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Outsourcing has worked for me and my clients for 10 years or so. The main aspects of making it work is vendor selection, local manager with outsourcing experience and proper choice of engagement model. The author, Yegor, is arguing outsourcing categorically does not work due to lower vendor margins from 2001 and today. What he fails to mention is that while Eastern Europe has risen in cost, there's still plenty of locations with much lower cost and therefore much wider margins. In such locations, his main argument would no longer be valid.
Even in Ukraine, there's huge difference in cost of living and therefore average salary across the country. Kiev is very expensive. Dnepropetrovsk, Kharkiv and Donetsk, not so much. But nowhere are you going to find 300 USD a month developers. 2000-2500 maybe, but not 300. Further, the vendors he describe are not good vendors. Good vendors will raise the price to provide a sufficient margin in order to provide a good quality service. Bad vendors will sell with low price being their only parameter, and yes, such companies will typically have the mindset of "milking the cow". Until they fold from one day to the other, that is. Finally, the mismatch Yegor describes between client and vendor expectations could be entirely removed if he just chose a different engagement model. For product development, you shouldn't do a fixed-price project model. Rather, do a monthly retainer based model for the same employee(s), where you pay the vendor x amount of dollars for the full allocation of person x. This way there's no prioritizing from the vendor company that can influence your project (unless the vendor is straight up fraudulent). And with a cancellation notice of 3 months, the margin can be lower as there's no risk for the vendor. |