There was a time when outsourcing was all the buzz. Lots of companies were looking into outsourcing as an option. But not all succeeded in making it work. Outsourcing is not for everyone. Companies that are small and require a very fast turnaround on their projects usually get frustrated with outsourcing. Communication is usually harder, and initial failures are common. Another thing I noticed was the whole hype in low cost development. This article is about such an experiment.

One of my prior jobs was to try and take some projects from an American based company to India and lead the outsourced development effort. I was really looking forward to successfully leading and completing a quality project on time. The project was an enterprise level application, and required good resources. Unfortunately, the budget was very small for the project. The budget I had per outsourced engineer was $15 K. The project required a quick turnaround, and in the time I was given, I really struggled to find decent engineers. Rather than delegating tasks, my primary function became that of a developer. It was tedious, and I wondered if we could have done things differently.

One of the things that I decided was that we had to evaluate the Indian resources the same way we evaluate the American engineers. You have to choose based on talent as well as price, and not necessarily based on price alone. A good American Software developer costs anywhere from $80 K to $100 K or more. Despite the high cost, a company would still consider this engineer because he or she brings in good quality work. You wouldn't want to depend on an entry level engineer to complete your enterprise level application on time and properly. You have to evaluate Indian talent along the same lines.

Here is how the salaries in India breaks down. An entry level engineer in India comes in at about $10 K and senior engineers come in between $40 K and $50 K. So, as an American company, the responsibility falls on your shoulders to determine what is best for you in that range. If the company wants good talent, they still have to make an investment.

Now, as I had mentioned earlier, outsourcing is not for everyone, and I think the market in America is becoming more realistic. American companies these days are able to better analyze the true profitability of outsourced development. They are not blindly jumping into it anymore. With careful understanding of how their own structure works, they can look at outsourcing as a positive option.