Outsourcing Rates - How do the Indian consulting companies operate?

[ManMachine]

Hi,

As part of my R2I plans, I am trying to work out a deal with my company (a private concern with $2B annual revenue). The proposal is that I join an Indian consulting services company as an account manager/delivery manager, take a small piece of IT work with me, build a small dedicated team that exclusively handles the work of my company and I manage the account. Suprisingly, my CIO was enthusiastic about this and has asked to put together a feasibility study on this. Outsourcing is new to our company.

So, I am on the lookout for data relating to the rates companies charge. So that I can arrive at an initial raw cost benefit estimate this move can provide for my company. Are there any benchmarks available for this?

Has anyone here done this? How do Indian companies respond to this? I assume they will jump on this as it fetches them another US based client. I welcome any input in this regard including suggestions and comments on how to go about doing this.

Thanks in advance.

[hyderabadi2006]

This is about a consulting company based in US and have an offshore development team in India.

They typically bill the local client here $25/Hr per person for a team of 6-10 people. They say, this team is blended, (meaning senior to junior level people) and they just bill avg $25/hr/person for the whole team.

[FreeSpirit]

Offshore companies billing rates vary based on whether it's a Tier-1 or Tier-2 firm. It also depends on the business domain, nature of work outsourced etc. It's all part of SLA.

Rates are anywhere from $20-$40 for each FTE. Typically these vendors respond to RFP from client companies. In your case it's slightly different as you want to lead the team in India on behalf of your current company.

[nand]

offer to start a company and take the business from your existing company. Why do you want to be a salaried ghoda for a desi consulting company. Instead be the malik. Form a team and all that stuff. this is a good opp.

[ManMachine]

Hyderabadi2006, FreeSpirit, Nand, thanks for your input.

So, the range seems to vary between $20-$40? The proposed work will be maintenance of existing applications - 100% Microsoft technologies.

I assume tier 1 companies are Infy, Wipro, TCS. Tier 2 is Cognizant, Patni etc? Am I correct about this?

Has anyone tried this? Would love to hear thier experiences and learn from it.

Nand, that option too was considered. While being one's own boss is a tempting thought, it would be a bit too much to do everything from scratch. These companies have the infrastructure, resources, processes in place, why not piggyback on them? Why re-invent the wheel? It is a win-win, if it materializes. The other hurdle is that it is too big and too conservative a company to risk a part of its enterprise systems on a no-name startup with unproven credentials. Even if the CIO buys that, it will be shot down by the CEO, guaranteed.

[nand]

I see your point. In that case what I would suggest is not go to the big - wiggies like infy. Go to a second tier or third tier player (of course this also depends on the job). If you want the name of a smallish but stable company (started by a college mate of mine) that has been around for a while let me know and i will PM you.

The thing is with the chota company you can maybe negotiate a deal where it is not just your salary but also a percent of the total billing. Let us say 10 developers at 30 bucks an hour. Ask for 1-2 bucks/hr/head as your finders fee. That way you make 30 bucks/hr on top of the salary.

Infy, Wipro wont care for you or your deal as much - it will be just another deal for them. A chota player may because this may be a golden goose for them.

[ManMachine]

I see your point. In that case what I would suggest is not go to the big - wiggies like infy. Go to a second tier or third tier player (of course this also depends on the job).

The thing is with the chota company you can maybe negotiate a deal where it is not just your salary but also a percent of the total billing. Let us say 10 developers at 30 bucks an hour. Ask for 1-2 bucks/hr/head as your finders fee. That way you make 30 bucks/hr on top of the salary.

Infy, Wipro wont care for you or your deal as much - it will be just another deal for them. A chota player may because this may be a golden goose for them.[/quote]

Nand, that is what I am leaning towards. That's why I was looking for people who have already done it - this way we can learn about practical issues and pitfalls. It is very early days now, I will definitely contact you after I am done with the initial spadework. Thanks.

[psagarn]

I was in the same boat but unfortunately it did not materialize. There was a big re-org in the company because of which the senior management that I was talking to got their profiles changed. The company I talked to is located in Pune, has been in this business for more than 10 yrs now and has a strength of more than 1500 people. There billing rate was 2300/engineer/month. Minimum team size was 3 people which included a team leader, a senior member and a junior member. Being a privately held company, they were more flexible than other medium sized companies. Let me know if you want more details.

[LLLLWhenR2I]

Man machine.

PM me for we are a 1B public company with our off-shore branch in Noida with about 300 people. I am not saying that things will materialize but we can proceed on that and see it that makes sense. Although our rates are higher than TCS etc. but we have got several projects based on our expertise.

Companies pay higher price for our domain expertise but we have lost several projects due to rates too !!! PM me and we may take that from there.

We are not pure consulting firm but w ehave an arm for consulting. India office is just extended consulting/development base.

[ManMachine]

psagarn, thanks. LLLLwhenr2i, you got PM.