The hidden cost of outsourcing

There has been a huge trend in corporate America to outsource IT and web development work overseas because of the drastically lower rates that people will work for in countries like India, South America and eastern Europe. (This is different than Design Contest and Crowd Sourcing.) Large companies have built offices in these locations to enjoy the low cost of the local labor pool, this can help their bottom line. The big difference between a large company using a overseas workforce and small company or individual is that the large companies usually have management in place to keep things running smooth.

Outsourcing can be a good way to go but you are definitely making some trade-offs when choosing an overseas developer, whether you are an American hiring an web design company in India, or in Hong Kong hiring a American designer. With the advent of VoIP and the web, its easier than ever to work with people abroad, however there are several issues that have ruined projects and forced clients to walk away just having to eat the loss of time and money.

Pros and Cons of Outsourcing

Pros

  • Lower Rate
  • Larger Pool of Experience per dollar
  • Overseas team can work while you sleep
Cons

  • Language Barrier
  • Time Zone Difference
  • Accountability

Lower Rate

You will notice that I use the word Rate here and not cost. This is very important. While many overseas workers will work for what equates to essentially minimum wage in the United States, just like any low paid worker you will be trading off experience and skill for a lower per hour rate. This does not always equal a lower bottom line! There really is no substitue for experience. You probably wouldn’t hire an overseas architect at $15 an hour to design your home, and if your website is going to be your main business portal then it’s just as important! On the otherhand, if you just needed a storage shed in your backyard, there probably isn’t much point in paying an expert architect $10,000 to design it when you could outsource the project for $1000.

So, with that said, if you have a complex project that you are planing on outsourcing then you would be best advised to hire a US based consultant with experience managing an overseas team, it will save you money in the long run.

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Here are a few of the issues that may arise when working with an overseas firm.

Time difference:

At 2PM here in the states its around 11PM in India. Its not always easy to get someone on the phone. Often you have to wait 24 hours for a reply to your email.

Language Barrier:

While an overseas designer may be able to communicate verbally with pasable English, the real problem is often the business concept and more abstract ideas. I have seen clients that were simply unable to communicate the concepts of their business with an overseas developer. I think it is more of a cultural difference than a simple language problem.

Missed Deadlines:

I have been approached by several clients who come to me and say. I hired this developer in (some other country) and its been a year and the site is still not working. Either the designer took another job or had some other issue that is keeping them from finishing your project. When your only paying someone $8 an hour to do technical work, it’s very easy for them to find better pay or not make time for it. While it may be a better wage than they can get locally, if they are talented they should be able to find better paying work.

Fraud:

I have heard some horror stories from clients who have paid deposits only to get a small portion of work done, then the company disappears! Luckily most designers overseas only charge once the work is delivered. However, if you have a dispute about the quality of work, or the product they delivered, you may find yourself holding the bag as these businesses are out of the US courts jurisdiction.

Comparing Bids and Proposals

If you are planning a web design project, you can post your project on DesignQuote and get up to eight free bids from developers in your local area, the entire US or worldwide! DesignQuote is the worlds largest creative marketplace and has over 44,000 designers registered globally. They have helped more than 4000 people find the right designer. Just post the details of your RFP (Request for Propsal) and then choose the designers you want to receive bids from.

 

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Planning on getting a web site designed? Then you should read how much should a website cost?
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