Offshore software outsourcing to China

5 things to know before offshoring software outsourcing to China

So, you go and talk to Gartner and they say that after India, China or Mexico are the next best options for software outsourcing. Great, now what? Well before you start contacting vendors, here are 5 things to think about before investing any more of your time, or money in considering China. If you decided to go with China as an offshore software development destination you will come to terms with these 5 eventually, so why not start now.

1. This is China - China is not India, Mexico, Ukraine ….
This statement may seem so obvious that you can’t believe you wasted your time in reading it. However, the number of people who have said, “but it worked when we did it this way in <insert second world country name here>, why didn’t it work in China” would amaze you. Plan time to adjust approaches and strategies (often substantially) for China.

2. Communication will be a problem
No matter what the vendor tells you, how many English teachers are on staff, or if you have native Chinese speakers you have at your company, communication will be a challenge. Plan for increased ramp up time of the offshore team. If a key success factor is speed to setup the offshore engagement then China may not be your best option.

3. Vendors do not have all the answers
A “tier 1″ vendor in China equals a “tier 3″ vendor in India. The outsourcing companies in China haven’t perfected the art of outsourcing and won’t for a number of years (some would say that India still has a far way to go, but China has much farther). Plan to invest time more time than you would need in India in helping your vendor understand your needs and how to work together successfully.

4. Significant cost reductions over outsourcing to India are a myth
Okay, yes you can get the “China price” which is per hour lower than India. However, the secondary or hidden costs of outsourcing are higher when working with a vendor in China. If your company is looking to cut 30% off your application maintenance costs because of the economic slowdown, moving your offshore outsourcing from India to China is not the solution.

5. If it sounds to go to be true, it is
It may seem like this contradicts point #1, but hear me out. Okay, China is a different country, culture, language … but it isn’t a different world. When the vendor says they hire the best developers in China and have 1% turnover, think twice. The facts are that the average turnover for software developers in China is 10-14% depending on the city, better than India but far from 1%. Believe me, the vendor has not discovered a new and improved HR system that eliminates turnover.

When I did an initial 2 minute brainstorm of tipics for this list, my list grew to 27 very quickly. I am going to stop at 5 for this post, but look for more in the future.