Software Sweatshop

I just saw a great video on the Scrum methodology delivered by Ken Schwaber at Google back in 2006.

Scrum is like having a gun to your head; if you can't produce results, be transparent, look for the simplest solution, adhere to strict deadlines, be held accountable, work incrementally and iteratively, respond to dynamic change, and deliver quality, you, your project, your company, and your career are dead. It's not all gloom and doom though, you'll be surprised at what you can come up with if you actually do follow this methodology.

It's perfectly suited for offshore software development. In fact, I can see why distributed software development teams that don't follow Scrum or Agile usually fail.

But as you'll see, Scrum isn't for everyone. It means looking at the facts, good or bad, and making very tough decisions. True adoption of Scrum is a real test of an organization's culture. With Scrum, you can't stick your head in the sand. A very valuable lesson for anyone that's been part of a failed offshore development effort.

So we all know there's no such thing as a free lunch. But intellectually knowing that doesn't stop smart people from believing it (myself included). Whenever you pinch pennies and cut corners, you're gonna get burned. It's a law of nature; there's no way around it, period. Like they say, when it comes to cost, time, and quality, you can only have 2 out of the 3.

I own an outsourcing business based in Chicago... and we don't sell ourselves as the cheapest provider.

Consider this, a friend of mine visited India a few weeks ago and wanted a custom shirt made. It cost him $45 bucks, $42 for the material and $3 for the labor; labor is the only cheap thing in developing countries. Energy, office space, etc. is the same:

• Gas in Pakistan is about $5/liter
• Rent is close to $1200/month
• Electricity is about $400/month and it isn't even reliable so we're seriously thinking of putting down $30 grand to install solar panels. Solar panels in Silicon Valley is common, in Pakistan it's unheard of

This doesn't take into account the benefits we give our employees like lunch, health care, etc. If we didn't do any of this, our good developers would all quit and we'd be stuck with a bunch of crappy developers.

We do NOT want to run a software sweatshop. We want to attract and retain good developers and we know that it costs money to do that. We look for clients that value quality over pinching pennies.

If you're working with a software sweatshop, then yes, you should expect dirt cheap prices (some firms are charging $3.36/hour!) If you don't think the quality is worth what you're paying, then work with someone stateside. Prices are rising, so companies like mine sell value, not sweatshop prices.

Nothing worth value is ever cheap. Yes, you will save money by working with an offshore development team, but you'd better be prepared to work with a firm that sells value, not cheap labor.

We make business decisions based on our needs. We're a small firm and don't have tons of cash and resources to waste so everything we do has to have a measurable impact on our business.

There was an interesting question on LinkedIn today asking what one skill software developers should learn that would make a noticable difference in my business. There's a big push for agile development, so I'd show them the benefits of agile development and how it makes their job easier. We're building some consumer facing web apps so an agile-iterative mindset is crucial.

In terms of technology I'm pushing for Ruby on Rails. It's nimble and fun... and of course facilitates agile development. I handle the business development for my firm (I'm not a programmer) but I've taken an interest in RoR just because of it's ease of use. There's a good article called moving from Java to Ruby on Rails if you're interested in some hardcore facts.  Here's why we're encouraging our programmers to learn it:

1). It's Fun: We're taking on our first RoR project and the developer is stoked. He's working on a few other projects right now, but apparently this has him pretty excited. Nothing can curb offshore attrition like giving your employees fun, challenging work.

2). Less is More: Write less code, do more stuff. Need I say more?

3). It Makes Us Look Cool: If we want to survive as a business, we better be really good at what we do. There's plenty of opportunity out there so ignoring it would be to stick our head in the sand.

4). Time Is Money: Revisions, updates, and changes take a lot less time.

5). Dolla Dolla Bill Y'all: It's free!

6). It's Pretty: It has a really good AJAX stack

I may have lost a client, but I think I just made a friend... I just had lunch with the owner of a company we were trying to do business with. They sent out an RFI to a bunch of outsourcing companies. He was looking for a smaller shop that could grow with him give him the attention he needed. We spent two weeks looking over the RFI and crafting a very detailed response; and then we waited. We didn't end up getting the deal, but it looks like the beginning of a good relationship (he paid for my lunch today as a way of thanking us for responding to the RFI). We discussed our business, past failures, and the excitement of being a young entrepreneur a new father over fish tacos and guacamole. He just got back from a trip to India visiting some potential offshore partners and wrote a fun set of posts India is Winning...  and Delhi Belly (hilarious)

We didn't lose the deal because of anything we could control. We have a solid technical background and an aggressive, problem-solving attitude, but we lost the deal to an Indian competitor that was obviously much bigger and more experienced than us. Our size, the political situation in Pakistan, and the fact that we haven't completed our ISO and CMM certifications influenced the client's decision. But that's ok, it comes with being an entrepreneur, it's just a part of the growth process. The encouraging thing is that it seems like we're on the right track in terms of attitude, technical skills, and vision. This wasn't our first deal and it won't be our last. In fact, now that I've met with the client, I have the opportunity to learn from him and gain advice on how to grow my own firm. It's funny how things turn out... this may lead

This weekend, two of our guys and my partner, Nayyar, just got done putting in 35 hours of emergency development work for a client with a big demo on Monday. The client made some last minute changes and was freaking out because we hadn't fully implemented them... a real nail biter. After we took care of that situation, I was talking to Nayyar about our lost deal on Skype and he said "one more thing that is more important then anything else.. They may be agile, CMM whatever but r they committed and dependable? That he will only find out after working with them"  With offshore software development, the company can be ISO-this and CMMI-that, but at the end of the day, it's all about how committed they are. A client of our was working with an outsourcing company that was a Microsoft Gold Certified partner. He was burned so bad, he wanted to give up on outsourcing.

When Nayyar and I spoke later he told me that we're going to raise our rates higher than I thought. I have to admit, I was scared "How can I sell this rate?" Other companies are charging much less than this. No one's gonna buy from us, we're going to go out of business" But then I thought about what Nayyar said and I remembered that we're looking for good clients that demand quality and are willing to pay for it. It reminded me that we're selling high value, not low cost.

At first I was uncomfortable with the rate hike, but coming from a guy who spent 35 hours of his weekend helping a client in need, I'd say he's absolutely right.