Only people really interested in Outsourcing should read this article. There can only be two reasons for reading this:

• One, you want to try outsourcing but don’t want to fail.
• Second, you have outsourced in past and do not want to repeat your failure.

Do not worry; you contribute to more than 85% of the people who practice(or want to practice) outsourcing. You can go on to websites that review outsourcing portals and see the reviews by yourself!

Here is a review I found on Outsourcing:
155 people gave an average 1.5/5 star on Freelancer.com (probably the most common way of outsourcing)

There are similar reviews for most of the outsourcing website as well.

That’s horrible, isn’t it? Why should you even consider outsourcing with such reviews of these so-called outsourcing portals!

Here is my profile on one of the top 3 outsourcing portals called People Per Hour.
My Numbers

Where I stand globally (Looks pretty good! :))

The reason why I am sharing this with you is not because I want to brag about myself. I just want to communicate some confidence when I say, “I understand Outsourcing”.

I have been there, done that. For more than 7 Years I have been working with clients who outsource from countries like the USA, UK, Europe or Australia to other countries like India, Vietnam, Malaysia or even Europe for that matter. I have also been at the employer side of it and have outsourced some tasks like “content writing” and some “PR stuff”. I worked with developers and writers (teams and freelancers) from Asia, Europe and even the USA and had my share of failures too! I get tonnes of clients who already had a fight with their previous developer or had a hard time communicating their requirements to them. A lot of people have already lost faith in outsourcing by the time they reach out to me.

In all these years, I have seen a pattern of why sometimes outsourcing can be such a pain and I took some time to list that out for you. So here are the 3 major reasons why outsourcing fails.

Why Outsourcing fails: Reason #1

It’s not about cost cutting, it’s about hiring specialised people whom you cannot hire for some reason.

Now this is what I consider the most important reason of why your next outsourced project might fail. Think about it, when we start searching an outsourcing partner (Let’s take a website developer for an example).

How our mind plans things initially:
“

1. I just need a website/app developer for my business
2. My project should not take more than a couple of months
3. I should not hire a full-time person for this (Who would leave his job for a couple of month of employment!
4. I think I should outsource it to some professional

“

^This is what you thought you will do.

What happens afterwards:
“

1. Let me search developers
2. Oh! I have seen Indians are good developers; Major global IT companies have them as CEOs!
3. Let me see how much it should cost. Well, but they are Indians, they should not cost as much as in the USA!
4. Let me see their average salary (This is where Google searches are bad)
5. Okay, I can directly outsource them using this website, cool!
6. Let me see the options
7. $20/hr is too costly, let’s go with $12/hr (well, I am outsourcing to India after all!)
8. Deal closed
9. Project Dies

“

When you started with a clear, rational mindset, it was about hiring a developer because you do not want to go through the hassle of hiring him for a couple of months. For this everyone can have different reasons. You might be looking for someone who is technically more superior for some particular technology or you just don’t have enough bandwidth for your next big project. But the problem is how the process concludes. Out “monkey brain” take over the “Neocortex” and wants us to have a great deal leaving all the logic behind. We conclude the deal thinking that it is okay to go with a cheap developer because he is from Indian subcontinent!

Quick fact: The average salary of a mobile app developer who actually delivers can be as high as $12-15/hr in India. If you add management cost, profit, Infrastructure and other expenses he would be billed to you at least $20-30/hour. If you hire anywhere below it, there is a really high probability that the project would never be delivered.

1.5 million Engineers pass out every year in India. The “Google search” you did for the average wage “was correct” but the average wage “never delivers”.

Conclusion: Your focus should be to get the right team/developer. Geography certainly changes rates but do not go on to find the cheapest of them all. If you want to work in India or anywhere else, work with the best. Do not lose your focus on finding the perfect guy.

Why outsourcing fails: Reason #2

Contractual Flexibility: He asked me to move an inch, I said yes! He marked the inch on a Map!

I have worked on a few products with my development team. So I have been in sort of a client relation with them. What I am about to say might not be in my favour but let me admit it. My development team failed me. They did not deliver what I was looking for. It took one year to develop something that should have taken less than 6 months. I had to change the entire development platform, technology because everything evolved during that time! It was a huge loss.

However, the same team worked very well and delivered what I was expecting and even more when I changed my way of working with them. This is called being Agile (I’ll explain what it means below if you do not have an idea already). Today every company is claiming to work on Agile and every project manager seems to be certified on it. But the fact remains intact; there is a high chance that Agile is not going to be used while development of your product. Why, because only “you” can do so.

Implementation of Agile has not just something to do with Project management but also with the Contractual terms and Flexibility. It simply can never be implemented in fixed cost fixed projects. Why? Because there is nothing called fixed scope! Because you cannot document 100% of the scope in the beginning as it has so many moving parts! It is bound to change with time!

