The Monkey Tax: Is Paying Peanuts For Overseas IT Development A Smart Move?

Code Monkey: A derogatory term for a developer who does extremely simple tasks and copies scripts.

Are overseas IT developers the right choice for your business or organisation?

What are the arguments for and against hiring overseas developers, and what countries should you source them from if you intend to do so? For cases in which you choose not to engage overseas developers, what are your local options and how should you evaluate them?

This guide by e-sourcing platform ThunderQuote hopes to lift the veil on the real costs and benefits of hiring local vs. overseas developers.

At first, getting overseas IT developers looks like a very attractive idea, especially after looking at (and being shocked by) the local development house prices for projects. While it is definitely true that per-hourly rates and the face value of the projects are supposedly lower, when purchasing for IT transformations, it is vital to consider the real Total Cost Of Ownership (TCO).

Total cost of ownership for an IT project will have several parts:

  1. Upfront cost of the project + implementation
  2. Cost to maintain the IT implementation
  3. Time cost of change management
  4. Disruption to normal operations
  5. Manpower & time cost of dealing with vendor issues
  6. Requirements for eventual rebuild and time-to-rebuild

Challenges of working with overseas developers

The challenges of working with overseas developers are threefold:

  1. Reliability / competence
  2. Trustworthiness
  3. Communications barriers

The first two, reliability and trustworthiness, are commonly known to anyone who has considered hiring overseas developers. There are of course,numerous horror stories of over developers not delivering, delivering projects to exact written specifications and no supporting infrastructure (eg. functions without membership systems), functions that only barely do what is stated without being complete or comprehensive, 6-10 month delays and many more.

These can be overcome through rigorous project management on the part of the client and/or the project manager, and by picking only very well established overseas outsourcing firms.

But the problem of working with overseas developers goes beyond just reliability and provenance of the developers. It’s actually a lot to do with the way in which IT projects need to be conducted. Often, IT projects come from a series of specifications which are dictated by the business or whoever has done the market research or user requirements gathering.

This means that no matter how good the developer is, the effectiveness of the final product is completely reliant on how good the communications are between the end-user and the developer.

So what does this have to do with engaging an overseas or local developer?

Anyone who has played the ‘telephone game’ as a child knows what happens when you communicate through multiple people. The first person is asked to convey that “The plants need watering and fertilisers need to be bought’, has 100% of the message, the second 95%, and by the eighth person, you suddenly need to water the elephants and start a tranquiliser shop.

Similarly, engaging an overseas development house creates several major communication steps (and barriers). Lets map it, how many communications layers do we have in the way when we engage a development house, in say, Vietnam?

 

Communications flow from:

  1. End-User
  2. Internal Project Coordinator (Associate)
  3. Internal Manager / Procurement (if any)
  4. Overseas Communication Barrier (Remote)
  5. Overseas Knowledge / Cultural Barrier
  6. Overseas Development House Sales / Project Manager
  7. Translation Barrier
  8. Overseas Developer / Programmer

 

As you can see, placing the end developers overseas creates some issues that go beyond simply trust and reliability. The extra communications layers pretty much ensures that you need intensive communications overhead just to maintain everyone’s alignment to the project brief and to ensure that what is delivered is of maximum value to the end users.

This problem is made even worse if the project scope is still actively being changed or iterated based on user requirements. The communications overhead effectively guarantees that without a manager of your own on-site, you’re forced into using a waterfall project management methodology, and are limited to very few changes midstream.

Unless the end-users and internal managers are experienced with managing IT projects- it is unlikely that they would be able to cope with running Agile project meetings with their developers- so any attempts at iterations will be tricky.

When scoping the project- the project manager in the development house should be as close to the end-user as possible, and ideally should be speaking to the person who gathered the requirements as well as a sampling of end-users.

This is usually not possible when hiring overseas developers- so results are very much contingent on the accuracy of gathered requirements. Without proper knowledge engineers, I can pretty much guarantee that not all requirements would have been gathered properly, or even if they have been… It doesn’t matter if it fulfils the stated requirements but fails to meet the required purpose. For example, stating that the system is required to be able to set in different user permissions in order for managers to have higher level view permissions. Obviously the purpose in this case is to prevent sensitive data from being leaked, but a developer could create different levels of view permissions but… not develop a way for the administrators to flag data as sensitive effectively rendering the feature useless.

You might think that this is just a made-up example, but as experienced vendors, I can assure you that this sort of mistakes do happen on a regular basis even with local vendors but the difference is that they are much more likely to communicate and clear up such errors quickly as opposed to overseas developers. Some more unscrupulous vendors may even take the opportunity to layer on additional charges.

But if you are still keen on getting overseas developers, do take note of these factors unique to various countries and hopefully ensure you hire homo sapiens instead of monkeys… or at least a smarter breed of monkeys, chimpanzees maybe?

 

Overseas developer choices by country:

Vietnam:
Tend to have issues with English proficiency, but extremely strong technical skills. Bilingual project manager needed. However, it is also not easy to get in touch with reliable vendors there.

Malaysia:
While there are usually no problems with English proficiency, it is slightly more expensive than the other options but a bit more reliable. However, do take note of potential issues with delays and ensure that the annotation of code is done in English not Malay.

Philippines:
Great English amongst most of the populace and they are also pretty cheap. However, reliability and commitment levels are something to be seriously checked as there are a large number of freelancers and dev houses in Philippines and some portion of these are made out of people who are unable to hold a stable job for various reasons…

Indonesia:

While you can expect a certain level of English proficiency in the Jakarta and Bandung, do not expect the same for areas outside of them. While prices are definitely lower in Indonesia, do note their culture is a lot more relaxed about deadlines and project overruns are very hard to avoid due to this fact.

India:

While most of them are English-speaking, their level of proficiency may not be as polished as you might wish for. The huge amount of IT talents there do mean that they are very much technically capable, but there are also a significant number of complaints about quality and speed. Be very careful about selecting vendors and ensure that the purpose of the project is communicated within along with the project specs to ensure that you don’t receive an end product which is built completely to specs… but absolutely useless for your intended purpose…

China:

Great talents can be found in China, and while not all of them are proficient in English and increasingly large number are. However, do note that copyright laws, intellectual property and similar concepts are regarded much more ‘flexibly’ in China… We highly do not recommend sending any sensitive work over to China developers unless you have a personal connection established and are very certain of their character. Otherwise, you can be assured that the work will be done absolutely well and fast… and similar copies of your product appearing in the Chinese market equally quickly.

Hopefully, this guide has helped shed some insight on what you need to watch out for should you choose to hire overseas IT vendors for your project. Should you be looking for local developers, you can source them for free through the ThunderQuote platform.

ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.

 

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