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Outsourcing plus local AI will soon become more economical vs. frontier labs
221–230 of 408 posts
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#222The 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…
My problem has been just a lack of ownership. Unless it is a small focused outsourcing firm it is easier for the companies to just ship it, regardless of quality or maintainability. I have admittedly a small personal sample set though
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#223Earlier quoted context omitted.
$300 is my employer's monthly cap on Claude Enterprise. It lasts me at most a week of moderate use. I would much rather get Codex Pro and Claude Pro or Max, which would cost ≤ $200. For $300, one could also add Gemini Ultra to the mix so I could have all three review each other's code, etc. Claude can be very good but enterprise pricing doesn't make sense to me.
The $200 plan you're talking about is subsidized by Anthropic. They cannot afford to keep offering that to everyone indefinitely. Absolute best case scenario for current users is that they can continue to subsidize it as way to sell enterprise plans, but there's no way that they can keep offering it to everyone at those prices.
They can if it is a way to get individuals hooked on it to then introduce it at their workplaces, who pay enterprise rates.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#224Earlier quoted context omitted.
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.
if your supplier promises you an iPhone 17 Pro, and then delivers you a Pixel 4a because 'thats all you need', you will be understandably miffed.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#225Earlier quoted context omitted.
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.
Depends how billing works, but it's pretty rare to see terms that say we'll deliver exactly what you asked for, on a fixed price and fixed timeline, and take all the liability for failure. To some degree or another you are paying for time and effort, which are easy to misrepresent.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#226Earlier quoted context omitted.
Also, your local hardware is in no way capable of running the types of models that the cloud providers do, it’s just not economically feasible, and it never will be.
> it never will be. Giving strong “640k is enough for anyone” vibes here.
640k statement was absolute, this one is comparative.
Cloud should have more compute and efficiency than local. I wouldn't be 100% sure, as I don't know what I might not be seeing, but still.
Whether that comparative advantage will matter, though, is a completely different question.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#227Earlier quoted context omitted.
Historically the winners in software have a flywheel that turns faster with more users. Facebook the more of your friends on it the better the product was. Google tracked how long users were on pages to improve search. The frontier models are going to win that way. They won't feed your code back into the system but they will track which code you keep and what code gets a "try again claude". They're not going to lose…
The marginal cost of AI is not 0. That's one of the big differences between this and older SaaS software. Inference costs a lot of money. Even if you're looking at just capital depreciation, it's quite expensive. I suppose it's more accurate to say marginal cost is stepwise - adding 1 new user is 0 cost if and only if your existing inference hardware covers that user's usage. As soon as you need a new server, adding…
It's not literally 0 but for most casual users it is. Programmers are heavier users and the ones that have 10 agents going wild are even more so. In that case the cost is above 0 but economies of scale means the effect is the same.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#228I've been saying this for a couple months now since I got decent hardware and started using my local Qwen 3.6 exclusively. I have no doubt the future for individuals and medium-sized companies is local private AI.
Could you share some of your hardware details for Qwen 3.6? And are you using the dense or MoE variant?
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Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#229I think this misses the forest for the trees. Working with ChatGPT is eerily similar to working with offshore Indian devs back in my enterprise days. Productive if guided explicitly but if let run wild there's lots of WTF moments. LLMs are likely to replace outsourced devs because your employees that know the context can use LLMs to do what offshore devs did before.
There are developers outside of your country that are talented, speak your language competently, and willing to work for less pay. There are plenty of reasons to believe that such devs will increase in numbers.
Are they willing to work for less pay than Claude?
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#230Great article that reinforces my own opinion but adding the cleverness of adding low cost human labor into the equation. Nice. I spent a month comparing Gemini Ultra plan to using much lower cost DeepSeek v4 with open source coding harnesses and, spoiler alert: I was happier using the much cheaper and more environmentally friendly open models: https://marklwatson.substack.com/p/my-evaluation-of-ai-agent...
FYI, Gemini is the most environmentally friendly model. https://share.google/aimode/a0O95wzk2UUhIXLUI https://cloud.google.com/blog/products/infrastructure/measur...
Thanks for the references.
BTW, Google is my pick for the winner in the USA tech giants AI race. I worked at Google about 12 years ago and was impressed by their use of renewable energy, etc.