I have been thinking for a while about creating my own identity in blogosphere and claiming my full digital footprint. I now live in the software outsourcing business development world, and I recently had the pleasure of 'exploring' a partnership with two outstanding outsourcing brokers (or, Biz Dev Consultants). There are a lot of smooth talking, high pressure, high impact, and self styled consultants trying to position themselves in the IT outsourcing/off-shoring space. Since this is the week after Christmas, and the entire Western world is literally on vacation, I find myself twiddling my thumbs. It is my perfect opportunity to cross that create-your-own-blog off of my to-do list.
Disclaimer: Please read at your own peril. If any of what follows is insulting to you, rest assured that it is not meant to be. If it is very different from your own experiences, I understand. Please do not retaliate with incendiary comments or threats of bodily harm. I am not writing about YOU in particular, so please do not take it personally. And if you do, you can always post one of your own to let that steam off!
So, here goes: December 28, 2010
The IT outsourcing broker (or Biz Dev consultant) claims to have hundreds, if not thousands, of serious high level contacts in their geographic region, or in their verticals. This high powered rolodex consists primarily of CXO level decision makers who can approve and award projects. Now, anyone can make such a claim, but the broker's FULL claim is literally stunning - in addition to having a rolodex, the broker has unlimited access to these CXO executives, and the broker claims to have the power to influence such decisions!
Alternatively, the broker has built a consortium of US & Western European corporations that subscribe to their outsourcing marketplace. Apparently Fortune “NNNN” (take your pick, form 100 to 1000 and beyond) companies are regularly posting their outsourcing needs and projects into the broker's marketplace.
Before visions of a long term strategic partnership with the brokers fills your head with sights and sounds of unlimited projects, hard currency revenues, and corporate heft that will someday rival the likes of Microsoft, before your ability to make rational business decisions is impaired, and before your wallet is a wee bit lighter ask yourself this basic question: what would you do if you had that almighty, unlimited no-questions-asked access rolodex, or if you had hundreds of Top-Tier corporations talking to you about their IT needs?
You would surely assemble the greatest bunch of systems architects, designers, developers, QA and project management engineers, and launch the most dominant IT enterprise to be in human history (sorry, IBM). You would crisscross the world with offices in every major metropolitan city, and churn out software like no one has ever before. And surely, all of that will make you extremely rich!
Then ask yourself the follow up question - why is this broker giving away their golden eggs? Hmmm, the answer is not very apparent, is it? Well, it is. The broker is a smart business operator. They have identified your ambition, your lack of global infrastructure, and they are out to make some money for themselves.
The typical small to mid size IT startup, or young IT Company in India (or in China, Philippines, pick your third world country - sorry to use the cliché, including-Eastern Europe countries) usually cannot afford an onshore full-time employee. The cost of one such resource is easily in the USD 100k+ a year, and at a hourly billing rate in the mid-teens, the break-even on that is roughly 5,500 billable hours of work. So, you would probably need 2.5 FTEs in your shop, working 10 billable hours every day, for the entire year just to break even on that one resource onshore. But wait, those 2.5 FTEs will probably cost you another USD 30k in local currency, so the 'all-in' breakeven is even higher. The cost of deploying an onshore Biz Dev resource is prohibitive for all but the extremely well heeled likes of Wipro and the TCS. Most offshore IT companies are therefore resorting to telemarketing, mass email spamming, and tweeting or blogging their way around the digital ecosystem. In my limited experience, the hit ratios are skewed to the less than 0.10% side of the scale. Telemarketers are the iconic cultural bottom-dwellers in the US. It is probably no different in Western Europe. Spammers are likewise, considered disgusting. And while there is a chance your tweet, blog or website will show up in a Google search, the chances of that reader calling you are slim to none! So you, the company founder and CEO of your startup sit in your offices and wonder why your local Biz Dev team is not productive enough.
In comes the broker, and the setup is perfect - for a mere USD 4,000 per month (and you can cancel with 5 days notice before the end of any month) they will bring you ALL these opportunities. Come on, get off your back and sign that contract. It is only USD 4k to get started. WRONG!! Unless you have a burning desire to wish away precious capital, hang up (politely) on that phone call and tear up that draft consulting contract. Anyone with some time and very small investment can put together an apparent rolodex. It exists alright, but it isn't real. It has no more access than you, or me have. Perhaps the broker knows one or two, is related to a few, etc., etc., but for the most part that list is as good as an umbrella is in a hurricane. You will end up investing more than 4k simply because psychologically we all have a propensity to throw-good-money-after-bad.
The second major problem with this brokerage model is the 'winner’s-curse'. How would you feel when you do win a 'project' when you find out you only beat 49 others to it? What did you leave on the table to be number one in that marketplace, for that one fleeting moment?
Finally, a word of advice for the wannabe IT business development consultants – if I were you, and I had major contacts and corporations talking to me about their IT needs I would become a consultant to those contacts, and offer my services for free to the IT development community. Think about it – Who can pay you better, the Fortune 50 mega-corporation, or that 21 person outfit in NCR India?
There is a sucker born every minute. If you can't figure out who the sucker in the room is, it is probably you!
Good night and Good luck.
