Global Software Development -- & -- Why U.S. Companies Will Outsource to Mexico Steve Mezak, CEO www.Accelerance.com +1-650-472-3785 x101 Steve@Accelerance.com

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

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 Copyright, 2008

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

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 Copyright, 2008

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

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

Where are they Outsourcing? Everywhere! Copyright, 2008

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

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 Copyright, 2008

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

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 … Copyright, 2008

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 Copyright, 2008

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

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!” Copyright, 2008

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

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 Copyright, 2008

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

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 Copyright, 2008

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

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

Next Steps Questions ??? Apply to Join Honest feedback Suggestions Meet with me today Copyright, 2008