Expert Columns
Offshoring Today: Most Companies Do Not Do Enough
Peter Dolina, Vice President of International IT Services
NOTE: Peter Dolina, Vice President of Business Development at International IT Services (www.iits-usa.com), focuses on finding appropriate offshore technology solutions for start-ups and Fortune 1000 companies. His clients include mobile wireless, telecom, web services and system integration leaders in RTP. He holds degrees from UNC Kenan-Flagler Business School and Harvard University. He can be reached at 919-949-6485 or peter.dolina@iits-usa.com.
Software developers have a strong opinion about offshoring. They point to Lou Dobbs, and they cringe and cry foul. No offense Lou, but it’s time you stopped scaring people for ratings and started reporting. The real software companies in RTP, hold your breath, do not outsource enough work overseas.
While large software and hardware makers like IBM, Cisco, Nortel, Fujitsu and others have established centers that they own, jointly own, or have a close partnership agreement with, smaller companies struggle to find a venue for inexpensive software development. Yet, early stage companies are the ones most in need of scaling up their engineering staff at a lower cost.
US software engineers are undisputedly among the most expensive talent on the planet. They are expensive, but they often appear irreplaceable, and therein lies the quandary. How do you get more out of your development staff? You cannot just lay off your staff and hire twice as many of them offshore, you need a process that allows your US team to do high value-added work and your offshore team to pick up the rest. Most important of all you need a trusted relationship.
Early stage companies have highly experienced project managers who juggle many responsibilities including the responsibility to create or maintain technology partner relationships. Often these project leaders cannot create a replicable process for development because the pressures changing their business make change the only constant.
Offshoring provides an incentive to create a successful process. Several local early stage companies, including NetEdge Software and DataCraft Solutions, have built processes around offshore outsourcing that have helped them scale up and create new business opportunities. The results have been greater revenues not just lower cost of development. They built their foundation on an experienced project manager and a solid spec.
As one of my favorite UNC Kenan-Flagler professors taught me early in my MBA coursework “never outsource a mess.” The spec is the lens through which the two sides view each other outside of a face-to-face meeting. Building specs that take two weeks to write and a week to code is inefficient, that’s where investment in human capital and process pays off.
The high-tech entrepreneur who wants to scale up a software business needs architects, project managers and software engineers who can communicate requirements to a larger team that will actually build them or test them. Therefore, offshoring needs to be viewed as an investment. While you can measure success only at the end, you must invest the time at the beginning to make it successful.
You have started your project and your team is off to the races, excited and energized. Who would not like to have that kind of magic wand?! The first project will likely hit many bumps along the road, so give your team time to learn, and that means at least six months to establish rapport, learn how to manage time zone differences, write appropriate specs and develop a team-based culture.
Offshore development success can be realized only partially through process, while most of the success comes from building human relationships and human capital. To realize the full value of those relationships invest the time to develop your internal staff and teach them how to fully leverage the capabilities of the offshore partner company.
Ask your offshore partner to help train your staff, and offer to train their staff so that you can have a seamless integration between the two companies. And, sign up for a good frequent flyer plan that gives you business class seats, because you will need them on those twelve hour flights!