How We Compare

The following chart summarizes the strengths and weaknesses of the different types of resource providers:

	Large System Integrators	Low-cost High-volume Resource Providers	Specific Product and Technology Consultants	Boutique Service Providers
Hourly Rate	$250 to $500	$50 to $150 (onshore)	$200 to $400	$130 to $200
Volume of resources	High	High	Low	Low
Complementary to in-house staff	Moderate	Moderate	High	High
Complementary to other resource providers	Low	Moderate	Moderate	High
Leadership	High	Low	Low	High
Expertise	High	Moderate	High	High
Objectivity	Moderate	Moderate	Low	High
Agility	Low	Moderate	Moderate	High
Leanness	Low	Moderate	High	Hgh

Once you have determined that your company needs assistance delivering a strategic solution, you start weighing different resource providers from whom to contract software development and solution delivery services. There is of course a broad spectrum of service providers from which to choose, but in general most can be lumped into four groups … large system integrators, low-cost high-volume resource providers, specific product and technology consultants, and moderate to small “boutique” service provider.

Large System Integrators:

Service providers in this group are very expensive and process intensive with a strongly-espoused rigid methodology.  Large volumes of documentation will be produced.  This is as much a justification of the methodology and to demonstrate their expertise as it is a necessity for project success.   They will impress with a high degree of organization and highly talented spokespeople, but many of the resources they apply will actually be considerably junior in experience so they can garner higher margins on their rate.  In the end the average individual capability is often far less than that of the spokespeople.  Large system integrators prefer to take control of the whole solution delivery and provide all the required resources, relying heavily on the expensive documentation to transfer knowledge and control upon delivery.  The value of large system integrators is usually best realized when expense is not a major concern, requirements can be completely determined before development progresses, your company can align with a rigid methodology, and your company does not have development and delivery resources or want its resources to participate in the solution development.  Their hourly rates usually range from $250 to $500.

Low-cost High-volume Resource Providers:

These service providers are more about volume and low rates than deep experience.  They will say “yes” to providing any type of resource and then go find the resource as quick as they can if they do not already have it.  They can indeed provide talented resources, but those are often diluted by many inexperienced resources.  These providers often have large offshore operations they can leverage on your behalf if the work is simple enough that it can be commoditized.  The value of these low-cost providers is best realized when they augment more senior, experienced, foundation-laying resources rather than providing the overall leadership.  Their hourly rates usually range from $50 – $150 onshore, and even cheaper offshore.

Specific Product and Technology Consultants:

This group of service providers tends to be very expensive with a focus limited to configuration and integration of specific products leveraging specific technologies related to those products.  Their agenda is usually to successfully integrate and promote their products and the specific related technologies rather than focusing on an overall enterprise solution strategy.  They can work well with other resource groups as long as they are allowed to maintain a leadership position in the implementation of their product and associated technology.  Their value is usually best realized when their products have already been selected and vetted by an autonomous team representing your company’s enterprise solutions strategy.  These consultants can be complementary to resources provided by low-cost, high-volume resource providers and boutique service providers.   Their hourly rates usually range from $200 to $400.

Boutique Service Providers:

This group of service providers usually provides very experienced architects, technologists, and managers who can lead strategic projects from the front ensuring a solution design in sync with your company’s enterprise requirements and IT objectives.  They provide the most flexibility, usually leaning toward agile methodologies and working directly with you company’s own resources and service providers.  They seek to build a trusted advisor relationship with you and usually have a mentor’s mentality.  Boutique Service providers’ value is most realized when they are asked to augment your current development team to provide expert leadership and build knowledge within a team or teams who are expected to carry that knowledge forward with the current and future solutions.  When you hire a boutique company, you tend to base it on that company’s owners’ or management’s ethical standards, honesty, experience in architecture, design, development, best practices etc.  In short you are looking for project leadership and confidence in delivery.  Boutique service providers can be very complementary to a delivery approach that includes any combination of your employed staff, specific technology consultants, or low-cost resource providers.  Their hourly rates usually range from $130 to $200.