Scrum vs Outsourcing
More from Jeff Sutherland (the video presentation i posted about yesterday). This time on outsourcing (sending to India) vs implementing Scrum locally.
Scrum Tuning: Lessons learned from Scrum implementation at Google
(example starts around 42 minutes into the presentation)
- Outsource $2million development
- Outsourcing costs $1.6M
(industry data show 20% cost savings on average)- Alternative: Introduce Scrum locally
(240% improvement)- Local Scrum costs $0.83M
(which yields a 59% cost reduction)
Every company I introduced Scrum in (even one with 600 developers) more than doubled productivity. In fact, I don’t even view that as very good.
That’s kind of a mediocre effect. A good implementation get’s a Toyota effect — at least four times. [company name] get it ten times. 240% was what I got at my last company which had about 600 developers. That means I can take my 2 million Dollars and do it locally for 0.8. If I send it to an Indian team that is doing waterfall and pay 1.6 — how dumb is that?
Why would anybody do that?
You would always wanna introduce good agility locally first, and then go and insist that the Indian teams be agile — and that’s what [xx] is doing — they are converting all their Indian operation — which is growing bigger than their US operation — to Scrum.
… although this seems pretty biased, the story continues and Jeff gives an example with even better productivity: Distributed scrum for a company in Utah, US/St. Petersburg, Russia.
More notes: Agile and Scrum Tuning by Jeff Sutherland
Technorati Tags: agile, scrum, video, presentation, jeff sutherland
April 3rd, 2008 at 11:04 (GMT-1)
Thank you very much for this very informative post. I am involved in outsourcing in the Philippines and this post is really an eye opener.
May 26th, 2008 at 08:15 (GMT-1)
Great inputs, really helpful. thanks!
June 20th, 2009 at 07:03 (GMT-1)
I definitely agree with the section that states it’s best to establish best practices locally first. Without establishing what your local team can do, you’re not able to start with a baseline for the outsourced team…a model to work from. Thanks for the post.
July 25th, 2009 at 07:16 (GMT-1)
By the way, I forgot to mention you have a great blog! I understand your frustration about the AdSense post…
August 14th, 2009 at 13:23 (GMT-1)
As someone who has lived and worked in Mumbai call centres as an Expat software designer I saw the customers frustrations first-hand.Despite having some of the best customer facing software technology available to call centre handlers, business process became confused due to the simplest language and cultural differences. Consequentley the travel and management costs of shipping out US-based training consultants eventually far outweighed the benefits of the outsourcing software process in the first place.
August 26th, 2009 at 03:08 (GMT-1)
I think more IT companies Outsource more quality of their product comes down, take Microsoft, Yahoo for example. Lots of research for Vista was done in India and we all know how pathetic Vista was. It was only when Microsoft realized that they need to come back strong, they used more manpower in US to develop Windows 7 and its already considered the Best operating system.
Even Yahoo 5-6 years back thought that best way to increase revenue is by going India, they outsourced 50-60% employee to India and today it need Microsoft to survive.
Bottom Line is Outsourcing is like steroids you’ll feel strong in beginning but slowly its killing you from inside.