• December 06, 2019

THE COST OF CUTTING COSTS PART 1: SLOW IS FAST

The world we live in is a crazy place and it doesn’t want to obey the laws of formalist logic no matter how much we want it too. The insane statement in the title is but an illustration of it, like something taken straight out of George Orwell book where freedom is slavery, war is peace and ignorance is a strength. Unlike the dystopian classic our article is less about dystopian authoritarianism and more about perception bias and established toxic practices in software development.

Managers make short-term investment decisions for many reasons. Sometimes they're trying to meet short-term objectives, such as improving their quarterly profits, which seems to be a more urgent goal than investing for the long term. Besides, two years from now, they may be long gone and the health of the firm will be somebody else's problem. For years, consulting companies and IT startups have been outsourcing parts of the software development cycle offshore to freelancers, often – in third-world countries. It’s cheap and simple. And it promises lots of trouble.

For years, consulting companies and IT startups have been outsourcing parts of the software development cycle offshore to freelancers, often – in third-world countries.

Case Studies

First, let’s establish the difference between the “price” and the “cost”. For example, buying the $199 laptop may seem like a good, quick investment. But the fact that it would get super slow in two weeks and breaks in 6 months means it was a waste of $199. Buying a well-researched computer for $600 that has a history of longevity and lasts you 5 years is a fantastic buy. Same basic principles apply to software development.Boeing didn’t adhere to this rule of thumb and paid for it with both its share value in billions and what’s worse - with the lives of its customers.

Long story short, Boeings managers decided to outsource software engineering cycle to an offshore software developer and lower the hourly pay from around $50/hr to $9/hr – may seem smart and cheap, since bottom line is everything. Turned out the offshore developers had much lower testing and quality assurance standards than Boeing and worked extremely inefficiently since the management prioritized fast delivery over quality end result. Naturally the vital piloting systems failed mid-flight due to untested software bugs and two planes went down, taking three hundred lives. That is the cost of cheap solutions.

It doesn’t have to be that dramatic for everyone, but in the age of Big Data, privacy issues, stolen identities, selling private information and GDPR to control it all, hiring offshore developers for the cheapness sake and turning a blind eye to the standards of quality and security quickly becomes a very expensive solution.

How not to despair?

Choosing quality doesn’t mean you spend beyond your company’s budget, nor bankrupt yourself. What you can afford will differ from business to business, stages of development and risk-aversion of management but whatever your budget and strategy – understanding that the price of the acquisition is but a fraction of the cost and there is a lot more at stake than the company’s bottom line. How should IT managers and their companies go about it, then and how Tentacle Solutions can help you with it all? We’ll talk about it in Part 2.

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