Outsourcing is supposed to save you money. Right? This is especially true when it comes to outsourcing mission critical work like software development, typically done offshore, with companies who enjoy very low labor rates. Why pay a software developer $80,000 to $150,000 a year, when you can get one overseas for $40,000 or less? That math gets especially attractive when you need a lot of them. At least the promise of big savings is supposed to be the idea. Unfortunately, the saying “Outsourcing will save you money,” is a lot like the old adage of, “Practice makes perfect.” They’re both half-truths.
The real truth is: “Only perfect practice makes perfect.” If you repeat the same mistakes again and again, practicing something wrong for any amount of time won’t make it right. Similarly, only outsourcing with the right partner will save you money in the long run. Pick the wrong one and you’ll pay dearly for that decision.
The Parable of the New House
Once upon a time a man wanted to build himself a new house. He had a good idea of what he wanted, how many rooms, the style, basic space requirements, and specific amenities. However, when he talked to a few builders, he was shocked by how much they wanted to charge him to build his new house. He only wanted to spend $100,000, but the lowest bid he received from a reputable builder was well over $300,000 to get exactly what he wanted.
He theorized that the real problem was that all of the builders’ workers were probably union workers and union wages were sure to be the basis of the high construction costs. So he decided to attempt to “save some money” and go another route. He bought his own “Home Architect” program for his PC and designed the house himself. The program produced blueprints and a materials list. He shopped for the cheapest materials he could find, and even “recycled” some materials he was able to “find” here and there in the neighborhood. He tore down his old house with a rented excavator. He moved his family in with a relative while the project was going on. He hired his brother-in-law who was recently out of work, but used to be a general contractor many years ago to actually oversee the construction. Cheap labor was actually pretty easy to come by – i.e. his brother-in-law would pick up a crop of day laborers in front of the Home Depot every morning, and off they’d go to work on the new dream home.
Needless to say, several months later, far longer than the man thought it would take to build his house, he didn’t get exactly what he’d imagined in his mind. He’d spent far more than the $100,000 he’d budgeted – why, he spent almost as much as the builders he had originally spoke with told him it would cost. Most of that was attributed to going back and fixing problems that arose, redoing work that wasn’t right, correcting mistakes. And it looked a mess.
To this day he and his family still live with a relative, saving money to try and rebuild later. You see, the city had the house he built condemned and torn down, and he was heavily fined for lack of all the proper permits and violations of building codes.
When asked by a friend why he was so foolish to waste so much money and put his family through such terrible inconvenience, he replied: “Well, the guys building my house only cost $5.00 an hour! I was saving money!”