Presentation on theme: "Steve Mezak, CEO +1-650-472-3785 x101 Global Software Development -- & -- Why U.S. Companies Will Outsource to."— Presentation transcript:
Steve Mezak, CEO www.Accelerance.com +1-650-472-3785 x101 Steve@Accelerance.com Global Software Development -- & -- Why U.S. Companies Will Outsource to Mexico
Copyright, 2008 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 cant 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
Copyright, 2008 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
Copyright, 2008 5 Who is Outsourcing? Example Deals 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 Medium.NET Team –15 engineers for 12 months –Approx. $540K Large Team –Custom vendor search –20+ engineer team –$1M+ per year BronzeSilver GoldPlatinum
Copyright, 2008 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
Copyright, 2008 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
Copyright, 2008 8 Where are they Outsourcing? Everywhere!
Copyright, 2008 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
Copyright, 2008 10 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
Copyright, 2008 11 How Are Outsourcing Decisions Made? Sourcing Options Strategic Consulting Firms –NeoIT –TPI –Equiterra Single-Country Experts Personal Referrals Elance Project Global Partner Network
Copyright, 2008 12 How Are Outsourcing Decisions Made? Selecting the Optimum Outsourcing Team Vendor Selection Criteria 1.Location / Culture 2.Positive References in U.S. 3.Technical Competence 4.Time zone 5.Domain Experience 6.…
Copyright, 2008 13 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
Copyright, 2008 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
Copyright, 2008 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 Mexicotan lejos de Dios y tan cercas de los Estados Unidos!
Copyright, 2008 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
Copyright, 2008 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
Copyright, 2008 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 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 Whats 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
Copyright, 2008 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
Copyright, 2008 21 Promotional Tools Copies of Software without Borders Promotional discount codes Ezine content to use or contribute Frequent updates to www.SteveMezak.com author blog Joint Teleseminars Listing on the Accelerance Global Partner page Blurb for your website
Copyright, 2008 22 Next Steps Questions ??? –Honest feedback –Suggestions Apply to Join –Meet with me today