By Andrew Neitlich

A caveat about off shore work and outsourcing

By Andrew Neitlich

I’ve been up since 5:30 am my time instant messaging with some developers from India.

As noted in earlier blogs, sometimes I go with US resources, and sometimes I go off shore. It’s nothing personal.

For this project off shore developers can do the job for 1/10 the cost of US developers. I’d be nuts to not take advantage of this pricing differential.


But I pay a price for this in my own time and sanity:

1. I can’t believe the back and forth required to get something right. Even a simple text change can take two days, and end up breaking other parts of a site.

2. I sometimes give up and pay a competent US developer to do something for me. He is so fast and accurate that even though his hourly rate is 5X higher, I end up paying less.

3. The time differences, large number of holidays, frequent sick days, and staff turnover can be annoying and difficult.

4. Versions of SQL and other programs are often outdated and lower end.

I am willing to put up with the above because, as you know from my blogs, I am cheap — especially in the early part of a site before proving the concept will work.

For you, there is a major advantage and opportunity:

1. You can beat off shore teams with a marketing message that explains the problems working with off shore.

2. You can be the go between who finds competent outsourced labor and makes a team work (as I know some of you already do).

So don’t lament people like me who sometimes use off shore labor. Don’t take it personally. Don’t get upset.

Turn it to your advantage. The opportunity is there….

  • A great piece of advice!

  • Dr Livingston

    > So don’t lament people like me who sometimes use off shore labor. Don’t
    > take it personally. Don’t get upset.

    We don’t though… Just we you shouldn’t take it personally when we the developer, the very people you depend on for your business, tell you where to go, when it’s pretty obvious your just being cheap ;)

    If your being cheap, then personally I see that as an insult, as what your basically saying is that I’m not worthy of what I ask for my services.

    But don’t take it personally :)

  • Well, you can always move to a third world country :p

  • chrisb

    Andrew; do you ever worry about the standard of code you’re getting, and its security/stability?

    when I was contracting (while ago now) I got majority of my work from client referals as they learned themselves that ‘you get what you pay for’ – looking through their older site code was rather eye-opening- security holes everywhere and various poor coding practises that kept crashing their servers..

    Do you find that once you’ve seen whether an idea is valid or not, you have to pay your competent developers to redo the site over again?

  • aneitlich


    Yes, I often have to redo the site over again. You raise a great point. Here is how I learned to make decisions like that, based on the science of managerial decision making as taught at business school:

    1. Never look at past, or “sunk” costs.

    2. Examine the future based on future costs.

    3. Multiply possible returns by some sort of expected probability.

    4. Take your analysis out to the next decision point, to minimize risk and maximize upside.

    So when I first start out on a site, the odds of success are 1 in 10. So I pay as little as possible via off shore developers to get it tested.

    If the site fails, my downside is low.

    If the site succeeds, I forget about sunk costs. Now I focus on cost to redesign, but knowing the odds of success are now more like 9 in 10. So I am willing to invest a lot more as my projected returns are high.

    In other words, in testing phase, if possible income is 1 million dollars, but with a 1 in 10 chance of success, then likely income is $100,000 and I have to spend accordingly.

    If tests succeed, then likely income is $900,000 and I can up my spending to achieve that number.

  • aneitlich

    Dr. Livingston:

    Thanks for the points. Let’s be clear about a few things:

    1. I don’t rely on developers for my business. My book sales are a tiny part of what I do, and I market to many different niches. So my advice is meant to be honest and candid. Really I write this blog for fun, which it usually is. I charge about 5% of the price that other authors to the IT world charge for their programs, because I want people to have access to good information and hope to work with them as they succeed down the road. My real income comes from serving as the interim marketing executive for growing and dynamic companies, and from start up ventures. The books are gravy.

    2. I am cheap early on in a project, because it makes good business sense. There are developers who go after people like me as their target niche. They are typically what you call “operationally efficient” developers, who handle many clients quickly and at low cost. You are probably more of a quality leader (although I have no idea), and therefore need to go after clients that meet your ideal criteria. Be happy that I am honest about what I want, as many clients aren’t and will waste your time. Me — I’ll give you a “yes” or “no” quickly, rather than string you along. That’s a good thing in the world of sales and marketing! You want to be able to spend as little time as possible on prospects who are not a good fit.

