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Outsourcing plus local AI will soon become more economical vs. frontier labs

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Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#211

Post by tintor »

tomp wrote: post #188
jyounker wrote: post #182

The problem with outsourcing, as opposed to remote developers, is that it takes a really good manager and tech lead to make it work. My experience is that you have to write extremely detailed design documents and work specifications in order to get effective results. These generally have to be as detailed as most effective prompts. Once you've written specs that detailed, why do you need outsourced developers and fro…

The entire business model of "outsourced" developers / shops is to overbill people - "we have 4 engineers working on your project" (and also on 5 other projects). Even if the engineers themselves are cooperative, their managers / business owners will resist close cooperation and enforce work at arm's length (e.g. 1x weekly calls). Ask me how I know. I once spent £300k (fortunately not my money) on an outsourced team…

"we have 4 engineers working on your project" (and also on 5 other projects)

Does it matter how many engineers work on supplier's side?

Supplier is tasked to deliver the project. It is up to them to figure out how many people would they need, and to manage them.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#212

Post by wongarsu »

runtime_terror wrote: post #192
wongarsu wrote: post #129

Earlier quoted context omitted.

Selling inference for more than inference costs is not incompatible with bleeding cash at ungodly rates. They do in fact pay ungodly amounts of cash for other things, like training, marketing, etc. Heck, you can bleed cash while being profitable (in the accounting sense) Also, API prices going up a lot every new version is more an OpenAI thing, and even there it's a recent trend: GPT 5.0 was a big price drop compared…

But explain to me how these companies will recoup these costs outside of increasing inference pricing? Their business model is selling inference but the training and other costs have to be accounted for somehow. Unless I'm missing something obvious, inference costs must go up drastically if these companies are going to survive beyond the subsidy stage.

Sell more. The hope is that there is a huge addressable market that includes huge per-worker demand in almost all white collar work and lots of inference in people's private lives

If that doesn't work, then yes, then prices will have to go up

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#213

Post by fg137 »

henry2023 wrote: post #85
ecshafer wrote: post #67

I have really been trying to get local models to work. I have tried different harnesses, tooling, skills, prompts, etc. But when I compare claude code with anthropic models or codex with gpt 5.5, vs qwen, glm or gemma and the same harnesses, the frontier models come out massively ahead. I am at the point where I just don't see the point of the non-frontier models, they waste more time than they save.

local models are 3 to 6 months behind SOTA models with the huge benefit of not needing to send all your IP to a shady third party. If inference cost comes down (as it has been for the last few years) you’ll be able to run today’s SOTA in your laptop by the end of the year.

"shady third party"

If Claude hosted on AWS bedrock is not considered trustworthy, I have some bad news for you.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#215

Post by munk-a »

jyounker wrote: post #182

The problem with outsourcing, as opposed to remote developers, is that it takes a really good manager and tech lead to make it work. My experience is that you have to write extremely detailed design documents and work specifications in order to get effective results. These generally have to be as detailed as most effective prompts. Once you've written specs that detailed, why do you need outsourced developers and fro…

It's funny - the problem with outsourcing is the same problem as AI and it's all a huge callback to the early 2000s. Companies are astonished by just how much money can be saved without realizing the damage to their product. Some will have extremely fastidious oversight from strong product/project leads that will become the new generation of developers and some will buy the pitch and just fail when their software becomes unmaintainable.

In ten years my prediction is that we have just as many developers as now building more products than they build now and AI is used for automation in isolated areas where it makes sense but most software development just happens at a higher level of abstraction where less text garbage is required to express the same concepts and the meat of code becomes even more focused on specifically encoding and highlighting the intricacies of the strange edge cases.

I started my journey in software development working on a MUD that had been passed down through a dozen hands and was extremely dirty software. I can't see anyone wanting to try and pick through the ball of mud and spaghetti that'd result of letting AI build software without severe oversight and corrections.

The core of software development has always been problem solving (or, more accurately, problem identification). As time has gone on we've gotten rid of more and more of the cruft to focus on that point. I suspect that trend line will continue and we'll evolve towards even leaner and more abstract languages to state problems and try and isolate the fiddly logical flow components, driver bits and math more and more into libraries and tools because for most daily work it is important but can be assumed to have been done by someone else better.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#216

Post by eikenberry »

illusive4080 wrote: post #209
eikenberry wrote: post #183

Earlier quoted context omitted.

The point is to not indenture yourself to a corporation whose motives do not align with your own.

Their motives are to make the best product to compete in a very competitive market.

Right.. and their definition of a "best product" is theirs, not mine and probably not yours.

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#217

Post by upcoming-sesame »

bob1029 wrote: post #191

> The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? We talk about capability like it's some kind of linear scale. I am not paying 30x for 30x performance. I am paying 30x so that my use case goes from "haha nope" to a signed contract with the client. Works 0% of the time => works 3% of the time is an inf…

Deepseek works just fine

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#218

Post by zozbot234 »

Our_Benefactors wrote: post #206
sourcecodeplz wrote: post #139

Earlier quoted context omitted.

It runs right now on 512gb RAM Macs and PCs.

It runs like shit though in terms of tokens/second and still has a reduced context window. Vs a single claude prompt can easily get into 300k tokens without breaking a sweat. I want local AI to be a thing but the hardware isn’t here yet, because the only options are a Mac Studio or DGX machines strapped together. RAM prices needs to crash before local AI has a chance at actually competing.

The more recent Chinese models are no longer heavily limited by context size. It can easily fit in RAM on a prosumer laptop. (You can also use swap space to extemd that, since context is only written to once per inference, thus a relatively mild wear-and-tear concern.)

Re: Outsourcing plus local AI will soon become more economical vs. frontier labs

#220

Post by thewebguyd »

htrp wrote: post #205
simonw wrote: post #79

Earlier quoted context omitted.

I learned today that the Anthropic "Enterprise" plan - the one big companies use because they need governance features and audit logs and all of that jazz - is billed at API token rates (plus $20/seat/month). So large companies are getting billed a lot more than those discount subscription plans.

> I learned today that the Anthropic "Enterprise" plan - the one big companies use because they need governance features and audit logs and all of that jazz - is billed at API token rates (plus $20/seat/month). Can large enterprises just not use the API ? I have audit logs and what seem to be enterprise features through my anthropic account (platform.claude.ai)

The devs can, sure. The "enterprise plan" is more for that + giving Claude to all the non-technical employees for access to the chatbot + Cowork. Plus SSO and all that jazz.
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