India software outsourcing: One unhappy customer

Steve Hamm

When you hear complaints about offshoring to India, usually it's about call centers. The hard-to-understand accents, high turnover, etc. make this a tough business to satisfy in. But, from time to time, I hear pointed complaints about India's software programming work. I got one today from Chris Stone, CEO of StreamServe, a US-based enterprise document presentation software company. (And former vice-chairman of Novell) Usually, when I hear negative comments about Indian programming, it's in situations like this: An American firm is trying to manage a small captive shop in India. The top Indian software services outfits say companies would be better off dealing with them because they manage the projects, assure quality, and can scale up and down quickly. That pitch makes sense. But do things really work that way? I'd like to hear from people in corporations who have contracted out relatively small projects to Indian outsourcers. Did you get what you expected?

Here's the e-mail I got from Chris, laying out his reasons for dissatisfaction with his Indian software experience:

We bought a company (name withheld) in order to secure a missing white space solution.

After a year or so we dropped the product. That left us with a number of resources in India to use for other purposes.

We chose to use the developers for other projects and to hire resources for Support in order to cover Asia technical support as well as 24*7 and weekends. In other words, it became our offshore alternative.

We started with some project help in India and then offloaded some product maintenance to them. It looked OK to start with and we gave them 2 bigger projects. What we discovered was the deliverable was a very poor solution. The product deviated from the specification substantially. It looked like it was done by kids....and it was. We had to do an enormous amount of patching as well as realizing that they "borrowed" a substantial amount of code from other sources in India. Even though we were told it was Open source, there was no way to trace the IP, and proper branding.

Both of these projects will have to be rewritten sooner or later.

Later on we started another project. The first and last task was some
platform user interface development. Yet another disaster. It was
late, poor code and had to be re-written. We decided to close up the office and get out. (BTW - take 18 months to close an office down in India).

Some of the problems we encountered:
- Communication. You will never hear about problems until it is too late. It's a cultural thing. They loose face if they let someone know they don't know what they are doing or that the result is below par. The problem is that there is no way you can manage this and you cannot take actions. You end up with either a dropped project or a bad product. You need to have someone you trust on the ground. -Infrastructrure. Our team was in Mumbai. Many in high tech use Bangalore. The Internet and phone connections were awful and dropped four to five times a day.
- Loyalty. We noticed a dramatic change in resources constantly moving. People were always leaving for another 20% salary increase. It's all about cash and who will give you more.
- Micro Management. If you are to avoid some impact on lack of information sharing about any problem you must micro manage the project. Preferably, you need someone there full time, which we couldn't.
- Cost. Well, it looks cheaper on the surface but caveot emptor. In the end, this cost us more and we were throwing money away. Furthermore, t is not that cheap any longer. WE moved our entire offshore model to Ukraine and are extremely pleased.
- Quality. In short, we discovered that the code developed in India was either poor or eventually thrown away. Not very well invested time and money.

It's probably better to use India for QA work rather than Development. Maybe we acquired/hired the wrong resources, or we didn't explain the product well enough, or we weren't as prepared for off shore business as we are today, but after moving the resources to Ukraine, I would not try India again.

Before it's here, it's on the Bloomberg Terminal.