    3. Maybe a better word than “cheap” is savvy. As noted in my response to Chrisb I eventually pay for higher end services. But first I test out projects. In other words, this blog post refers to just one project in its early stages, not my whole range. I pay top dollar once I know a site has legs. That’s why I noted that I employ both higher end developers and the lower end.

    4. Keep going after the high end clients! Just be sure you have the marketing message and strategy in place to attract them.



  • designOweb

    I run a small firm in India, developing websites for international companies out there (near you). Definitely it is advantageous for you guys to be local and have access to all clients near you. You can meet them personally (note it). But you can not prevent them reaching for offshore which have less budget to run their business. And I found that people in USA and other countries are able to find the right guy for them to work on offshore project. I never sell my services by explaining about what is wrong with other companies, as I sell services on the basis of the quality and timeframe (ofcourse costing too)

  • Looking at this from a different point of view, in many ways what Andrew is doing is prototyping. Just like making a prototype of a hard good, he is getting something that approximates the end product… maybe not all the functionality, maybe not exactly how it will look, but enough for a touch and feel to get an idea on how well it will be received.

    But just like in consumer goods, when you deal with “your products” day in and day out, it is easy to work with a prototype and understand what the real product will be like, but your target audience may not be able to make that leap. So on one hand, you may save developments costs and risks, but one risk often overlooked is the risk of discarding a very viable product that just happened to fail miserably in the prototyping stage.

  • Gator99

    Do you ever give your clients this type of advise? ei … “Why are you paying me when you can use an overseas consultant?” “My God man, cut out the middleman and save some big bucks!!”

  • eveenend

    “I am cheap early on in a project, because it makes good business sense.”

    “Maybe a better word than “cheap” is savvy”

    Andrew, I believe the word you’re looking for is bootstrapping. You need to prove that your business idea is a viable, money-making venture. Only then should you open the ‘vault’ and pour in the support (financial being just one piece of that of course).

  • Jan Korbel

    Hi, I am from Czech Republic and I just have to make something clear here. The tone of Andrew’s post and overall message looks like this to me: “Outsourcing to offshore companies is cheap but be sure you will get substandard work.”

    This is just plain wrong. Be sure that we here know and care about standard coding, accessibility and all this stuff as much as you do.

    In every herd there is a black sheep (hope you have this saying too). So just pick up more carefully.

    Just a sample from our work http://www.iptec.cz/

  • eveenend

    “If your being cheap, then personally I see that as an insult, as what your basically saying is that I’m not worthy of what I ask for my services.”

    Dr Livingston, the reason Andrew chose not to use your services is because your value proposition is less than your competitors. Price is really only one small piece of your value proposition. If not for price, why should he stay within the USA to do his business? What do you offer that your offshore competitors cannot?

    China/India are here to stay. I’m not going to launch into a big discussion about why they’re good (as I also support and use their businesses) because these discussions have happened in this forum before.

  • Let capitalism rule. It’s just good business.

  • I have been hired many times to fix code other offshore developers have created, but on the flipside I have also seen some rather good code from offshore developers that I have only needed to make minor adjustments to. It all depends on who you get – there are some good ones out there, though the good code seems to come up a whole lot less frequently than bad code.

    Andrew makes a good point, though. I can’t even count on my hands how many projects I have started and have never finished because I insisted they be done “right” from the start. Sometimes you just need “something” to get you started, and you can worry about fixing it later once it gets more popular. After all, there is some value to getting a project off the ground as quickly as possible – and that’s what he’s talking about with this post.

  • I’m currently knee-deep in a web-app plagued by performance and security issues. Guess where it was developed?

    Seriously – the number of things done wrong is astounding.

  • sheffy6

    I’ve never worked with code developed off-shore, but I’ve dealt with plenty of crappy code developed here in the USA…

  • I’m currently knee-deep in a web-app plagued by performance and security issues. Guess where it was developed?

    inside a frontpage express IDE?

