Just the other day I was explaining to my father how size of a software development company also influences the way you can make money if you want to. He wanted to know how some companies larger than us were making so much money inspite of such large overheads while smaller companies with more expertise, experience and lower overheads make less.
So I explained a possible scenario.....
When you have a LARGE company you automatically for some strange reason get selected over smaller companies for larger orders which may need many engineers, it is a KNOWN fact that the client really has no way of really finding out how many engineers are really working on a project unless they have a educated and dedicated project manager from thier side who knows how to undertsand and apply performance metrics (now this rarely happens). The projects managers of today especially from the client side really dont have the time for this and hence the possible opportunity for making more money.
Let me explain a POSSIBLE scenario. A client gives a software development company a order which needs let us say 30 people. What really could happen is only 22-25 engineers are really put on the job while the impression is given that 30 people are working full time on the same. So the client pays for 30 engineers, is shown as if 30 people are on the job but in reality only 22-25 people are working. Now it doesnt really stop here , out of the 22-25 people that are actually working, a couple of them are freshers/relatively less experienced but the client is paying as if all were of a particular level so a little more profit here ... so not bad for the money you are making .. let us sum it up..
- you charge for 30 people at about 20-30% profit
- you actually put 22-25 people instead of 30 people so more profit here
- you dont fill ALL the exisiting 22-25 people actually with people with higher level experience and hence less spend on salaries so a little more profit here too. Now imagine the possible profits being made if a company is given an order where over 100-200 people are supposed to be working...
Not a bad scenario for making software development a profitable business..
AND YET these companies will go to these very companies because they are a BIG company, having so many engineers , buildings, certifications etc. etc.. and small companies who would probably do it cheaper , faster and better are discounted purely because of size.
Let me be clear that this is a scenario and now it is upto the readers to decide on this possible scenario. I am sure not all big software companies do this but I am sure a lot of the above happens since you have the advantage of size.
There really should be a rethink.
