Keep up the good discussions.

I guess the important thing to remember is that the overall objective is to find good developers, and filtering them through a process such as this is only one way to do it.

I think something which isn’t clear from the article above is that this is only part of the story, there are other stages to move towards getting an actual developer signed on. These will be overed in subsequent posts.

M.

a) If you don’t have an existing relationship with your partner, and/or your team has no experience in working with offshore partners, then I absolutely agree- start with the non core.

b) If your relationship succeeds, then as part of next phase, do consider also letting them work on “core”. There is “core” and there is “core” “core”. You know what I mean. Many clients put a strong thick guard wall around what they consider their core. But if you really look into core, you will notice there are many other carvings that can be farmed out. You may want to consider evaluating the options for that part too. Here is why:

b.1) My experience is that there are a reasonable # of reputable companies, who have now spent 15-20+ years working on specific domains who have very good knowledge. You may be surprised that some of your partners may know as much or sometimes more than your own team

b.2) In general, for a complex product, a good offshoring team takes between 4-6 months to completely rampup on your platform and be what you will call “very good”). Once they do that, they will usually surprise you even more in quality and suggestions.

b.3) Good people like good work. Period. Economies evolve. Specific to India and China, that threshold where any work will do has been crossed. To keep a team motivated, you need to give them good work. Of course, you will find many companies who still operate with ‘will do any work’ – but caveats: b.3.1) They will frequently change their people internally b.3.2) They will always maintain the same level with you of ‘average’ to ‘moderate’. It is usually unlikely they will blow your mind.

c) Many companies feel offshoring “core” is synonomous with laying off their own people. Compeltely wrong. Offshore “core components” (again, remember my perspective on “core” vs “Core Core”) lets your own team work on new product features you may have not budgeted for.

d) Remember loaded costs – when you budget, the cost of an employee is typically twice his salary. This seriously affects your bottom line.

In short, the limits you put to your relationship are defined only by you. It is not a rule. The less you are open, the less benefit you will see.

Firstly there is the question of whether you should be outsourcing this type of work. As a startup, developing the software probably counts as your core business, which should be kept in house. You can still hire low cost employees in India or elsewhere to do the work, but you need to maintain complete control over the development and who is doing it. You may well find that a vendor’s goals for the project (and fitting it in with other work) don’t quite match your own – not good when project failure or even delays can cause your entire business to cease to exist.

Secondly there is the fact that startup work is quite difficult to spec in advance, and is more likely to involve features the vendor is unfamiliar with. You might get away with it if your project is the same as a typical corporate project except for the number of users, but for anything more innovative you can expect communication issues.

And that’s before you even get to issues with management or developer competence. It’s not that uncommon for a team to have one good developer on a team making up for a couple of not so good developers who get nothing done. If you manage your own team you can fire the ones who are no good. Going through a vendor you won’t even know there is a problem beyond a nagging feeling that you are paying three times what you should be.

Visiting offices is just not feasible for low cost outsourcers. If they have a local office in the US, it will just be a sales office. If they have local people in the US, they are going to be much more expensive (one local person typically costs as much as three or four remote people). Meeting those local people will help, but it still won’t give you a sense of the people doing most of the work. It is also unlikely that local clients will be near you, unless you live in Silicon Valley or New York or some other major center.

The only reasonable option is to talk to people on the phone. Speak to past customers. Speak to the development team.

I have run an offshore operation in India and currently have one in Vietnam, so let me give you some perspective from the other side.

First of all, you’re not going to speak to my clients unless we are in the very final stages of winning a large project. My past clients are a valuable resource whose time I call upon only very cautiously. Many of my most important clients insist on anonymity.

Spending days responding to detailed requirements documents is very expensive in terms of opportunity cost. I only do that when I have evaluated the client. They will be people I know personally or through referral, or famous companies. And if not, I will want to see evidence that there are no more than one or two other contenders and that they have sufficient financial backing to be considered serious.

About eight hours is all the time we can afford to invest on prospective clients who are just fishing around multiple vendors. This is especially true about those who use checklist templates (we might not even bother to respond to those). Such people are looking for expensive international consultancies such as Tata, or are looking for a small vendor willing to lie to them to get the job. I’ve negotiated million dollar consulting contracts on the phone in twenty minutes with clients who know and trust our past work; we’re not going to waste days of time responding to cookie cutter fishing procedures from unproven prospects. Unless you are a famous brand name, you need to make a special effort to make an offshore relationship work and find the right match for your needs.

touché ..

What you really need to do is: a) Ask local reps to visit you and present – get the tech guys over the phone. ask impromptu questions and judge responses. It is easy to craft a response over a day. It’s hard ot do that on the spot. b) Make an effort and visit your top 5. Nothing better than visiting their labs, talking to people and understanding their processes. Often, some of the best will be those who may not have said ‘Y’ to all your questions. For example, if you are a startup with just a few million in funding yourself, a good vendor will not say ‘unconditional Y’ if you ask for silly things like liquidation damages

c) Figure out the right process NOT to micromanage. Companies think that by writing an extensive RFP, they have done a great job. Actually, you would be surprised how much of your RFP is a copy of another company (in other words, birds of feather – those who start this way all think the same, so ask the same).

But the company that you really want building your hot new application – probably 2 or 3 guys with real grunty experience -do you think they’re sitting around with time on their hands waiting to jump through your hoops? Your process acts as a filter at both ends. It’ll remove the people at the lower end for sure. But it will also turn off the really hot, good supplier who just doesn’t need to go to these lengths.

Anyone who’s been around the blocks will know that if you demand a fixed price quote from someone, either a) they need to spend a LOT of time studying your requirements (which are probably not as good as you think they are), b) they will build in a hefty risk premium (which comes out of your cash, c) they’ll quote you a good price all right, and then gouge you later for project variations and the like.

And then good luck building your new system with the average guys left from the middle.

Thanks for informing. Some clarifications.

1. Are you referring RFI as RFQ (which I see from the sample in the link provided)?

If so, then it is for T&M contract type. From the article, I tend to think it is of FP type. For IFB or RFP etc, normally it is Fixed Cost and Cost Reimbursable types. It will not be for a fixed cost project. Or did I miss something?

1. If you are going for a fixed cost type contract, I really doubt any vendor worth his salt will accept, if the scope is not known. If someone is worried of IP cases, I guess, there will be different mechanism to handle.

If the scope is not known (if you say just “e-commerce” project), then will they accept?

1. Another is arranging a talk with a client for which they have completed a similar project. I understand that a number of vendors can give client data, but then arranging talks with them, how practically feasible it is?

I think, one can ask for a demo of the product being done, which will boost confidence.

1. How will you rate vendors who are sub-contracting the work? I mean, if they claim to be a development company, and in turn sub-contract to another, they are not a development company in the first place!

And mostly it is for technical development work, which you would like to go for. Sub-contracting, sub-sub-contracting will bring “privity” into question, which will be a headache – if something goes wrong.

Satya