  • I’ve said it before and I’ll say it again – managing offshore teams is a skill and it’s not an easy skill to master. If you don’t have adequate experience to do hands-on tech work (i.e. some coding/design/etc) it’s only going to be harder when you take it overseas. If you are getting work done for 10% of the domestic cost, you are feeding on the bottom of the barrel in your destination county.

    So, let’s look at that:

    +Stipulate that technical project management is hard.
    +Stipulate that technical project management is even harder when dealing with overseas clients.
    +Add in the factor that it sounds like you are dealing with crappy vendors (since you are getting such savings I am making that assumption.

    The result = a mess.

    Although it drives my business, I am really tired of reading the gross generalizations of people who try their hand at offshore development, only to find that it’s actually much harder than it seems. What did you expect? I think most of us would agree that it’s no picnic getting good services here in the US – why wouldn’t it be much harder when you go overseas?

    There is another side to this. I travel to India annually and have lived in S. India for a long period. I know from personal experience that billions and billions of dollars worth of services are being expoerted from India each year – and the majority of the buyers are very happy.

    If there is too much ‘back and forth’ for you, perhaps you could improve your ability to write specifications. If their versions of SQL,etc. are outdated, perhaps you are working with inferior vendors. If you find the holidays to be too frequent, maybe you should familiarize yourself with the India holiday schedule instead of being surprised (i.e. Holi was just this past week, which is a big deal for Indians. I saw it coming and didn’t expect any communications that day). Staff turnover is a problem everywhere – again find a stable vendor.

    Did you think that you would sail through the culture gap and get your 90% savings without any trouble?

    There are plenty of GREAT vendors out there. There are lots of people (like myself) who make it work day after day. It’s amazing to me how people fail to see the incredible importance of relevant management experience and savvy (specifically for offshore management) and blame the vendors. This is why people spend years mastering the art of identifying and managing those vendors.

    And yes, there is plenty of crappy code being perpitrated right here in the USA. I will put one of my best IIT graduates from India in a ‘code quality challenge’ against any domestic programmer any day.

  • Etnu

    Price has little to do with it. It’s all a question of “competence”.

    The MAJORITY of developers are bad. It doesn’t matter if we’re talking China, India, The U.S., or anywhere else. 90% of developers aren’t worth ANYTHING.

    The savings realized by having a “good” developer will always outweigh whatever their salary is by a long shot. If you’re lucky enough to be able to get that developer inexpensively, then you got yourself a good deal, but the odds of being able to locate a “good” developer that you don’t even meet face to face is pretty slim.

    That’s the real problem with outsourcing — it’s got nothing to do with whether or not the “average” quality is the same. It’s got to do with how you pick people.

    In the U.S., you’d never just hire somebody that you never saw in person. If they weren’t local, you’d typically do a phone interview or two, and then fly them out for a face to face before making a decision.

    So, when it comes to talent, you really shouldn’t be making price your most important factor. If you have a product that makes $10,000 a month, you’re an IDIOT if you choose the developer who takes 6 months @ $500 a month over the developer who takes 3 months @ $7,500 a month. The first developer will only cost you $1500, but you’ll only have made $60,000 by the end of the year. The second developer will cost you $22,500, but you’ll have made $90,000 by the end of the year (and that’s assuming 0% revenue growth over time). Delivering a product later is always more expensive than your labor is ever going to be.

    Really, the problem has nothing to do with the “average” quality of offshore developers. It’s about the fact that it’s much harder to judge how well something is progressing (or how talented the developer is) when they’re on the other side of the planet.

  • AC

    The MAJORITY of developers are bad. It doesn’t matter if we’re talking China, India, The U.S., or anywhere else. 90% of developers aren’t worth ANYTHING.

    Sadly this is true, though I would add about 10% more in favour of the developers and put that at 80% are bad… it is the ubiquitous 80:20 rule.

    Also even with outsourcing you get what you pay for… so after factoring in the economic ratios I would say the guy who is doing it at 1/10 the cost of US developer is doing it cheap even by local Indian standards.

