Successful offshore practices – let them work on your crown jewels!

The buzz around offshoring has certainly died down over the last year.  For a period of time, you could not pick up a magazine or read a newspaper without a lead article on the dangers of offshoring.  I had dinner tonight with a portfolio company CEO who has managed to shift most of his resources to India.  Today the company has almost 100 employees in India, over 30 of whom have been with the company for 5+ years.  Even more impressive is that the employee churn has been pretty low.  When I asked him about the secret of success, he said it was quite easy.

"Let them work on your crown jewels."

In other words, most software development opportunities are with consulting firms where employees work on a project basis.  So these jobs are usually fleeting and never last very long.  Other software jobs are body-for-hire which, once again, is not that interesting and does not provide real upside for the developer.  Many of the better opportunities have developers maintaining existing code, fixing bugs, and doing low-level programming.  By making a strategic decision early to let the developers in India work on the core technology this company has been able to thrive and prosper and turn its offshore team into a real strength.  All of the main architecture and design is still done in the US, but all of the development is done offshore.  The other reason why this has worked so well is because the company also made a conscious decision to send over our existing VP Engineering and a few other key developers to seed and build the team in India.  It is a wholly owned subsidiary and the employees all work for the company.  The startup costs are obviously higher to do this but if you are looking to do offshore development and do it successfully I seriously urge you to consider building your own team if you can find the right lead project/eng. development manager.  I have seen way too many companies fail in offshore development trying to just work with consulting firms as inevitably the churn and training costs end up being quite high.  In addition, to make it really work, let your team build real product, work on new technology, and not just maintain old code.

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This post was written by who has written 358 posts on BeyondVC.

6 Responses to “Successful offshore practices – let them work on your crown jewels!”

  1. Dimitar Vesselinov Feb 1, 2006 at 9:13 am #

    Inside SAP Labs Bulgaria
    link to video.google.com

  2. Ed Sim Feb 1, 2006 at 9:35 am #

    thanks, needless to say it looks like some substantial development is happening in Bulgaria

  3. EQ2 Gold Feb 1, 2006 at 4:26 pm #

    It depends on. Indian developers as rule have very very narrow project vision. That’s why the best to use them is to hire them as coders. In oppsoite, russian developers in most cases has very broad vision of a project, require much less control and intervention of other members of a company in their wont influence positively.
    Someone fail to obtain expected results, someone achieve them. This is risk, of course. Just project-based approach doesnt resolve problem byitself. there are a lot of different factors.

  4. Charlie Crystle Feb 9, 2006 at 6:53 pm #

    Innovation occurs at the point of the problem. Outsource the problem, you outsource the innovation.

  5. Scott Feb 27, 2008 at 8:08 pm #

    I am contacting you through this contact form as there was no email address available. We would be interested in purchasing advertising on your blog link to beyondvc.com. Please get back to me using the email address I have entered if you would be interested in discussing this further.

  6. Thang Phan Dec 27, 2008 at 5:50 pm #

    Excellent comments! But my 2-cents are 1) hire each individual offshore developer just like the way you hire onshore developers, 2) treat them they way you treat your own employees from every aspect of the job. If they feel the have the stakes in the company they will step up to the plate and be accountable for the work they are assigned to.

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