Why Looking for Cheap Developers is Stupid!

Why is it that financially driven organization believe that they will prosper by finding the cheapest cost development and test talent they can access? 

A few years ago, when I-Pods were all the rage, a friend said, "No way am I going to spend that much money for a fancy music player." Instead of spending $150 on an I-Pod, he found a small MP3 player for only $40. A few months later, I asked about the MP3 player. It sat uselessly in a drawer because he hadn't figured out how to load music on to it. It was too difficult to figure out how to work it, etc. Two years later, it was in the garage sale box and thrown away. 

 While the MP3 player was much cheaper, in the end, was it a good deal? Based on the value received, it was much worse. 

 Virtually every large corporate IT organization that I walk into, I find that they have significant outsourcing and off-shoring activities. When I ask them why - they tell me, as if I'm stupid, "Because it's cheaper!!"

 They are usually surprised when I assert that the data is quite clear regarding total cost of ownership: Outsourcing and offshoring software development will at best be a break-even proposition for any large IT organization. Much more commonly, the organization actually gets significantly less value per dollar than hiring for excellence. While they are surprised, it often aligns with their experience and they will often give me more evidence for the extra costs of out-sourcing.

 The issue is not per se that they are outsourcing or off-shoring.  The primary issue is that they are hiring based on the cheapest rate that they can find. The outsourcing companies promote the idea that they can find average or above average developers at a cheaper rate. The most common reality is that the organization gets developers and testers that meet the specified criteria, but are average or below in their development and testing skills. 

 We all know from our own experience and from productivity studies that there are significant differences in the productivity and quality output of the best software engineers compared to average or below average engineers. The top tech companies know this and they look for the best talent wherever they can find it. Working in telecom for 20+ years, I worked with excellent software engineers in America, Europe, India and China, so I know that you can get good and great software engineers in every location.

 So, when large corporate IT managers confidently assert, "Because it's cheaper!!" I know that they are looking for bargain-basement developers and testers. And I also know that they will get what they pay for, or even less. Meanwhile they have brought in high priced consultants to help their teams of bargain-basement developers and testers be more productive.

 They are just like my sale-shopper friend.  They proudly proclaim, "Look what a great DEAL I got…" It doesn't matter that the item that they got on sale isn't really needed and won't really be used. They got a great deal, paying less for a product that ostensibly is the same. But are they getting a good value?