The CTO of SOMA Living on the Adventures of Starting a Web Development Project

I foolishly thought that finding and selecting a Web development company would be a piece of cake. As chief technology officer for SOMA Living, an online and brick-and-mortar real estate service that represents homebuyers in the San Francisco area, I was confident that it would be a matter of calling a few companies and having my choice of vendors. I was wrong. So, when the local development organizations didn’t offer the right services at the right price, we chose an offshore development company that does all of its engineering out of India. And we haven’t looked back since.

The journey into our Web development project began when we received our funding from GMAC Home Services in Liberty Corner, N.J. We knew that we had to develop a second-generation website that stood out. But we hit a speed bump when it came to money. After meeting with some local companies, the price tag for everything we wanted went through the roof. It became apparent that we needed to get creative.

With money burning in our pockets, we set out to find the Web development company that could deliver what we needed, when we needed it. Our search focused primarily on local organizations. Why? There was a certain comfort level in knowing where our money would go and being able to see the droves of programmers hard at work. We felt that it would be easier to communicate with local engineers.

We had two primary considerations as we met each company. First, the right chemistry had to be there–the right combination of size and resources. The small-boutique companies offer a high level of personal attention but do not always have the resources. The second consideration–and perhaps the most decisive–was price. The large organizations don’t give the time of day to anyone who doesn’t walk in with a $3 million budget.

Once we were able to select our short list, we started to talk prices. This is when the real sticker shock hit. But it so happened that one of our consultants had been working with the Indian company on another project and proposed the idea of offshore outsourcing. At first we were skeptical because we had no experience working with an offshore company, but after several meetings and some research we became more comfortable with the idea.

The company does all of its engineering out of Bombay, which is 12.5 hours ahead of California time. It also has a small office in Northern California, where its project managers and several executives are based. As part of its standard practice, there is a project manager based in the United States along with an engineering manager in India. Most of the interaction occurs between us and the U.S. project manager.

We found that our offshore development company provided two to three times more functionality for the same cost as the local companies. It seemed almost too good to be true. So we did our requisite background checks–talking with references that confirmed the company’s ability to deliver a solution for such a low price.

LOWER COSTSOne of the unique aspects of our development company was that it touted a solutions-oriented approach to a project. That meant that it committed to a certain level of functionality for a fixed cost, and if additional resources were needed to achieve that level of functionality, no additional costs were passed on to us. At first we were very skeptical about this approach. But as we did additional investigating, we found that it could manage this because its labor cost was significantly lower than that of any U.S. organization, and its engineers were just as capable as their U.S. counterparts. Our project initially had 12 to 15 engineers assigned to it, but we ultimately ended up needing 20. If we had chosen a U.S. company, I am positive the addition of the extra engineers would have broken the bank.

Many U.S. companies, especially the large ones, were costing their junior analysts/programmers at $200 to $225 per hour, with rates topping out at close to $400 per hour. While we do not know the exact figures for our company, we estimated it was paying under $100 per hour and probably close to $50 per hour.

Besides the obvious monetary benefits, we also found that offshore outsourcing brought a different approach to this project that was both exciting and scary. Our project was a seven-days-a-week, nonstop activity for everyone involved. At the latter stages of the project, the engineers in India had two shifts running, a day shift and an evening shift. On our end, it meant long nights and early morning conference calls. This meant changing the way we worked. Our time line was very aggressive, and we were committed to hitting the agreed-upon deadlines.

Because the development activities were taking place in India, the difference in time zones meant that while we were sleeping they were working and vice versa. This enabled us to accomplish much more in a 24-hour period since we knew that each morning something additional would have been accomplished during the night. Also, the time pressures meant that we often had to drop everything we were doing to work on a Web task due at 5 that evening.

LESSONS LEARNEDWe have learned several important lessons during this journey. First, before beginning a project it’s important to have all third-party vendor contracts in place as well as the technical implementation details. Second, it’s crucial to be honest about meeting the milestones and deadlines agreed on in the project plan. Third, commitment by all parties is essential. This includes everyone in the company who is touched by the project, as well as subcontractors such as graphic artists, writers and marketing companies. And last, be careful of what you ask for. If you request new functionality, be sure it’s necessary and that you are able to support it.

While the first stage of our website is complete, we have a long list of enhancements and features we want to implement. It was difficult to determine which features we wanted right away and which could wait. We feel sure that going with an offshore development company was the best choice for us and will be for many companies trying to develop innovative websites on a budget. The cost advantage we have received allowed us to create a website at least a year earlier than otherwise would have been possible.