Knowing outsourcing software development to China, India, Philippines

In modern times where globalization has progressed, large enterprises will transfer manufacturing bases to cheap labor wage countries. However, even in the same manufacturing industry, when outsourcing software development to other countries, there seems to be a specific difficulty different from hardware manufacturing.

Troy Hunt: Offshoring roulette: lessons from outsourcing to India, China and the Philippines
https://www.troyhunt.com/offshoring-roulette-lessons-from-outsourcing-to-india-china-and-the-philippines/

Mr. Troy Hunt who worked at Pfizer has worked for software development department for many years and has outsourced software development to countries with lower wages such as developing countries. In more than 10 years, Hunt has been involved in Pakistan in the west, Japan and New Zealand in the east, most countries in Asia and Oceania. From this experience Hunt says software outsourcing has a unique problem that is different from hardware manufacturing.


In the first place, why leave the development of software to other countries, the biggest reason is wage disparity. Labor wages in the US and Australia are high, and in developing countries it is possible to obtain labor with much cheaper wages, so many manufacturing companies are looking for areas with lower wages and are moving all over the world.


Comparing labor wages in software development with relatively expensive countries such as Australia, the United States and the UK with relatively inexpensive countries such as China, Philippines and India, the difference is exactly an order of magnitude.


Each country in India, China and the Philippines thinking that Hunt has value in outsourcing among the countries that have been working for a long time is as follows.

◆ India
India is synonymous with "a place to do software outsourcing" for companies all over the world. The big reason is that the engineers have very high English skills from the history that India was a British colony. In addition, the world's second largest population of 1.3 billion people is also attractive, and many high-tech companies have invested heavily.

A major problem in India of that IT outsourcing power is "staff turnover". Most people in India have no obsession with the company they work for, and it is rare for those who work for the same company for two years. In addition, Hunt says that Indian engineers tend to demand more detailed materials than other countries.

◆ China
China's Internet users have exceeded 700 million, and it has 2.5 times the Internet population in the United States. Furthermore, the Internet users of China are still only half of the whole citizen, which is a very promising software development area in terms of the fact that the Internet population is expected to increase further in the future, compared with the United States which has already reached over 90% I will.

However, in China with abundant workforce, infamous censorship system "Great firewall"Hunt says that it is a major obstacle. In China with an irregular Internet environment where Google, Facebook, Twitter, YouTube can not be used, it is a major bottleneck that the English level is not high in addition to that. In the process of manager translating English to convey detailed specifications, a few percent of information is said to be lost. Also, due to the low English level, the code itself has the disadvantage that it is difficult to read Westerners. Hunt thinks that the wall of words leads to the wall of the UI of the completed software.

Also, in recent years, the rapid rise in labor wage in China is also a major drawback. Although the wage gap between the United States and China in 2010 was 11 times, it has shrunk down to seven times in just five years, and this trend is considered to continue in the future, and utilize the low labor cost There is a problem that the merit of overseas outsourcing is greatly impaired.


◆ Philippines
It is the Philippines that Hunt is evaluating more than India and China. In the Philippines, from the history occupied by the United States, English is functioning as a second language and Filipino 's friendly friendly qualities are also very attractive. Just as much of the call center has been transferred from Australia to the Philippines, high English ability and friendly national character behind the Philippine potential as an emerging high-tech sector. According to Mr. Hunt, the labor cost in the Philippines was consistently lower than in India and China.

◆ Problems in overseas outsourcing
Regarding the merit of the cost obtained by switching to overseas production, Hunt points out that software development has a problem different from hardware production. For example, if you set up a software development base in a country with half the cost, you may be able to hire twice the number of staff so far, and you probably think that productivity doubles, but that is not the case.

Software development is done by teams, teamwork such as collaborative work and unity among team members is questioned. If you work with two people, the number of connections is one, but if you become three people, the number of connections will increase to three. The number of connections will increase rapidly as the number of teams increases with 10 in 6 or 5 in 4 people. Because there are "losses" that the number of connections increases and the number of connections increases, it is difficult for the members to communicate with each other, so the difference in labor cost can not directly increase productivity.

Also, it is inevitable that areas with low labor costs can not maintain the same "quality" as areas with high labor costs. Moreover, the quality of the software is not clear at the time of outsourcing, and it often needs several years to raise the technical level, so if the life cycle of the software product is short, outsourcing It is said that there is a danger that it can not receive price merit.

And Hunt notes that the "cultural nuances differences" in each country should never be underestimated. Cultural differences that make it difficult to communicate with overseas teams that are often done remotely seems to be a major problem to be incorporated as a cost to pay in overseas outsourcing.