We've  all seen it before -- an entrepreneur or an established company outsources its IT work, especially software development, to an overseas development team.  The savings are amazing -- sometimes 1/4 or 1/10 the cost of a domestic development effort.

But the cash development costs are usually only a fraction of the story.  When I've developed offshore, I've seen a dramatic upswing in project management and coordination costs -- somebody needs to direct these teams every day.  And I have also seen a painful increase in the development debugging costs.  Sometimes this debugging is seen in code errors, but more often it comes in the form of user interface issues and software functionality specification "translation". 

As most developers would likely tell you, as they code software to specifications, even good specifications, there are questions.  There are undefined states, unclear data set definitions, and under-specified data relationships.  Sometimes there are navigation uncertainties and undefined data display pages.  And even the best software planning cannot plan for an interface that make less sense once implemented than it did on a piece of designer's layout paper.

This is the hidden cost of offshore development.  Rework.  Cleanup.  Substandard interfaces.  This can happen with a domestic firm, to be sure, but in my experience (plus that of just about every person I've talked with about offshoring) says that the problem is multiple-fold when one offshores development.

So what to do?

Well, one simple solution is to bite the bullet and domestically source your IT work.  It's more expensive on the surface, but it may cost less on a fully-accounted, all-in basis.  Definitely consider a boutique ("code jockey shop") development firm, who often have reputations of developing code quickly and efficiently with tightly knit super-coders.

Alternatively, you might still decide to offshore, but recognize that the planning and project management disciplines need incredible attention -- perhaps more than you ever thought possible.  You'll need to hire (or assign) a rock-star project manager, software development manager, and technical liaison.  Alternatively, you might be fortunate to find one of the IT outsoucing firms that have these skills in-house and also have relationships with (or employ) offshore developers.  This approach may make the most sense for larger projects, where the programming labor savings are dramatic and can cover the increased planning and management fees.

Either way, it's best to go in with your eyes open, because offshore development savings are not as easy and sure as they appear.

What is your experience?