  • Blake

    I’ve worked with offshoring companies in India and Russia, and recieved babby code and had to baby site the hole time. Sure the system was functional, but poorly written, designed, and with the extra management time it took me, ended up costing me more.

    Blake Snow

  • well, its just being prejudiced & stubborn when one says that developers from a developing economy like India or China is third rate & hence they charge similarly for their services(which is cheap). the fact is that their services look cheap(price wise) only to those who come from a place where cost of living is higher, like USA or UK etc. its not necessary that programmers from India etc. are bad simply because they charge less than the ones in US or UK, this is just like saying that only the Muslims & followers of Islam have any chance to go to heaven!! ;)

  • Ani

    I think it’s high time that people(read developers and designers) in USA stop being lazy. Iam from India. And my clients are from USA. They appreciate the fact that we charge less for our services and are generally available 24*7 for them. I work for my clients even on weekends and odd hours if the work is urgent

    As far as coding and designing standards of indians(third world countries) are concerned, many saner souls have answered that much better already…

  • Now we see the reverse stereotype – that US workers are lazy. It’s not true – American workers are amongst the hardest working in the world.

    Also, as a buyer of offshore service I would add that vendors who offer 24/7 services are usually amateurs, as are the people who think they are getting better value from those vendors. There is almost no REAL value to a 24/7 vendor – it says ‘excited college student who will soon burn out’ to me.

  • Anonymous




  • AnandC

    Some very interesting points have been brought up in this discussion. Outsourcing is a topic that invokes strong passions from all of us.

    What I don’t think any one has brought up is that you get what you pay for. I am a e-Business consultant working out of San Francisco. I have used multiple development and design resources based out of India & Eastern Europe for about a year and half now. The bottom line is that when you act cheap, you get what you pay for. Of course you will have people in India selling you services for a 1/10 of the cost. And your going to get garbage. Now try a firm that is 1/2 the cost, I guarantee you will get better quality work. But it is human nature to get greedy and want more.

    You can’t blame any of this on outsourcing but rather poor management and execution. As someone indicated, people overseas are NOT monkeys. Do your homework and find out about their holidays and culture. Learn to adapt your business model to accommodate your work force. You will see better results. I’m disappointed to see that several of you, even Andrew, didn’t do all their homework when accounting for a global work force.



  • Well said!

  • What I don’t think any one has brought up is that you get what you pay for.

    It has already been brought up, and I don’t agree with it, in a prejudiced manner that is. Its not always true, though it is true quite a lot of times, that I’ll give to you. Let me explain by an example:

    a couple of years back, a client of mine had their business website hosted with the most expensive host in the locality, which charged more than double for what others charged on an average, stating quality as the reason for their exorbitant fees. now when I took on their website & ran into some server problems etc. then I found out that they had the worst support I’ve ever seen. the delayed responses apart(took them 48hrs & 1 email & 2 phonecalls to respond everytime), the darn techies on the support duty had no clue to what I was talking about & I didn’t talking in greek!! and then, they had so many restrictions and so less features, it was ridiculous. I recommended another host to them which I’ve used earlier & which provided almost instant support, more features at about half the price, that client has never looked back!! :)

    so you see, cheap is not always bad. but what you said is not totally false, so I’d take it with a pinch of salt. hence I’d modify it as:

    you get what you pay for, like if on average a job costs $100 in a locality & a person living/operating in same area charges $10 for it, then there’s something fishy. but I wouldn’t suspect someone charging $80-$90. :)

  • to add on it, I’d say that instead of going blind while hiring someone, its always better to do your homework, know about others providing similar services and its a lot better if you can determine why exactly the prices of the one you want to go with, are what they charge(or lower than others).

  • There are many companies which have been geting benefits of outsourcing and more are planning to do. I agree with comments “its always better to do your homework” and “You can’t blame any of this on outsourcing but rather poor management and execution.”

  • One more thing in favour of outsourcing – the “living standard” of developing countires make them Cheaper Seller, not the poor quality.