When you start your project, which can be a website or your next mobile app, ask the project manager to divide the project into Sprints, not milestones. What is a sprint? It is the smallest shippable version of your website or app. So with each update, your website or app should look like it’s ready to go live and just has some missing features. It should have clear layouts, should not crash etc. I’ll write a separate article of how to implement agile in some time. But first, let me explain the most significant benefit. The benefit is, you remain in complete control of your project/product.

What happens is that with each sprint you can visualise that how the user/customer will be using your app and can ask for changes in the next sprint. This makes the development process very dynamic and chances that your customer would love the app shoot up!

The only downside which is obvious to this is that you cannot fix the associated costs on day one. And there is a slight chance that you might run over the expected cost by 20-30% (It totally depends on how much changes your requested at the end of each sprint). But having a product and paying 120% for it is better than not having a product and paying 100% for it, isn’t it!

Now, the above might seem obvious and you might be thinking that this is what you do exactly. It’s really just a difference in mindset that can bring an entire revolution in your outsourcing strategy. Let me explain.

-Orthodox outsourcing:

“Find a developer who is technical, humble, kind and cheap. Give him a fixed scope and fixed cost project/product to do. Once he has an idea of the project, negotiate hard to get a good price out of him. Later in the development stages I can keep explaining how it should “exactly work” (evil grin)”

This developer can harm you in ways you might not know. Let’s take an example: you finalise a developer and give him $3200 for 160 hours of work and freeze the contract. Now the developer asks for your input and you make a few suggestions. Soon the required development time increases from 160 to 320 and the developer is now effectively getting $10/hr which should have been $20 as per the initial contract and is even lesser than his regular salary. He would try his best to do everything within the allotted time for which he would start taking shortcuts. He would use bulky third party code, libraries without doing any research as he is getting paid to implement functionality and is least concerned about the project’s success.

Conclusion: Do not try outsourcing in an orthodox way. Share the complete requirements and ask for genuine deadlines and charges. Once you have the estimates, ask for sprints and kick off the project. Understand Agile. Pay the developers hourly/daily/weekly (As you pay salaries) and not in milestones. The bottom line is you MUST work with them as they are a part of your team and they would never think of you as a client. Your product/project will become theirs and success is inevitable.

Why outsourcing fails: Reason #3

You might be getting scammed: Greed attracts Greed

Recently one of my partners was talking to a client. We estimated the project would cost around $6000 for Android. What happened next was surprising even to us. The client said that he has an offer of getting the app developed within $4000 not just for Android but iOS as well. Now this app was a fairly complex app and even $6000 was cut throat. We had to let the client go but could not let the anxiety shed away.

The problem was not just that he had an impossible offer, but it came for a company that has more than 150 full-time employees and a good reputation! I was forced to think where the industry is going as this could not just be a case that they had the exact app built already.

After this happened to us a couple of times with the same company, I was forced to discuss this in my network where we have business development professionals from various companies. What I discovered was shocking. The company that I was up against was a scamming company. They have half the employees in business development and they do not generate revenue with project deliveries but with project advances. Their entire focus is to get the project at whatever cost. The client never has a problem because they already have a good sales team and a decent online reputation. I head that a client called them after 3 months and they had to dwell in their files to check if he even was a client! This is the most terrible thing that can happen to you in

Why this happens and how you can save yourself from this:

1. Do not deal with salespeople, ask them to connect you with the developer or BA and make sure that they would be the point of contact throughout the project lifecycle.
2. Do the maths. If maths says it should cost you $16000, it will. No one has a magic wand to do everything at a quarter cost. There can be greedy developers but it’s our(client’s) greed that forces us to make choices that seem to be largely based on the “leap of faith” rather than the rational “NeoCortex”
3. Compare breakdowns, not overall costs: Ask the breakdown of the estimates from each company that you are comparing. It’s good to get a good price but before finalising the most economical option, check if they have considered each and every aspect of the project in their cost breakdown. If they haven’t, ask them to add them. It’s very easy for anyone to say that this should take $x. It’s when you think through the project, you realise, “boy! there are going to be efforts in this”

Conclusion: Do not be greedy. Do not jump to the conclusion on the basis of a good online reputation and a good sales team. Reach out to the BA, get the breakdown and compare it. Go with a logical mindset. The best looking option at the first glance may not be the best in the long run.

If you are looking for a website development or mobile app development then you can talk to our subject matter expert.

You might want to read: 3 Mistakes an Entrepreneur makes in planning app development

PS: All the points mentioned above are my personal beliefs, suggestions and experiences in the past 7 years of outsourcing experiences.