software development outsourcing - total cost of engagement tce
DESCRIPTION
A comparison of 3 different resource types for building a software product: internal, offshore, and nearshoreTRANSCRIPT
Total Cost of Engagement Comparison
January 2009
Assumptions
Long term, 3+ developer contract considered
Asian and in-house rates are estimates Fewer trips are required in nearshore
model as cultural similarities and experience reduce understanding gaps
Productivity is higher with Mexican team primarily due to time zone proximities and real time collaboration» Extensive SaaS expertise may
contribute to productivity gains as well.
Scio Consulting International, LLC. All rights reserved.
2
Total Cost of Engagement
Scio Consulting International, LLC. All rights reserved.
3
Rates for Developers
Scio Consulting International, LLC. All rights reserved.
4
Overhead
Scio Consulting International, LLC. All rights reserved.
5
Attrition
Scio Consulting International, LLC. All rights reserved.
6
Calls and Trips
Scio Consulting International, LLC. All rights reserved.
7
Productivity
Scio Consulting International, LLC. All rights reserved.
8
Decision and Transition Models If rate differences are NOT the
primary driver and productivity improvements and ease of engagement ARE the primary motivators then you should consider change.
Ask yourself, how great is the pain? Gradual transitions where nearshore
resources are increased while offshore resources are decreased generally work best. We have worked with several and proposals will vary with each scenario.Scio Consulting International, LLC. All rights
reserved.
9
Scio Competitive Advantage
SaaS / RIA/ Web 2.0 Focused» Market and business model understanding» Technical skills» Ecosystem knowledge
Product Focused» Understand the product lifecycle and challenges
Agile Development Methodologies» Clearer communications and expectation management for
quicker, better results Nearshore Model = easier, cheaper, smarter
» Same time zone > real-time collaboration > increased productivity > faster time to market & lower cost
» Saves time and money on projects through more efficient communications
» Perform your own TCE calculations here.
10
Clients
11 Scio Consulting International, LLC. All rights reserved.
These are a few of our satisfied customers. We wouldlove the opportunity to work with you.
Scio Consulting International, LLC. All rights reserved.
12
Development Center: Morelia
Population: 1 Million Capital of Michoacan
State» Government &
college town» 200 mi from Mexico
City Time Zone: CST Altitude: 5,000 ft Founded 1541 Direct Flights
» Houston - 2h» Los Angeles - 2.5h» San Francisco - 4h» Chicago - 4h» Anywhere in the US
within 6-7 hours
Scio Consulting International, LLC. All rights reserved.
13
Mexico vs. India
Offshore Mexico
Time Zones 9-12.5 hours 0-2 hours
Travel2 days each way plus jet lag
Same day travel each way
Management overhead Higher than US
About same as in US
Total Cost of Engagement (TCE) 80-85% of US 60-65% of US
VisaH1 Quota, restrictions
Non-quota, TN (NAFTA)
Scio Consulting International, LLC. All rights reserved.
14
Gartner’s Country Suitability
Mexico India China
Language Excellent Very Good Poor
IP & Data Security Excellent Good Poor
Educational System Very Good Very Good Fair
Infrastructure Very Good Fair Good
Political Stability Very Good Fair Fair
Cultural Compatibility Very Good Fair Poor
Labor Pool Good Excellent Good
Cost Good Excellent Excellent
Government Support Very Good Excellent Fair
Overall Climate Very Good Very Good FairSource: Gartner Study of Qualitative Indicators of Country Suitability
Scio Consulting International, LLC. All rights reserved.
15
Full Lifecycle IT Services
Idea Lab» Software product design consulting
Development Center» Design, Development, Testing, Launch
Support and Maintenance Services
» Maintenance, Training, User Support
Dedicated Teams» Long-term custom-built teams
From Ideas to Product
Scio Consulting International, LLC. All rights reserved.
16
Project Meetings
Nice surroundings close by…
