When I decided to launch the new business, one of the first decisions I made was to outsource as many of the activities as possible. I spent 14 years providing design services and professional services in a variety of industries so it is something I am entirely comfortable with.

The main areas are obviously software development, graphic design and datacenter operations. To me it it no different than getting a lawyer to do your legals or an accountant to do the books. The generally accepted wisdom is that you should never outsource your core competencies but one issue I see is that many people are not clear on what their core competencies are. Just because we are building a web application does not mean that software development should be one of ours.

The roles of the core management team are Product Management, Project Management, Sales & Marketing and Funding and that is where most of the effort has gone. However, the biggest mistake we have made is not nailing down the outsource providers in the first few weeks. We’ve changed direction on development several times which has delayed things more and more. But the prototype is now properly underway and we will soon have something we can demonstrate to potential investors.

When we started looking for dev houses, we assumed it would be trivial to find expertise in web application development. To our dismay, most vendors idea of a web application is a web-site with a bit of PHP. We worked through tons of unsuitable vendors whose sites tell one story but whose expertise tells another. I’ve successfully worked with teams in India, Japan, USA and China so I had no fear of offshoring to India. The reality is that without recommendation, it is impossible to sift through the thousands of outsourcing firms there. All of them claim to be able to do everything so the idea of working with someone that far away was dropped.

We then moved the focus to Eastern Europe and found some potential suppliers in Poland, Belarus, Serbia, Romania, Bulgaria and Latvia, all of whom seemed quite competent. A simple filter removed about half of those, that filter being “how expensive is it to fly there and back”. Belarus was coming in at €2000 whilst Poland was less than €100. In the end for several reasons, all were dropped for the prototype but are still in our short-list for full system development.

We did talk to one Irish company and one US one. Both were more than capable of doing the work and very easy to communicate with. But for the prototype, we just felt they were overkill and the costs were too high. Both remain in our short-list. Just to give some sense of cost, from all the vendors, we received quotes that ranged from €25 an hour to €120 an hour.

One of the greatest annoyances of the past few months was the number of vendors who never replied to our inquiries and I have to say that the UK was by far the worst offender there. When I was on the other side of the fence, every inquiry was leaped on whether we had the resources available or not. The services business is all about building and maintaining relationships and none of the vendors who ignored our questions will ever get business from us as a result. We did have three great responses from the UK including one that simply stated that they did not have the required expertise. That sort of honesty means that they are top of our list for the areas that they do work in.

In the end, we found our vendor through a specific technology mailing list. This is something we should have done on the first day. For any work which is going to cost more than a few hundred Euro, you really do have to use those whose reputation you are at least familiar with and whose existing work speaks for itself.

The large amount of work that has been put into requirements definition should now make the task of building the system far easier. We know exactly what we want and how we want it to look. As long as we strictly control changes to minimise the development time, we should be able to claw back some of the lost time over the past few weeks.

Technorati Tags: outsourcing, offshoring, nearshoring, design+services, professional+services