Software development outsourcing rates & advice

scott_e · Post by **scott_e** » Tue Jul 16, 2013 11:09 am

Morning.

We have a software development company from Dundee popping into see us tomorrow , important to get someone close by. Got software projects left right and centre at the moment and have recruited 4 and looking for another 1 with at least 5 years experience. Took sometime and effort to recruit the first 4 so also exploring outsourcing a specific software development project too. I seem to remember there are a few software devs on the forum that starting doing this. What day / hourly rates should we expect ? Any other advice ?

Thank you for any help.
Scott

graeme · Post by **graeme** » Tue Jul 16, 2013 2:07 pm

Start small. Don't give your 12 month, number 1 priority, business critical, roadmap project to complete strangers. Get them to do something a trained monkey could do, because the code will be the least of the issues... outsourcing is a management challenge, not a technical one.

There is no way to send out a spec and get back exactly what you wanted without managing the project daily. Have you got time for that? Or do you always work from watertight specification docs anyway? I doubt it.

You probably rely on your developers to figure things out for themselves a lot. Outsourced devs don't know your business or your products, and won't make any smart assumptions for you or do any investigation; they'll just follow the instructions in the spec and that's what you'll get. Any abiguity and they'll send over a list of questions which they need answers to NOW or the deadline slips, so you need somebody always ready to answer them. Only way round messing up the project through lack of communication is to work very closely with them, every single day. Which is probably why you want a local company, right?

Consider hiring a Business Analyst/PM hybrid at your end to run the project daily, and demand daily builds to see progress and stop mistakes early before they get costly. Under no circumstances send a spec, wait 3 months to hear from them, and then realise it's all wrong. Money down the drain. Whoever pitches for the work should be selling you their dev processes which will prevent this, their reporting and quality assurance process, focusing on delivering the right solution, not covering their arse so they don't incur costs when it's wrong.

Rates vary wildly, but if you're outsourcing a project, pay for the work as a piece, not the time. Leave it up to the company if they put 1 or 100 developers on it and how much they mark up or discount their rates to get your project. Negotiate down with promises of future work if the first project goes well. As long as you're happy with the price and what's included.... project management, reporting, testing, documentation, deployment, 1 yr support etc... you decide what you need from them and what you're willing to pay. Have an idea of how long it would take your own team to build, add on overheads and subtract opportunity costs and probably 30% on top of that and you'll be doing well. Remember, their developers are probably on salaries, not day rates, and costing the dev company something like £350-400 per day to employ, so add in project overhead costs, travel etc and if they charge you anything around £500 per developer per day (after hefty discounts and negotiation) you're doing very well. Assume they'll start at £750pdpd as a ballpark, and £1000 upwards for specialists.

There's always India... I had a team of 15 developers out there for £1000 per month each. Management overhead, cultural divides, quality... all big issues which need significant investment and patience to overcome, but it scales well and pays off if you're in it for the long-term.

Another idea, if you have a team of developers who are tied up fixing bugs on old projects, outsource the bugfixing to free them up for new projects. That's great for morale, as they get to work on the cool new stuff all the time instead of it being given away while they slog through the buglists, getting bored and miserable.

scott_e · Post by **scott_e** » Tue Jul 16, 2013 2:33 pm

Thanks for the reply Graeme , a very useful insight. One of the reasons for sourcing in Dundee for this product specifically (just the front end bit) is to allow for face to face meeting regularly. We are no stranger to producing 100s of page detailed specs for the end customer but fall short in producing a detailed design spec for the relevant dev team weather its internal or external. We believe an internal developer to concentrate on the front end (while the existing dev teams do the deep backend system) is a better plan but getting the right person to do that front end job is difficult. Its a great opportunity that's for sure .... but i would say that

douglasgdmw · Post by **douglasgdmw** » Tue Jul 16, 2013 5:42 pm

Also agree with Graeme on his points.

However if you are wanting to outsource to a different country, a better option may be to use Eastern Europe resources. Surprisingly, within our company the internal rate between E.Europe and India is not massively different but the quality of software produced is significantly higher by EE, broadly speaking (although it does naturally vary depending upon the actual developer that you are using). Eastern European developers are more likely to be able to follow a more open approach to development and can cope with given some "freedom" to work around problems.

Just a thought

Thanks
George

graeme · Post by **graeme** » Tue Jul 16, 2013 10:28 pm

Good point George. Polish developers are great and I've hired loads, and would do so again any day!

scott_e · Post by **scott_e** » Wed Jul 17, 2013 7:43 am

Thanks again for the posts.

Regarding polish developers , a friend of mine that was the tech director at Avian for a while hired a few over the years and was very impressed by the work ethic and quality of work. I have contacted a Romanian friend who has his own software development business asking advice on how to employ developers from eastern Europe but have yet to hear back. Got any tips on where to advertise to attract good candidates from the former eastern block ?

Thank you
Scott

douglasgdmw · Post by **douglasgdmw** » Wed Jul 17, 2013 8:47 am

Scott,

Will have a chat with some of our Eastern Developers to see whether they can recommend any firms. Out of curiosity what s/w language do you want the development done in as they may be able to recommend some people they have worked with in the past.

Thanks
George

graeme · Post by **graeme** » Wed Jul 17, 2013 8:51 am

We targeted Polish software development forums, newsgroups, Google groups, IRC channels etc. Find all the relevant, active groups and spam away in English. Each dev you interview, tell them you need a whole team and ask if they know anyone else who might be interested...they'll all give you more names to follow up on.

scott_e · Post by **scott_e** » Wed Jul 17, 2013 9:02 am

douglasgdmw wrote:Scott,

Will have a chat with some of our Eastern Developers to see whether they can recommend any firms. Out of curiosity what s/w language do you want the development done as they may be able to recommend some people they have worked with in the past.

Thanks
George

Thank you George, that could be really helpful. In this case its a front end developer we require with strong JavaScript, JQuery, CSS, HTML skills. Knowing where / how to attract candidates from the EU in general would be really useful. So far GumTree & StackCarreers have attracted candidates out with the EU.

Thanks for any help
Scott

scott_e · Post by **scott_e** » Wed Jul 17, 2013 9:15 am

graeme wrote:We targeted Polish software development forums, newsgroups, Google groups, IRC channels etc ....

Good idea, will give it a go thanks.

ryallm · Post by **ryallm** » Wed Jul 17, 2013 10:45 am

I am a partner in small software company. Agree with a lot of the comments above. I have quite a lot of experience of working with Indian developers, not through choice, but because we have support contracts with clients who use them. Almost without exception they have been hopeless - you get what you pay for!

Mark

Lazydonkey · Post by **Lazydonkey** » Wed Jul 17, 2013 11:05 am

graeme wrote:Another idea, if you have a team of developers who are tied up fixing bugs on old projects, outsource the bugfixing to free them up for new projects. That's great for morale, as they get to work on the cool new stuff all the time instead of it being given away while they slog through the buglists, getting bored and miserable.

This is a great idea !

Like others on the thread i've had very mixed experiences with some Indian guys (onshore mainly) being great but offshore being horrible. But then I've also had useless £400 a day local hires so it's swings and roundabouts. Using a consultancy is definitely more expensive but it does save a load of hassle in the long run.

A lot of our support contracts are now being handled out of eastern europe and aside from names that sound like a firework going off we've had nothing but positive experiences.

ryallm · Post by **ryallm** » Wed Jul 17, 2013 1:32 pm

Lazydonkey wrote: names that sound like a firework going off .

Brilliant

Scottish Elises