Software Business in the Middle East

Part 1.

Obviously, the main reason why people outsource their development to such exotic places as India is the cost. I used to get proposals from Indian companies to outsource some of our projects with the price for .Net developer as much as $7 per hour. It means $280 per week, or $1’120 per month. For the first pilot project they’re ready to work for even less money. This kind of proposals seems to be very attractive, especially comparing to Sweden. In Sweden, considering taxes and current currency exchange rate with US Dollar you would be able to hire one developer for the cost of 5-7 developers in India.

Unfortunately, the issue is not as simple as comparison of the payroll costs. There are many other things you would consider, and it is very often not so easy to measure how much each of them would cost you.

If you are sitting in the same office with your developers, you might discuss any topic and find the solution pretty fast. You can talk face to face. You can use white board with pens, or even your monitor with the source code opened. Or you can have a lunch together. Having developers in remote office has its own price. If your developers are in thousands of miles from you, then you talk to them using phone, messengers or e-mail (considering pretty bad infrastructure in India, I would consider video- conferencing as useless thing). The problem is that if you talk to somebody over the phone or e-mail, you leave a room for misinterpretation of your words. In addition, there are certain cultural differences. As a result, it might be very easy to find yourself in a conflict with your outsourcing partner that will not help you to keep good relationships and keep working productively together. Also think about the price for all your phone calls to India – normal conference call is about one hour, or even longer.

Misunderstanding might cause the problem that you get something you didn’t ask for – people simply understood you wrongly. It will cost you time and money to re-develop the wrong stuff.

You cannot always sit in your office and manage people remotely – time to time you need to travel to meet them, or invite them to visit your country. It means additional expenses associated with travel, hotels, rental car with a driver (I would never drive a car myself in India) and so on – and all these costs are getting higher now in India. Long time ago I noticed that no matter how smart you are and how smart your outsourcing partner is, the meetings face to face is the most efficient way to establish good relationships. So if you want to make your work productive, plan for periodic meetings face to face.

Due to pretty pure infrastructure in India, the quality of phone calls and Internet is not always very good. Time to time there is no connection and you can only wait until the connection is up again. It means further delays.

I really got sick from the fact that time to time you knew about the problems at the last minute when you have no other choice except to postpone the deadline. I understand that it is kind of cultural thing, but it was really difficult for me to accept that. Therewith, there is one small “feature”. If you ask somebody to send you a document on Friday, and that person answers “OK”, for me it means that he or she will send me the document on Friday because there is no reasons at this point why this document could not be sent. For Indians, “OK” means “maybe”. Very often this “OK” became “No”, so we finally started to interpret “OK” from our Indian colleagues as “Maybe, but Most Unlikely”. As a solution, we began asking for clear “Yes” or “No”.

Reading over this post, it seems to be too pessimistic – maybe because we faced many problems with outsourcing to India. Nowadays I get several e-mails weekly with offers to outsource some of our projects to India – those e-mails are sent to Deleted folder almost immediately.

Anyway, I think that outsourcing to India or to any other offshore area might work very well. Especially with the conditions like:

• Your partner controls the company you outsource the project to. Or at least your partner controls everything related to your particular project. No need to say that your partner must have the same goals as you, and you have to absolutely trust him. In this case you will have somebody you trust to organize the development work and to follow up in case of problems.
• Outsourcing company is not located in India, but instead in the country or area you are originally from. In this case you might avoid all problems due to cultural differences, and also you probably speak the same language as the people in the outsourcing company. The good example is a company in Saudi Arabia that outsources its development to Egypt – although they speak different dialects of Arabic language, they still understand each other. Also, both countries have the same culture and religion.
• As an option, you are originally Indian, so you have no problems working with outsourcing company located in India as you came from the same culture.
• Outsourcing company is working on the project that is not related with your other projects, or this relationship is so weak that it will not affect your other projects in case of delays or technical issues.

Personally, I think that it works much better without outsourcing. Currently, we have all our development in Egypt. Although it is not pure outsourcing because this is my partner’s company, this is forced decision anyway as we are not yet ready to spend much money on development in Dubai because of its high cost. Later, when we feel more comfortable with our sales volume, we will most likely move the development to Dubai.

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Interesting posts in Blogware:
Xing Blog published article about Doing Business in China. Joel Spolsky discussed the Excel Bug. On one of the blogs I found 12 years old article about How Software Companies Die - even after 12 years, the article looks like it’s written today morning.