This morning, I was at the SDForum event on software outsourcing and realised that it is far easier said, and decried, than actually done. There, Russian outsourcer Luxoft presented a report, based on online interviews and surveys of 213 outsourcing decision makers at fairly large US-based software vendors (ISVs). The study highlighted some of the questions you should ask yourself and the potential outsourcer provider, before you hand it a job:

- Location;
- Workforce experience/education/attrition rates;
- Security;
- Domain expertise;
- Project communication/scalability;
- Cost savings;
- Language barriers.

But for a small company like a Web 2.0 start-up, quality of the outsourced team, speed and cost are what ultimately really counts, said Murano Software VP of Operations, Andrew Filev (pictured).
Of course, it's nice to know where your virtual team come from: "offshore" (India, China, Russia...), nearshore (Canada, Mexico, USA...) or a combination of the two. But typically, a start-up would want as much direct access with the virtual team to speed up the development process and avoid unnecessary hops, like going through the outsourcer's "nearshore" people which will then forward the changes/requests to the "offshore" team and back. However, don't get me wrong. This nearshore/offshore structure can very well work for larger companies, where predictability is more important than speed. But that is not what start-ups are looking for, at least not in their early beginnings.
Of course, going direct increases the risk of a possible language/communications barrier. Unfortunately, that is something you would only realise once you are actually working on a project. A way to mitigate this risk is to start with a relatively small project, like QA (quality assurance) or testing that would require one or two developers, and then grow up from there.

Russia: low cost, IP protection
At Murano Software VP of Operations, an average russian engineer will cost you about $25/hr or twice as much for a top "notch" one. And inspite of "commercial" software piracy in Russia, Fliev doesn't know of a russian outsourcer that "screwed up" its client. "And we've been in business for 7 years", he added. You can find a podcast of my conversation with Filev here.

China will not reach India's size before 2015 Now, there could be reasons why you would want to outsource your projects in a particular geography, like to establish a footprint there for future sales operation. "The companies that sell consumer oriented goods are going to China not for the low cost labour but because they see the rising middle class there as an immense opportunity for the next 50 years. And they want to begin establish business operations in China. And it's one way to get a footprint there, even if it's fairly small", said Dean Davison, VP of Research at neoIT. He also said that because of China's internal demand for outsourcing, China's outsourcing providers won't be a major force in the global markets before 2015. "Why would they bother go global when they can secure good margins by staying local".

The quickest way? freelancers But according to Davison, for start-ups, the quickest past to "staff augmentation" is just to look on the Web for sites that provide freelancers for hire and bid for them. "You can go to the Web and hire global services on a freelance mechanism", Davison added. You can also check out his podcast here.