The Next Offshore Programming Frontier: Bulgaria

Computerworld - They're fast, they're cheap and they're highly skilled. They are Bulgarian programmers, who, according to their customers, deliver on Web development efforts from overseas in a fraction of the time it would have taken their American counterparts—and at a substantial discount.

On top of that, customers say the Bulgarian programming teams they have dealt with through their contracts with Philadelphia-based iConcepts Inc. typically respond to glitches overnight and speak fluent English.

Hi-Tech Parts LLC, a Plymouth, Mass.-based firm that provides an online database for buyers and sellers of computer components, evaluated four consulting firms — two in the U.S. and two in Canada — before settling on iConcepts in January to rebuild its site.

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Of the four companies that bid on the search-and-retrieval project, iConcepts "was the only one that could rebuild my site in three months. Everyone else said six months or more and at a much higher cost," said Kristal Snider, Hi-Tech's president.

The Bulgarian programming team was able to get Hi-Tech's site rebuilt and running by March. Though Snider wouldn't disclose how much Hi-Tech paid iConcepts to rebuild its site, she did say, "I would have paid six figures had I not brought them in."

Said Snider, "You could put together a team of [Bulgarian] programmers there for what you might pay for one or two [programmers in the U.S.]."

Though IT managers should consider a variety of factors beyond cost in assessing offshore programming contracts , the one-two punch of the Sept. 11 attacks and the downturn in IT spending have forced offshore programming costs downward this year.

At programming houses in India, where 80% to 90% of offshore development deals are handled, the "blended rates" for teams of programmers, managers and software testers have dropped from $30 an hour in 2001 to about $20 to $25 an hour this year, said Marty McCaffrey, executive director at Global Outsourcing, a Salinas, Calif.-based research and consulting firm that specializes in offshore outsourcing.

But as the economy improves, companies that have been stalling software development and integration projects will pump up demand—and labor rates—for offshore programming firms in India, Israel, the Philippines and other markets, said McCaffrey.

Other companies have also had success taking their online search-and-retrieval projects to iConcepts and its Bulgarian counterparts. For instance, Dionex Corp., a Sunnyvale, Calif.-based manufacturer of chromatography instrumentation, needed a stand-alone engine for its sales staff and customers to search its documentation and product data. For an initial $11,000 fee, iConcepts and its Bulgarian programming team were able to develop a CD-ROM for Dionex and its customers, helping to slash the company's document management costs by $23,000 per year.