Offshore outsourcing your Chicago startup and why we don't do it

by John W Ostler
August 20, 2014

We don't offshore our work. Here's why:

You got your funding.

It might not be as much as you thought you'd need to raise, but it's certainly enough to lay your first or second proverbial egg. Whether you have your own team or you're starting from scratch, you make the decision to get help to produce your idea.

This happens more often than you think. Name almost any established company or non-profit in Chicago and I guarantee you some if not all of their digital marketing is done by an agency or studio.

For startups and first-time entrepreneurs, this is a new world. The search typically starts with a tweet, "does anyone know any good #design shops in #chicagotech". It won't be long before you get recommendations, but then something else comes along. Offshore outsourcing.

Offshore companies are a big deal right now. In India or China or Eastern Europe the cost of living is such that they can drive the price of product development down. These come with huge promises:

  • An email template for $100
  • A logo for $200
  • A website design for $499
  • Wordpress development for $8 an hour
  • The mobile app of your dreams for $2,000

You think to yourself, at those price maybe it's worth the risk! You get some bids from places in Chicago and then get some bids overseas and think, at these prices why would I ever do this in Chicago?!

Back in 2008, I read The World Is Flat by Thomas L. Friedman and decided to try my hand at creating a product with an offshore team. As a prerequisit, I've spent the past 15 years in the digital space, 7 years of that being in Chicago's scene. I've launched and helped launch hundreds of digital products with teams of 6 to 100 from Fortune 100's to Startups. I figured if anybody was going to do it successfully, I had a shot. 

I overcommunicated everything. I supplied UX workflows, designs for every screen, motion graphics for behaviors broken up per feature, development user stories, development benchmarks and even went as far to have prototypes of particular pieces of functionality spec'd out using specific gems, plugins or sdk's. You're thinking what I thought. That should do the trick!

It didn't. That level of communication constantly refining my communication process resulted in a 15% success rate. Why? How could this happen?

Communication differences - This one you'll notice first. When communicating your feature requirements, assume NOTHING. If you're lucky, you will get implemented only what you say you want implemented. For instance, if you have text with an underline, you better define it as a link that has to go some place. If you say you want login, you better also say you want registration, forgot password and what and to where those emails will be sent with what text. These are all things that a domestic firm will help you assume but you'll take for granted when working with a team overseas. Depending on your vertical, this can be a nightmare as functionally our societies use on a regular basis like scheduling tools or certain utilities can have completely different realworld workflows.

Accountability - As it turns out, when you're 10,000+ kilometers away, the pressure to get your product done and right isn't quite what it would be here. There isn't a reputation that has to hold up. Unless you enjoy traveling overseas and visiting your firm, you'll find that a good majority of time the pressure you put on teams via Skype or email will end up keeping you awake at night instead of them.

Working conditions - Depending on the country you work with, often times you will have to deal with the power outages that are frequent. Some for hours and some for days. There are generators at many of these shops that keep the computers on but don't always keep the internet up. Not always, but some firms also have their teams work really long hours. This results in lower quality work every time. I wish that was unique to overseas but there are plenty of teams here in Chicago with similar issues. That's for another blog post.

Ethics - I would never say that offshore teams all have ethical problems, but many teach their teams to bill longer hours for tasks that simply don't take that long to complete. Also, many shops take a significant margin from their workers. If you're paying $45, $30, or $15 an hour for your resources, often only 30% or so is making it's way to the people actually doing the work.

Timing - You can pretty much forget about the dates you give your offshore team for product benchmarks or completion. I've never witnessed or talked to anyone in our industray where the team hit their dates unless they're very highly compensated. This is rare and typically only happens at places the size of Motorola who can afford it. At a startup level this often outweighs the cost benefits of offshoring in the first place. Even when it's the case that you're promised great project management and account direction hitting dates is simply not the norm. Cheap, fast and good: you pick 2.

Time traveling - If you want your user experience, design and development to look like and act like tech from 2-4 years ago you've come to the right place. Design and Tech trends are like music. They start here in the U.S. and slowly make their way around the world. The better the english is in the country, typically the closer to today's trends you get, but that's as good as it gets. Just be ready to have a product that looks like it needs to be redesigned as soon as it launches.

If you're convinced you want to offshore your product, I've found that it's best when you can afford to lose your entire monetary and time investment. Note: This is the mentality I take when going to Vegas. Some of our competitors in digital use offshore teams to offset their costs and even they, from time to time, screw themselves and their clients in the process. My team is often brought in to clean up those messes. From code reviews to complete redesign and redevelopment of their products, we witness a constant churn of entrepreneurs and brands in Chicago losing time and money when they have to startover or start twice.

We don't offshore our work because we respect how difficult it is to solve new challenges in digital. We recognize that it's the most well thought out products, NOT the most featureful that people use, download and share. How a consumer experiences your brand is everything. Each seemingly little functional compromise you make to your product also alters your communication and vision with your audience. That's hard enough for a team in downtown Chicago, let alone a team with no regular contact with you or American culture.

To be clear, I'm not anti-offshore. I don't believe that Chicago or North America has a monopoly on intelligence or talent. I have also met some incredible Project Mangers and Developers along the way. But as someone who considers themselves fairly experienced, know that offshoring is best left to absolute pro's who they themselves, don't always have the best batting averages.

Please be careful.

 

John W Ostler (@seahostler) is Co-Founder and Principal of UX & UI at Eight Bit Studios (@eightbitstudios) a mobile and website design and development studio in Chicago. He has helped lead and produce technical and interaction design engagements with brands such as Cadbury Adams, Burger King, Motorola, Career Builder, Groupon, Exelon, Sidley Austin, and HSBC. His work has been featured in the USA Today, Brandweek, The Daily Beast, NewYork Times Tech blog, Mashable.com, homepage of Drupal.org, and featured on multiple CSS design blogs. He is also Co-Host and Executive Producer of Bytes Over Bagels, Chicago's favorite tech morning show.

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