Sunday, April 25, 2004
Misadventures in Indian Outsourcing
BW Online: "It's in regard to smaller businesses, however, where India's 'outsourcing solution' appears to be showing the most signs of serious wear. Husband-and-wife entrepreneurs Arun and Sangita Shastry of Westford, Mass., learned this lesson the hard way when they launched totalETL, a business specializing in sophisticated desktop information-extraction tools for project managers. A decision to outsource very nearly cost them their startup.
GOOD CONNECTIONS. One of their initial decisions was to send the bulk of the development work for their company's first product to Bangalore, India. The duo figured such a move would give them a distinct advantage, since Arun, who emigrated to the U.S. in 1993, is originally from Bangalore. In 2001, he went back there to investigate the outsourcing option, since he already had in mind the product idea that's today the basis of totalETL.
Sangita, who was born in the U.S., also is of Indian descent. And because each had spent many years doing software consulting for major U.S. corporations, they were seasoned hands when it came to scoping out projects.
....... By October, the couple had settled on a team of five developers with a midsize Indian outsourcing company of about 70 employees. The Indian developers would each be paid between $2,600 and $3,200 per month. This wasn't the lowest proposed price, but the winning bidder seemed to be the most experienced, and its references checked out well.
Everything appeared to be in place. The idea was that the team in India would do its programming, ship the results to totalETL at the end of its working day, and two American employees in Westford would do the testing, integration, and process management while the Indian team was asleep. Then, as the world turned and the sun rose over Bangalore, the process would reverse. Says Arun: 'We gave them a project plan with all the tasks.'
..... When the estimated cost of that visit came in at $20,000 for two months, Arun decided instead to visit Bangalore, at a cost of about $5,000. Since totalETL is self-funded, the difference was no small consideration.
EXPENSIVE DELAYS. 'This lead architect was disappointed he couldn't come to the U.S., and it started showing on the project,' says Arun, who cites missed deadlines and deviations from project specifications. Within two weeks, the lead architect departed the outsourcing company, and when the outfit couldn't immediately find a replacement, Arun and his wife 'pulled the plug.'
By the start of November, totalETL's adventures in outsourcing had left it $11,000 poorer, while the project was 'back to the beginning,' says Arun.
Figuring that this initial experience with outsourcing was just bad luck, the couple once again turned to India -- only this time Arun and Sangita decided to look outside Bangalore. They settled on an outsourcer in the neighboring state of Hyderabad, with an office in the U.S., as well as what's known as a 'Capability Maturity Model Rating' of 3 (out of 5), which is considered a solid indication of expertise. Amazingly, two weeks into the project, that lead architect quit, just as his predecessor at the Bangalore shop had done. To Arun, it was 'a double whammy.'"
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