The Mythical $10/hr Programmer

Numbers don't lie. An entry-level programmer in India earns anywhere between Rs.15,000 to Rs 25,000 a month. $500 a month. That, all said, is the equivalent of $3/hr. So why should you, when someone quotes you $10-15/hr for services, run like hell?

Here are some more facts:

1. Indian engineering schools - even the so-called good ones - generally do a poor job. We have an ongoing stream of incoming candidates - we look at 30-40 candidates per month and put them through a simple aptitude test -- 90% of them bomb on it. These are inherently smart kids who've been dumbed down by 4 years of appalling schooling, preceded by 12 years of an unhealthy rat-race.
2. Most decent outfits will invest in the engineers that they hire. The big guys run a finishing school, we throw them in the deep end and have our seniors mentor them - grunt work initially, progressing over months to things that actually add value. 
3. Engineers who've spent more than 3-4 years in a large outsourcing outfit are useless in a product development setting. They'll know how to configure Struts and Spring (and are proud about it!), but have no clue on how software really works. 
4. Salaries go up exponentially with experience - for the good guys. 

Which brings us to the economics of a real product development outsourcing gig. The only feasible way to run an effective product development team in India is to have an experienced lead (someone who's developed product before, ideally in the US) work with a small smart team. The good experienced leads are generally folks that have commanded 6-figure incomes in the US, and trust me, they make close to that in India. I'll let you do the math for the bill rates.

So how do some of outfits give you a great price like what I mentioned?

1. They've designed a much better mechanism than I've seen or can think of. There is that possibility. 
2. They've got a great mix in their team. 1-2 guys who actually do the work. 5-6 that just hang on. Multiple team size by "n" - and you have the typical outsourcing model. 
3. They're in the charity business 

Enough said.