  • But I pay a price for this in my own time and sanity:

    As you should. You obviously deserve it.

  • Megan

    I think the whole thing is about where your focus is combined with what your budget is. I live in a small town where Walmart came in and made it very hard on many small established businesses. True, Walmart created jobs, but they also caused a lot of jobs to disappear when the small businesses went under because they could not compete with Walmart’s prices. Being a small business owner myself, I understand how hard it is to make it. I could take the dog-eat-dog, everyone out for themselves approach, but instead I try to support other local business as much as I can by buying locally made candles from the local candle shop instead of Walmart where they are cheaper, eggs, from the local egg lady instead of Walmart where they are cheaper, get my dog groomed at a local groomer instead of PetSmart, etc. Still there are times when money is especially tight that I have to go with what I can afford (at Walmart) or go without. Making a choice isn’t easy. But I do try to support my LOCAL economy as much as possible. just my 2 cents, megan

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  • BID

    It is not racist in anyway. I am getting totally sick of people using the ‘r’ word when people call a spade a spade. Stop playing the damn race/victim card.

    Go and have a look at Indian Web Design sites. Virtually everyone of them is using tables. This gives us a very clear idea of the quality.

    The simple facts are they are churning out cookie cutter sites in dreamweaver as fast as they can. This is in no way value for money.

    I really like i-dev’s description of what Andrew is doing. Prototyping. As soon as I read that Andrew’s article made a lot of sense. Well done i-dev and Andrew :)

  • ABCD

    I am sure some people will get hurt hearing this.
    No offence but it’s true. In many organisation which deal with US clients, in training it is tought that the IQ of an average 35 years old American is equal to an average 10 years old boy/girl and the weight of 1 American is same as 10 year old boy/girl from [Put any country that you people say a third world country]

    And when these people after training go to production floor, find this perticular stuff tought in training amazingly true.

    Here people are talking only of bad code, bad designer, bad service.
    Just want to remind you that same thing goes to clients also. And the most amazing fact is US clients, who are good, are very good, a pleasure to work with.
    But bad clients are not only bad but they are hilarious. You have to pray to GOD when can I get rid of this client.

    Pricing is factor but the main thing is greed. For both of us. When you are talking of standerd you look only from your point of view and that creats a problem. Coding standerd is same world wide, I am sure although some body has mentioned that but I think we should discuss not only on coding standerd but work standerd.

    Please try to know about outside world you can be a good client. The problem with US people is that they know very few about outside world. And that makes them difficult to work with people form 3rd World country (It’s a kind of naming convention, although very insulting)

    Few example how people from so called first world country use compter terms. Forget about coding standers and work standerd.

    1. “This page should look good in every search engine” – she is actually refering a browser, and she is a 3500$ client. Its a big amount for a small off-shore company.

    2. “I have provided you the flash file. I wonder why any designer in you company don’t know how to edit a flah file. It’s a very small change right !!!”- actually they provided us a SWF file and his designer is on leave. And he own a designing farm.

    Just two example … I am not writing more as this is actually not a battale filed where we will fight.

    But just a request to so called 1rst world country citizens … stop critisizing others, make yourself straight … the world will follow. At least that should be the motto of 1rst world citizens … to set an example.

    Last of all forgive me for my bad english. Its not my mother tongue.

  • First you hire dumb asses and then regret it =|

    Oh and as for bad quality adn response, you gotta be in touch with the right people and dish out atleast twice you’d pay other devs here to get what you really want unless you want things done on a shoe-string budget and take home all the margin money.

    And this whole off-shoring / outsourcing debate … for heaven’s sake stop using those retarded service exchange websites if you want something real done. Contact the company directly if you can. Get leads from people on forums. Geez Andrew! do you have to be TOLD that? Is it not a well known fact yet that almost every street here has a cheap and crappy web dev company full of clueless fools who call themselves web developers?


  • Pitou

    Hello Andrew,

    I’m new to the site/forum and wish to let you know how impressed I am with it!!

    Further to the subject regarding the use of Outsourced Web Development, any company names/information you can provide me would be appreciated. This is a service of great interest to me.



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