Sunday, January 04, 2009

Can an offshore software service company benefit from the current financial crisis in the world?

I believe yes. But there’s a certain formula.

First of all; the company should be well managed up till now. There should be 95%+ utilization level and they should already have 2~3 good clients. The engineering staff should be above average, comprised with people who are able to make a difference in a project. A well defined software development process must be being practiced. There should be one or two architects who could really stand by a white board and convince people. Company should be small - 40 to 100 head count.

Just because there’s a financial crisis, it doesn’t mean there aren’t any projects out there. Companies in the US are cutting jobs and eliminating all possible expenses. But they still have projects which are critical for their business. So offshoring is a very cost effective solution with lesser liability for them. If someone can offer them a cheaper, better and faster solution - they’d go for it.

A bigger offshore company is likely to have,
  • Management overhead
  • Under utilization 
  • Smaller percentage of above average engineering staff.

Therefore they are unlikely to be able to offer a competitively better price or a service than a smaller company with good staff.

For a company who can offer a good service for a lesser price (the formula in above); It’s the right time to grow. Most companies are taking a hit and putting raises and promotions on hold. So it’s a great time to hire good people. You shouldn’t hire the people who are let go of; but rather should focus on the people who are already being utilized in other companies. And if your current staff can keep the projects flowing; it’s guaranteed that you’d be able to get good people to get them done.

So for the opportunists - I say “yes, we can”.