[Firegarden]

You know as a programmer myself for the last 15 years I can see how the market has changed and everything is becoming part of the global economy which means the rates are a lot lower which means Ukraine and India are playing a bigger and bigger role I could see private Equity trying to lower costs by outsourcing.

I think there's a fundamental flaw in the idea that you can just pay for cheaper labor- as Steve Jobs has said before the difference in a good programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't capture that by trying to cut your cost from $100 an hour to $20 an hour.

Software inherently is one of the most scalable business models in the world the cost of manufacturing is almost zero all of the cost is in the design they should be able to make money. The mindset of being a consulting firm has to be changed.

[tyingq]

Thoughtworks isn't cheap though. They sell the idea that outsourcing your work to them is outsourcing to an elite team. They do have teams in Brazil, China, etc, that are cheaper than their US based devs. But, those teams have rates much higher to end clients than a typical outsourcing shop.

That's what has me curious here. A PE firm usually buys when they think they see cost cutting opportunity. That may be hard to do with TW, since they pitch and price themselves as "premium".

[CoffeeDregs]

    A PE firm usually buys when they think they see cost cutting opportunity.

The PE firm buys things in which it sees opportunity. Often-times, the opportunity is to cut: the management team's adventurist streak in markets; weak products; bloated staff.

Other times, they might recognize that a company needs capital to get bigger faster in order to address an expanding market. In this case, I think the thesis might be: cloud deployments and migrations are exploding; ThoughtWorks has the thought leaders; "roll up" other consulting firms into ThoughtWorks; dominate the market. A friend's consulting firm was just bought for this exact reason. Something very similar happened to Pivotal.

[njarboe]

Many companies or brands have a reputation for quality built up by decades of producing a high quality product. Then the company hits hard times and the brand name or the whole company is bought by a PE firm. The firm tries to capture the purchase price and some profit by producing cheap, low quality goods under the "premium" brand name. Huge margins until people realize they have been duped. Not cool. See: Craftsman, Kodak, Polaroid, etc.

[lonelydreamer]

We are not an elite team...believe me.

[Firegarden]

Well I wonder who the PE team is because perhaps they see value that exists intrinsically in quality programmers that know how to design software both quickly and at a high quality level and engineer it in a way that it can be built-in iterations and refined into a maintainable system.

For example someone like Joel Spolsky could probably find a way to drive profits from the TW team and so maybe its a programmer that knows business behind the PE money.

[nunez]

TW wastes a lot of money; there are definitely cost cutting opportunities

[vram22]

> They do have teams in Brazil, China, etc, that are cheaper than their US based devs.

They have an office in Bangalore, India too. Or had until a while ago - not checked recently.

[lonelydreamer]

What is your opinion about the "premium" label?

[richmarr]

> I think there's a fundamental flaw in the idea that you can just pay for cheaper labor- as Steve Jobs has said before the difference in a good programmer and an outstanding programmer can be 50 to 1 or 100 to 1 you can't capture that by trying to cut your cost from $100 an hour to $20 an hour.

Perhaps you left something out, but the argument that high quality programmers have to be expensive might be interpreted as assuming that high quality programmers only exist within high-salary countries like the USA. I assume you didn't mean it that way.

[sheepmullet]

1) High end developers get paid a lot. Even in India and Russia.

2) As a rule of thumb consulting companies charge out at 3x wages.

It usually is more expensive to outsource to the top end than it is to do it in house even in Seattle or SF.

[UK-AL]

The Thoughtworks brand is based on being high end.

I doubt they're going to turn it into a cheap outsourcing thing.

There's lots of companies you could buy for that.

[lonelydreamer]

You've said correctly, the Brand is...