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Rent Before You Buy Into Offshoring

By Andrew Binstock

June 1, 2006 — (Page 1 of 3)
Despite the fond hopes of many developers, the outsourcing and offshoring trend that began a few years ago is clearly a permanent fixture. Although there have been a few highly publicized failures, the basic premise of lower-cost software produced overseas has been validated. The original glitches have been worked out as U.S.-based companies have learned to manage such projects.

Developers in the United States have basically three responses to outsourcing: work for an employer that does not outsource yet, move to higher-value work or into management of outsourced projects, or leverage outsourcing themselves.

In previous columns on this topic, I have discussed the first two options. In summary, the first approach has a whiff of sticking your head in the sand. Companies that don’t offshore today are likely to do so tomorrow, as I’ll explain shortly. Working for them is a temporary solution—fine as you approach retirement, but not exactly the basis for a career decision.

The second approach of acquiring more skills is clearly a winner and is an active response, not a flight to temporary safety.

The third option is for you to leverage offshoring. This seems crazy at first blush, because the general view is that only big companies go offshore. This view is nonsense. And as more firms see how easy it is to outsource part of their work, there will no longer be safe havens for the head-in-the-sand types.

One way to outsource development is to use RentACoder (www

.rentacoder.com) as described by my colleague Allen Holub in his May 15 column (“The Clearinghouse Model,” page 37). This is a site that works similarly to eBay. Companies post projects and a rough estimate of how much they’re willing to pay. Coders bid on the projects. Money is placed in an escrow account and freed by the contracting company as milestones are met.

Both companies and coders are rated on a 10-point scale. The top developers are listed in descending order of their ratings, so companies that want to contact or contract with the best of the available pool can do so directly. Of the top 10, three are located in the United States (including the top two spots), with India and Romania taking most of the remaining places.

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