Yes I’m talking about Reverse Sourcing and not the tradition outsourcing.

From Wikipedia:

Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company.

The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources.

Today when we refer to outsourcing, its common to think about outsourcing to “third world countries”(economically backward) primarily for cost advantages. Esp. in software we all have see a huge wave of outsource development. Companies in US, Europe, Australia, etc outsourcing development of software products to countries like India, China, Philippines, Sweden, Romania, Russia, Ukraine, etc. The customer and business side of people stay onshore while development and testing is offshored.

Even though Reverse Sourcing is actually Outsourcing, it different from the very intent point of view. There is a sense of things being reversed. For example, the customer and product owner is now in India and while the developers and testers are in US.

Slowly I’m seeing a trend of reverse sourcing picking up in India. Companies and Individuals in India are outsourcing development work to US and Europe. This trend is quite opposite to what was happening before where the main driving factor for outsourcing was financial. So far I’ve seen reverse sourcing happening mostly on niche technologies and domains. Cost is no longer the driving factor. Certainly developing in US turns out to be at least 2 times more expensive than developing it here.

I had a few product ideas and I was planning to outsource the development to few folks I know in US. Me being an individual, and not willing to go down the VC route, I was not able to pay them per hour US rates. Instead I was planning to work on an “equity sharing” model. Where the developers in US get some stake in the end product.

While I have not made much progress on this front, I did meet a few companies in India, who were outsourcing development to US and actually paying US rates to them. To improve my understanding of how reverse sourcing works and to get comfortable playing the customer role, I have started a pilot project with Penn State University, where I’ll be the customer and students of Penn State University will be the development team. More details on this project on “Playing Customer for Penn State University Project“.

This entry was posted on Tuesday, February 12th, 2008 at 7:41 pm and is filed under Agile, Genral. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.