Recall the Augmented Reality Exercise System (ARES) scenario discussed at the beginning of Chapter 11 of the textbook.As the manager of this project, would you approve the decision to use an offshore contractor to outsource the development of AR headset applications? Why, or why not?

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“Outsourcing the development of our apps might be the best option,” Henri reluctantly says to Ashley. “We’ll need apps for the exercise bikes and the AR headsets, and we’re going to need developers for our back-end system.”

“How many apps are we going to need for the bikes?” Ashley asks.

“Well, CanyonBack Fitness and three of the other top-10 exercise equipment manufacturers use embedded Linux for their operating systems. The rest of the manufacturers use either Windows Embedded or a real-time operating system. I think we should stick to embedded Linux and Windows Embedded.”

“Why is that?”

“I think the Internet of Things push is going to force them to make all of their devices ‘smarter.’ That means they’ll need a high-end operating system.”

“What about apps for the AR headsets?” Ashley asks, looking at Raj.

“That’s the fun part,” Raj says, smiling hesitantly. “We might need a different app for each headset. Each AR headset manufacturer has its own software development kit and wants companies like us to develop for its platform.”

Ashley shifts in her chair and leans forward, “Aren’t we already developing our app for Microsoft HoloLens?”

“Yes,” Raj explains, pointing to the AR headset on Ashley’s desk, “but we don’t want to limit ourselves to Microsoft HoloLens. What if Meta, Magic Leap, or another AR headset becomes the dominant technology? It’s probably best to hedge our bets and make apps for the top two or three most popular headsets.”

Henri motions to his smartphone. “It’s like developing an app for a smartphone. You need an iOS app, an Android app, and maybe a Windows app.”

“Wow, OK. How much is this going to cost?” Ashley asks surprised.

“Not as much as you might think,” Raj responds. “I know a guy in India named Sandeep who could probably make them for us.”

“Probably? What do you mean ‘probably’?” Ashley knows Raj is smart and passionate about AR, but she’s not going to start pouring money into a probable outcome.

“Well, I’ve worked with Sandeep before, and he did a great job developing a C# app I needed. I met him when I was an undergraduate student at Indian Institute of Science before I came to Stanford. But he’s busier now, and his business has really grown. He’s also in India.”

“Raj, this makes me nervous. I don’t know anything about doing business in India. What if the guy takes our money and runs? What do we do then?” Ashley asks emphatically.

“Well, we don’t pay him until he delivers…or at least we don’t pay him much. But I’ve had a positive experience with him, and his references are good on a recent app development project.”

“India is a long way away. What if he gives our code to somebody else? Or our ideas? What if we find some horrible bug in his code, and we can’t find him to fix it? What if he just disappears? What if he gets two-thirds done and then loses interest…or goes to work on someone else’s project?” Ashley is on a roll.

“All are risks, I agree. But it will cost you four to six times as much to develop over here,” Raj says as he shrugs his shoulders.

“Outsourcing the development of a strategic application seems risky,” Ashley says, shaking her head.

“It is risky. Well, riskier than hiring local developers. But there’s still risk involved with local developers. Do you want me to look into hiring local developers?”

“I’m not sure. Henri, what do you think? You’ve worked on larger systems development projects before.”

Henri shakes his head slowly. “I’m not sure. Augmented reality application development is very new. Not a lot of people know how to create AR apps, and everyone is facing a steep learning curve. If Raj worked closely with Sandeep’s team, we might be able to get this done for a fraction of the cost.”

Raj nods in agreement. “Since this is probably his first AR app, he might even do it for a little less. He knows I’ve been working on AR for years, and I’ve told him this is the future of app development. He’ll want the experience. We could buy him a couple HoloLens software development kits to sweeten the deal.”

“Outsourcing the development of a strategic application seems risky.”

Henri sees the worry on Ashley’s face. “We could structure the contract so we pay less up front and then more on the back end. That would reduce our risk somewhat.”

“True, then we would only have to pay for it after we’ve seen that it works.”

“We’ve also got a lot of other things on our plate,” Henri says, counting on his fingers. “We’ve got to get imaging for the virtual bike rides, test the 3D webcam integration, and look into mapping executive bike tours in Europe.”

“I’d also like to test a few HoloLens apps on a real bike,” Raj says excitedly. “The ability to use ARES on stationary bikes and regular bikes would be amazing! We could include apps that give turn-by-turn directions, hands-free notifications, rear-view radar, and point-of-interest notifications. Cyclists would love it.”

Ashley can feel the meeting slipping away. “OK, well, those are really great ideas. Definitely something we want to consider for the future. Let’s put a pin in that for now. Raj, will you arrange a meeting with Sandeep? I’d like all three of us there to hear what he says.”

“Sure, I’ll call him later today. There’s a 12-hour difference between California and India. It’s 2:00 AM in India right now. I won’t be able to get a bid from him because I haven’t finished the requirements documents yet. I should have those in a few days,” Raj says while making a note for himself on his phone.

“Good, and will you also get a bid from a local developer? I want to see what the difference is going to be if we decide to outsource this.”

“Absolutely. There’s just one problem…the local developer may outsource it anyway.”

“You mean we might be paying Sandeep either way?”

Raj smiles. “Unfortunately…yes. Well…maybe not. Honestly, I’m not sure. We’ll see.”

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