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Blog August 9, 2017

The Continuing Trend of Outsourcing Stateside

Vinnie Schoenfelder
Developers at WorkIf you looked at the New York Times last week, you may have seen that the new hot spot for tech outsourcing is the United States. The article points out that the once relatively small cost of overseas outsourcing is rising and that companies, like IBM, have plans to hire more workers in the United States over the next couple years. Most importantly, though, the author also makes the point that, "software is best created by small, nimble teams, working closely with businesses and customers - not shipped to programmers half a world away." And that aligns completely with one of CapTech's long-held beliefs: having true engineering discipline and rigor in a project is the key to success, not a focus on hourly rates. Even if you were only concerned with the bottom line, look at the long term costs-an enhancement phase is far more expensive than the build phase. For years we have advocated that good engineering reduces the total cost of ownership. Not only that, but for digital transformation projects, the key to successful engagement is responding quickly, and when using onshore resources and onshore teams their agility just can't be matched by their offshore counterparts.

In 2016, we commissioned a white paper and reached out to over 300 Fortune 1000 business leaders who were responsible for making outsourcing decisions and the response was overwhelmingly supportive of domestic solutions. 63% of those surveyed said they planned to bring offshore projects back onshore. And in one case study, we were able to actually go head-to-head against an offshore firm. We had three developers on our team and they had seven. The challenge was an app development project for a fortune 500 insurance company that could empower their employees in the field. The results were overwhelmingly in the onshore camp; our team ended up with a 64% lower total cost and 75% reduction in code. That speaks to a great difference in the engineering discipline. Not only is that important for the initial cost reduction, it's important for the total cost of ownership over the life of the product because you're maintaining far less code. Costs aside, the most important factor that we measured in the study was on the DevOps side, it used to take two weeks to deploy code; now it takes 10 minutes. Why is that important? If you're spending huge amounts of money analyzing data to learn what your customers want-it doesn't seem reasonable to then wait weeks or even months to satisfy their requests. If you can't reply quickly to customer demands, it's almost worthless to understand what they are in the first place.

It's nice to see that the trend of outsourcing work to stateside businesses is continuing, because it is increasingly important that your customer experience is outstanding. It simply makes more sense to work with companies here in the US, and at the end of the day when it comes to security, engineering, timeliness, and success-a firm ten time zones away just can't keep up with one right here at home.