The Background

The company in question, a high-tech start up, got its initial VC funding in 2000 to develop an Enterprise-class software product to address a major deficiency in the way that public companies report their financial status. This was made all the more urgent by the Sarbanes-Oxley requirements.

The resulting requirements called for a complex, multi-tier system, and it had to be developed quickly and without breaking the bank.

The management team wanted to outsource the QA function. They wanted a low ratio of development engineers to QA engineers (i.e., 2:1 or less). Mature products usually have a 3:1 or higher ratio, but this product was complex, written from scratch with POJO, by a newly assembled team. All told, there was a good chance that the early releases would have a high bug count and they had to be caught before the product made it to customers.

They also expected other benefits from outsourcing this function to a third party:

They needed access to large, ERP databases (e.g., Oracle APPS, Peoplesoft, SAP) and the right outsourcing company would be able to provide test databases created in those systems without the cost of the license.
They didn’t want to spend cash on extra capital equipment.
They had very limited office space and wanted to keep the rent to a minimum.
They had used offshore outsourcing successfully in previous jobs.

After some research, they outsourced QA to India. Going offshore met all their requirements, at a price they could afford. Or so it seemed.