1. Global Software Development -- & --
Why U.S. Companies Will Outsource to Mexico
Steve Mezak, CEO
x101

2. Outsourcing Software Development from a U.S. perspective
Who
in the U.S. is outsourcing?
What
kind of outsourcing?
Where
is the work going?
Why
are U.S. companies outsourcing?
How
are they making their decisions?
And perhaps how Accelerance can help you reach the U.S. market . . .
Copyright, 2008

3. Who is Outsourcing? Software Development from the U.S.
Independent Software Vendors (ISVs)
Growing but can’t find programmers in U.S.
Want cost savings
Startups with limited funding
Small company IT department
Fixed-price SW development projects
Large companies
Create an offshore operation
Mix of IT services & SW development
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4. Who is Outsourcing? Target Markets
Bronze (< $100K)
Software Startup: Entrepreneur/CEO/Founder
Create demo for customers and investors. Validate market opportunity & raise funding
Silver (< $500K)
Funded Startup: Entrepreneur/CEO/Founder/CTO/VPE
IT Department: CIO/IT Manager
New product launch or IT project implementation
Gold (< $1M)
Small & Growing Software Company: CEO/CTO/VPE
Enable growth with dedicated global team & control/reduce costs
Platinum ($1M+)
Medium & Growing Software Company: VPE/Engineering Director
Enable growth & control/reduce costs with own offshore operation
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5. Who is Outsourcing? Example Deals
Bronze
Silver
Small PHP team
4 engineers for 6 months
Approx. $96K
Medium Java Team
8 engineers for 6 months
12 engineers next 6 months
Approx. $360K
Gold
Platinum
Medium .NET Team
15 engineers for 12 months
Approx. $540K
Large Team
Custom vendor search
20+ engineer team
$1M+ per year
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6. What Kind of Outsourcing? Engagement Models
Fixed-Price Project
Good spec required!
Used as pilot for ODC
ODC
Offshore Development Center
Dedicated team
Paid monthly
In-house / Outsource Blend
Staff augmentation
BOT
Build, Operate, Transfer
Offshore Subsidiary
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7. What Kind of Outsourcing?
Software Development
To a detailed spec
Java and .NET
Design & Development Process
Architecture
Agile vs. CMMi vs. Waterfall
Quality Assurance
Special Technical Expertise
SAP or Oracle practice
What is your specialty?
Also BPO - Business Process Outsourcing
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8. Where are they Outsourcing? Everywhere!
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9. Where are they Outsourcing? Pros & Cons & Costs
India ($20/hr)
80% of outsourcing
10 to 12 hours away
China ($18/hr)
Many engineers
Limited English
Philippines ($20/hr)
English & low cost
Limited tech workforce
Russia ($25 to $30/hr)
Analytical technologists
Limited English & stability
Eastern Europe ($20/hr)
Well educated & low cost
Limited English skills
Canada ($40/hr)
Almost same culture & time zone
Almost same cost as U.S.
Mexico ($25 to $30/hr)
Near & time zone overlap
Higher cost than other countries
Central & South America ($20 to $30/hr)
Low cost in same time zone
Limited tech workforce
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10. Why Are US Companies Outsourcing
Why Are US Companies Outsourcing? The Million Dollar Outsourcing Decision
Ignore Outsourcing & Overspend
20 engineers for one year
Difference between In-house ($64/hour) & Offshore Outsourcing ($32/hour) is about $1 million
Competitors Are Outsourcing
Joining the global economy
Foreign-born executives
Needed Technical Expertise
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11. How Are Outsourcing Decisions Made? Sourcing Options
Strategic Consulting Firms
NeoIT
TPI
Equiterra
Single-Country Experts
Personal Referrals
Elance Project
Global Partner Network
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12. How Are Outsourcing Decisions Made
How Are Outsourcing Decisions Made? Selecting the Optimum Outsourcing Team
Vendor Selection Criteria
Location / Culture
Positive References in U.S.
Technical Competence
Time zone
Domain Experience …
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13. How Are Outsourcing Decisions Made
How Are Outsourcing Decisions Made? The Selection Process – can take 6+ months
Matrix with evaluation criteria
Define evaluation process
Number of vendors, schedule
Create RFP
Define optional pilot project
Choose countries
Contact vendors
Send RFP / Get responses
Select semi-finalists
Using evaluation matrix
Final selection
Visits, pilot, pricing & terms
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14. How Are Outsourcing Decisions Made? How Do You Get Selected?
Differentiate your services
What are you best in the world at doing?
Java, .NET, C++, …
CMMi, Agile, XP, …
Wireless, embedded, web apps
Software as a Service, Web 2.0
Sell your value, not low price
Have great references
Understand your customers
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15. How Are Outsourcing Decisions Made? Why Mexico?
Close to the U.S.
Same time zones
Fast travel
NAFTA
Agile development
Smart Engineers
Lower cost
Less than U.S. engineers
What else?
“Pobrecito Mexico—tan lejos de Dios y tan cercas de los Estados Unidos!”
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16. Global Software Development Conclusion
Who
Most companies in the US
What
Software & business processes
Where
Everywhere, each with pros & cons
Why
Savings & global economy
How
After a careful evaluation process
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17. The Accelerance Solution Speed Dating for Outsourcing
Global Partner Network
40+ vendors in 14 countries
Proven, pre-screened & qualified
Outsourcing Jumpstart
Select by Region or Technology
Guided DIY vendor selection
Money-back guarantee
Rapid Ramp-Up Programs
More consultation
Custom vendor searches
Setup of offshore operation 1
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18. The Accelerance Value Proposition To U.S. Clients
Cost of Vendor Selection
3 months, part-time: $15K
Unproductive programming with the wrong vendor: $30K
Selecting a new vendor: $5K
Delayed time to market: $huge
Other Consultants
$50K to $100K
Accelerance Programs
Only $497 to $15K 1
“The outsourcing partner we found through the Accelerance Outsourcing Jumpstart service has successfully finished our initial project and we've now re-launched our website and programs. Again, thank you for guiding me in our outsourcing endeavors!“ — Vince Turk, Directory Manager, Find White Papers, Inc.
Copyright, 2008

19. The Accelerance Value Proposition To Global Partners
Network Member Benefits
Low cost lead generation
Another sales channel
Joint promotion opportunities
Lost deal feedback
Leave network at any time
Application Fee
Only $500
Money-back guarantee
What’s the Deal?
Accelerance earns a one-year 10% referral fee when you are selected by a client
“We still find U.S. clients through our personal connections, but being an Accelerance partner has tremendously increased our business and enables us
to win clients we never would meet otherwise.” — Vijay Shah, CEO of V2Solutions in Mumbai, India 1
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20. How Are Outsourcing Decisions Made? How to Make Contact
Outsourcing is a relationship business
Personal networking & referrals
Partnerships
Publish articles
Give talks & seminars
Webinars & teleseminars
Virtual networking with LinkedIn, Plaxo, Facebook, etc.
Attend conferences
Cold calling does not work
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21. Promotional Tools Copies of Software without Borders
Promotional discount codes
Ezine content to use or contribute
Frequent updates to author blog
Joint Teleseminars
Listing on the Accelerance Global Partner page
Blurb for your website
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22. Next Steps Questions ??? Apply to Join Honest feedback Suggestions
Meet with me today
Copyright, 2008