Offshoring/Outsourcing: What value do you present to your clients?

by oneafrikan on March 30, 2005

So, you do outsourced / offshore software development. But, what value do you present to your clients?

I’m gonna make some sweeping statements here:

1. Outsourced / offshore software development is now a commodity.
2. We operate in a very competitive market, where you can get dev services in virtually any country with an internet connection and (fairly well) educated people.
3. Usually, vendors that operate in this space will differentiate first off on price.
4. Some countries are generally cheaper than others, and this is bringing the competitive price of services down.
5. Usually, buyers will respond to that price, and buy accordingly. Some will have backed a winning vendor. Others, will find out it’s not all a bed of roses and price isn’t always a good indicator of what you get for your hard earned revenue.

So by definition, when you do outsourced or offshore software development, if you can’t compete comparatively on price, then you’re not going to be able to compete [?]

So this is where my question starts to become relevant. If you’re operating on the assumption that your price will be enough to get you clients, how do you start to differentiate yourself from everyone else that is offering the same insanely low, unsustainable prices. You start to offer some sort of real value. But what is this value, and how do you communicate this to your clients and your prospects? Because if you don’t, your competition will, and they’ll start to steal your market share.

End result: a few very large firms, and lot’s of minnows fighting it out for the scraps.

What do you do, that is perceived as valuable to your prospects and clients, that will make them want to come back to you?

  1. Do you offer a better service?
  2. Do you offer discounted rates for longer engagements?
  3. Do you do prototype work for free?
  4. Do you sit on your arse all day?

I’m curious, and would really like to start a conversation with you – I’m not asking you to tell your trade secrets, but it would be interesting to know what other people are thinking? and where they see this going?

Over to you ;-)

3 comments

Clearly competing on price is a quick race to the bottom. I find it interesting in the examples that you mentioned:

1. Do you offer a better service?
2. Do you offer discounted rates for longer engagements?
3. Do you do prototype work for free?
4. Do you sit on your arse all day?

that two of the four are based on price. Price is never a sustainable competitive advantage.

Dodd

by Patrick Dodd on March 30, 2005 at 11:53 pm. Reply #

And the other one was a joke!!

I hear what you’re sating Patrick, but this is the thing I’m trying to understand. Intuitively we understand that cost competition is not sustainable, and we would think that the buyers would understand that as well – I mean, do they expect the developers in India / China to work on one or two bowls or rice a day? – but they don’t seem to. While we think that competing on cost is not a clever thing to do, they (and I could be massively) wrong here) seem to make buying decisions based on that.

So, the thing we have to do is to start showing them (being the clients) what value we offer them, when they work with us.

For example, we’ll often work with a client on an RFP or a pitch, augmenting their sales ability with our specific knowledge. They like this as it means they have more people on that prospective piece of work, and we like it because if we help them land the work, we get to do the dev side of things.

But that’s one example, what are other people thinking / doing?

Do you have a fixed methodology / process?, and are inflexible when working with new clients and adopting their processes?

Do you opt out of engagements honestly, when you know that someone else could do it better, but offer to help the client get the most out of that engagement?

Gareth

by oneafrikan on March 31, 2005 at 12:44 am. Reply #

PS – Patrick – I still can’t get your RSS feed from your blog ;-(

by oneafrikan on March 31, 2005 at 12:45 am. Reply #

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