Fine, but don’t take a short-term
approach to saving a few bucks. As we noted above, sending your development to Asia is going
to cost you more than you expect it to. And that’s just the money. Imagine to whom your
company will sell its products when the highly experienced American developers are out of
The Investor’s Perspective
Developing your competitive advantage is the real reason behind owning your own software
instead of relying on off-the-shelf systems. We’ve heard of late that many angel investors and
venture capitalists will not invest in entrepreneurial endeavors that have off-shored their
software development. Certainly, that is not true in all cases. But do you need to make that the
factor that determines your ability to secure funding?
It’s critical to find a partner that works with you to determine the feasibility of key features, to create a
timeline that works for you and your project, that delivers and is easy to communicate with. It’s also
important to take a longer look at the impacts on your business and your community.
Over the next few months this blog will dive more deeply into the above reasons. Keep your eyes on this
blog, and if you have questions in the meantime, don’t wait a single minute to give us a call. We’d be
happy to explain how PS Solutions addresses each of the above concerns – right from the USA.