BossTalks.com Topic: At what rate would you consider outsourcing?

peet on "At what rate would you consider outsourcing?"

peet — Thu, 15 Mar 2007 07:46:19 +0000

Your problem is that you trying to sell right now and you are trying to put your expenses on the shoulders of your clients. This is not a good way of either negotiating or price building model. But no one here, in US, cares about your problems (I guess you are in Russia or somewhere around). We have got plenty of local people with no language barrier and recent equipment and no Internet problems. Keeping in mind that offshore people often screws up on paying taxes, while local people are not. My point is that I'll think about paying each person independently and the salaries over here would influence me in the latest order. I will never propose more then 10% of the local offshore salary to any remote worker. I mean, if the people in Russia get $1 grand monthly for doing PHP development, I would never give them more then $1,100 from the very beginning ($1,000 + 10%) even if here in US, I will have to pay $5 grands for the same kind of a guy (disclaimer: this is not an actual numbers, just an example). I will definitely increase his salary if he'll prove himself to be really good for me, but this is the part of other science. And I never could understand why a lot of offshore teams try to do pricing looking at US prices, but not making of a real cost.

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krivitsky on "At what rate would you consider outsourcing?"

krivitsky — Thu, 15 Mar 2007 04:51:51 +0000

there are tons of hidden expenses in offshore development - it is not only about salaries, sadly

they might need:
- tools that support your remote process
- IT infrastructure to enable remote communication (hardware, internet bandwidth, telephony...)
- working environment that matches *your* standards
- ...

also note that the lower are the salaries, the faster they tend to grow.
and also your project speed (velocity) will slow down had you been developing it with local teams before which will delay the ROI and increase your project expenses

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white on "At what rate would you consider outsourcing?"

white — Sat, 03 Mar 2007 21:49:14 +0000

What is rate difference at what you would consider outsourcing your development overseas? I.e., if the salary of full-time Java developer is $84,000 annually, or $7,000 per month, would you consider hiring a Java developer overseas for 70% of local employee ($4,900 per month) or you would consider not more then 30% ($2,100 per month) ?

What are the numbers which warm you up to think about it?

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