Outsource It!

Researching Offshore Rates

Getting ballpark rates from vendors is simple: just ask. Some vendors will offer you a rate table, some give a range, and some give you a high number and immediately indicate that they’re prepared to reduce it. The trick is to understand the relevance of the numbers, market trends, and negotiation space: just how much is the vendor prepared to reduce the rate to get your business.

For example, at the peak of the recession, a midsize nearshore provider quoted standard billing rates of US$35–$45 for a QA engineer and US$45–$55 for a Java developer. At that time I knew that I could hire locally at similar rates, so I knew the high rates were just a sales technique, leaving plenty of negotiating space. Our discussions ...