Outsourcing Bill Rates: Dollars Lost in Distant Time Zones



Posted: Wednesday, February 06, 2008

by
Vision TRE, Inc.

Outsourcing in distant time zones can be an expensive choice for software development projects. Although the bill rate is low, communication black-out times raise your cost. Let's look at India as an example. India is about 10 hours ahead of the U.S. East Coast. This means when you get to work on Monday full of new ideas, their Monday is already over. Efficient Software development is the collaboration of ideas, business knowledge, technology experience, and the development skills of your entire team. That is why an in-house team sitting in the same vicinity is ideal. The next best thing is a team you can remotely collaborate with in real time using desktop sharing, VoIP, and internet white board technologies. Distant shore companies may tell you they will work in your time zone but remember, the best professionals don't work nights, they don't have to.

Let's look at an example. In a Thursday afternoon meeting your clients in marketing decide to make several minor changes to a report you have promised to deliver on Monday. You spent the rest of the afternoon and carefully document the requirements and send an email directly to your software development team lead in India with the specified changes expecting them to be completed by the time you get in on Friday (your day is their night). Friday morning when you get in you find an email from the team in India telling you that they need their password reset for the server or the calculation you requested is not clear. Maybe you get an email that has the completed report attached but the fields are pulled from the wrong database fields. You then send them instructions for correcting the problem which they get on Monday morning and should have completed by the time you get to work on your Monday morning, right? Or maybe your email did not get there at all!

Working in distant time zones creates hidden project time losses that you pay for. Loosing just one day increases your cost for that week by 20 percent. This does not exist when working with an in-house staff or project team in your work day time zone. Simple requirement changes can be discussed in impromptu meetings and then documented by the team rather than your manager. This saves you management time and enables you to quickly change direction on requirements. When requirements are discussed with team members they are enhanced by the technical and business knowledge of the team which improves your product and adds an instant layer of quality assurance review.

Suppose you have a team of 10 professionals in India including 5 database professionals. At 3pm this afternoon your Oracle database goes down. Can you use those professional in India to help? Only if you are willing to wait until they get in the next morning. In-house IT staff is often re-assigned to "fire-fight" system problems or emergency situations that are not anticipated. Distant time zone workers have no value to your team when a mission critical system fails or the VP of Finance has a need for immediate assistance. However offshore teams in a similar work day time zone can be directly managed and re-assigned immediately to assist you. These teams can also be used for emergency over-time assistance. Many things can cause you to miss a schedule deadline. Suppose a development server fails at 8am and it take 6 hours for the technical staff to get it back online. An in-house staff or remote staff working in the same work day time zone can be called to work extra hour that day to meet your schedule. A distant time zone team might have to wait until the end of their day to even get support, loosing an entire day of work.

Near-shore teams working in a U.S. friendly time zone usually have a higher bill rate than the rates found in China and India. However, with service in places like Brazil, Panama, or Mexico you are getting much more flexibility, interactive collaboration, and the ability to use these resources like in-house staff and still at a much reduced cost.

This Article is by Henry Johns, President & Chief Consultant at Vision TRE, Inc. in Atlanta, Georgia.  Mr. Johns is an international entrepreneur/consultant specializing in IT near-shore staff augmentation in the America's for businesses in the U.S.A.  Expert in near-shore IT sourcing, particularly in Brazil, Panama, and Canada.  Global business experience in North America, Central America, South America, Africa, and Europe. 
This Article has been viewed 96 times. (Not updated in real-time.)
No comments yet.
We want your comments! If you can read this, you don't have javascript enabled, so you can't use this comment system. Please enable javascript.