No, you're really paying your developers to build domain/business knowledge and familiarity with the codebase. Then when you need a bug fixed or a new feature, it's a snap. You're also paying them so the competition can't hire them. Remember the value of any company engaged in IP is not in the stuff it owns and not even in the stuff it's already done: it's in its ability as an organization to identify and solve new and commercially relevant problems. The value of such an organization is quite literally in the heads of its people. Without those people what is it? A brand?

Contractors, no matter how individually talented they are, can't do any of this. You can outsource payroll and catering; you can't outsource IP creation and survive.

>you can't outsource IP creation and survive.

Software companies that are primarily software companies can't.

Companies that are primarily not software companies can and thrive on it. Content companies using tools, factories creating tools, etc.

Businesses are also their relationships. You can have plenty of those with very little ongoing development to support what you have already

The types of businesses YOU'VE been in, the IP creation is that important, however the types of companies that often hire out aren't software companies, they're other companies adding a piece of software to their process/infrastructure/product line

These are all valid points, but I think you're overstating the case a bit. Certainly, IP creation should not be routinely outsourced, but it can be outsourced in limited cases to the benefit of the organization.

I think there's a common misperception that outsourcing firms charge higher rates because their resources are (supposedly) more technically proficient. But, at least at my company, this is rarely what's going on. Most of my clients have excellent technical staffs. Our clients hire us in part, of course, because we are talented technologists, but the larger part, I believe, is because of our ability to acquire domain knowledge rapidly and our ability to retain that knowledge over long stretches of time when we aren't actively involved in the development process. Finding a comparable resource to hire or contract is so onerous that it doesn't make sense when what the company really needs is to achieve a goal now.

In other words, any product development company worth a damn hires as much for business acumen as it does for technical acumen. Otherwise, what would be the point?

>any product development company worth a damn hires as much for business acumen as it does for technical acumen. Otherwise, what would be the point?

Oh most definitely.

It's a girl ("I am the daughter and granddaughter of immigrants (Indonesian/Chinese on one side and Russian on the other side)").

1) The problem with domestic outsourcing is you frequently come up against the issue of "I wont need to support this in a month so fuck it I'll just finish it the quick hacky way now." For small site projects like wordpress blogs this may be acceptable, but for actual software I still can't imagine a situation where outsourcing is cheaper, which is why most respected software companies don't do it.

2) Which is a huge issue. The concept that you WANT them to go away afterwards (again, with the exception of something like a wordpress blog) both disincentivizes them to produce high quality, lasting code and also means you lose your support for their code base.

I'm not saying this is how your company operates, I'm sure you have great programmers who deliver good products. But I've yet to see the scenario everyone dreams of: We pay a lower price long term and end up with a great maintainable codebase that we can easily pass off to other developers and we never have deal with the outsourcers again. Just never happens.

The domestic firms to which you outsource typically don't want #1 to happen. They want to build a long-term relationship and hold your repeat business. They want to become such experts on your software that it's not cost effective for you to pay their competitors to work on it.

The way they can stay less expensive than in-house development is simple. They can use time division multiplexing to put an entire team of workers on your project. Each worker may have six or seven customers he works on across the year, six or seven codebases with which he is intimately familiar.

You may have the budget for one developer on salary, full-time. Instead of hiring that one guy to alternate between overwork and sitting on his ass, you could pay an entire team of people for three months of work every couple years. Additionally, you get the skills and experience of that entire team. You're not limited to what one contributor is comfortable with.

I'm sure that's true for many, many firms. But, in my experience running a domestic product development firm, the single best way to acquire repeat business is to exit completely and gracefully. Doing so builds a trusted relationship not only with the business managers who authorize our work but also with the technical resources who have to live with our code. When we give both groups reasons to trust our integrity, I find that I'm able to negotiate better, longer-term maintenance agreements (when those make sense) AND that I'm presented with opportunities to bid on future projects.

Clearly, many HNers have had poor experiences with outsourcing (whether domestic or overseas). But there are good guys out there, I promise.

>But, in my experience running a domestic product development firm, the single best way to acquire repeat business is to exit completely and gracefully.

Very much so the truth. Additionally, giving great business advice to go with your software works well too. The business of software is unfamiliar to most of the people hiring software developers.

I would love for that to be the truth, though I've yet to see any scenario that works out anything like that.

> I still can't imagine a situation where outsourcing is cheaper, which is why most respected software companies don't do it.

IBM and AT&T both hire outside resources....

>the concept that you WANT them to go away afterwards

I was making a riff off a joke about prostitutes which is why I chose that exact phrasing...you don't want them to go away, but you don't want to pay them except for a very occasional upgrade.

>I wont need to support this in a month so fuck it I'll just finish it the quick hacky way now.

On quality: Some places would rather get a hack for 1/3 the price than a stable piece of software. Not that should be the baseline, but people are (unfortunately) highly tolerant of crappy software if it fixes budgetary problems. Does that mean you should offer the hack? Sometimes. I have done it, but I offer the better thing too when possible, and explain you're going to pay a lot more for V2-4 if you buy the really cheap V1.