How to calculate the real ROI of offshore consulting

Ever wondered if offshore software consulting could be a magical shortcut to solve your software issues without burning a hole in your budget?

Offshore development centers are now sprawled across China, Malaysia, Pakistan, the Philippines, Mexico, Chile, and beyond. The promise: low-cost services from an army of programmers.

But is it truly a budget-friendly savior?

The price tag on software development goes far beyond the developers’ hourly rate. There’s the cost of time spent on communication, management, and approvals. There’s the quality of the software developed, the time it takes to develop and its impact on the business objectives. The maintenance costs required to support the software after its launch, along with the stability both during development and in the post-launch phase, also contribute significantly to the overall equation.

It’s crucial to consider that more comprehensive picture of software development to understand the real cost and value of your investment.

Now, if your primary goal is to get the cheapest possible price for your upcoming software project, then Test Double is probably not the right partner for you.

Our work goes well beyond shipping a product, with a deep commitment to quality and value. Our consultants drive improvement in collaboration, processes, and workflow. That kind of value does not come at the cheapest hourly rate. So while we are not the lowest cost, we do promise the highest value. (See more about our approach to fair contracts, weekly pricing, and open-ended contracts.)

That said, over more than 12 years and 1,000 projects in software consulting, we’ve been called into clean up messes, including those stemming from failed offshore collaborations.

So we can shed light on what to expect from working with an offshore software development agency to help you better evaluate the return on investment.

Agility & speed-to-value

Collaboration is tough when you go offshore. Time-zone differences, language barriers, and culture differences can all slow down the process. Expect a two to three-week ramp up period, and build in additional delays during each round of feedback or reviews.

Before you sign with an offshore firm, consider what, if any, overlap hours are available for collaboration, feedback, and approvals.

Security & privacy implications

Whether it’s unpredictable geopolitical situations or the potential for communication gaps, these inherently risky landscapes may lack the robust IT infrastructure and resilience measures crucial for safeguarding against unforeseen challenges.

Your customer data, financial information and system libraries are made available to a foreign company that is not subject to U.S. laws. That has added complications for financial services institutions, healthcare organizations, utilities and other organizations that face varying degrees of government oversight.

So choosing to work with an offshore agency demands attention to not only the technological aspects, but also the strategic planning to ensure compliance and uninterrupted business continuity.

Creativity and innovation

Consider the work that you’re willing to hand-off to an offshore agency. It should be well-defined and rote, without much room for misinterpretation.

If you’ve already put in the work to clearly define the project and all you want is a software developer to execute, then an offshore agency might work for you. (Even then, you still have to take extra care to clearly specify the end solution, while also reviewing what is produced to meet quality standards. Remember: Your offshore partners likely have little understanding of your business strategy.)

If you want consulting, innovation or complex problem-solving along the way, though, then an onshore agency like Test Double will offer a better return on your investment. As Eddie Kim, the co-founder of Gusto, once said: “Give Test Double your hardest problems to solve.”

Quality of software development

In our extensive experience, we’ve observed that the lion’s share of software development costs resides in maintenance—as much as a staggering five times more than the initial build.

The way to minimize the maintenance cost in the long run is to invest in higher quality software development, with quality assurance and test-driven development processes built into the process.

So what is the experience of the developer(s) you will be working with? Will the programmers be pairing with each other and/or with your team? Who will own testing and QA?

The turnover at offshore software agencies tends to be high – up to 40 percent per year, according to the National Association of Software and Services Companies.

In contrast, at Test Double, we don’t hire entry-level developers. We bring on experienced software consultants who have a track record of success, and we work to keep them. We have a test-driven development approach that enables far faster iterations from development to production.

When it comes to quality, a really good programmer is also going to be able to get a lot more done than five or even 10 average programmers. (There’s even a name for it: the 10x developer.)

And a pair of really great programmers is worth even more, because they work so much better when pairing. Two minds working together can often find solutions that are better and faster than one. They’re also more likely to catch errors or bugs earlier, resulting in higher quality code and fewer issues later, and it’s key to knowledge transfer between developers.

As Robert Ross, CEO at FireHydrant, said: “Some consultancies are trying to just get code out the door and are designed to write stuff that will last for maybe the next 6 months. Test Double thinks deeply about problems and delivers sustainable solutions.”

Knowledge transfer and post-development maintenance

In our experience, it’s tough to transition away from offshore consulting. It’s not necessarily the fault of any engineer. It’s just that offshore companies are not able to provide the same level of support and ongoing management. So the likelihood of a (costly) rewrite is much higher.

Questions to consider before working with any software agency, including an offshore agency, that will help you maximize value and minimize future maintenance costs:

• Are they documenting their work as they go through so that your team can extend it?

• Did they build in a level of automated testing so that changes made by your team in the future are likely free from defects?

• Have you considered how you will transfer the knowledge back to your team?

A free consultation

Did this spark more questions? Want to chat more about our unique capabilities to deliver high-quality software for a better return on your investment? Contact us now for a free consultation.