For the last several years, off-shoring has become all the rage. In fact, it’s gotten to the point where if you’re pitching a VC you had better include off-shoring in your pitch if you want to have any chance of success. But success in your pitch doesn’t necessarily mean success in your business. I want to take this opportunity to share one particularly successful off-shoring endeavour, and to focus on the importance of good management.
Baby Steps
At a previous software company where I ran the product management department, we decided that we wanted to off-shore some of our development operations. We went through all of the standard strategic planning processes, looked at costs and internal capabilities, and ended up opening a development centre in Bangalore. Eighteen months later we had over 30 engineers, many of whom were “senior”, but we somehow seemed capable of doing little more than basic QA work. Costs were spiralling out of control, the staff was unhappy, the engineers in the US was unhappy with the engineers in India. In short, it was a mess.
Based on stories I’ve heard from colleagues, our case could actually be considered a success by the standards of much of the outsourcing that has occurred over the last few years. You could easily add high turnover to the above complaints, and, depending on how unlucky you were, bribery, theft, corporate espionage, and innumerable other problems. In fact, it’s gotten so bad that many companies are shutting down their off-shore development operations. We considered it ourselves. Thankfully, we made a different choice.
Turning Things Around
We didn’t turn things around through some complicated, strategic process. In fact, not through any process. We turned things around by magic. The magic of being lucky enough to have the right person in the right place at the right time, and the magic of that persons good managerial skills.
It turned out, we had a senior Indian developer at one of our US locations who both wanted to move into management, and wanted to relocate home to Bangalore. He raised his hand. We sent him to India. The problem was solved.
Seriously. It was that simple. Within 18 months, the same team (fewer than 5 staff members of the over 30 changed in that time period) that had previously been a huge burden had not only succeeded in doing major development, getting projects out on time and under budget, they had taken over all of our engineering architectural work.
Now, I grant you: that manager was exceptional. But let’s take a look at some of his characteristics:
- He was native to the country in which he was going to manage operations
- He was educated and trained in the country of the parent company; and preferably at the parent company
- He wanted to go there
Let’s look at each of these in turn. If you’ve ever had to have a document translated, the first one should be obvious. The first rule of translation is always have a native speaker of the language to which you’re translating do the work. If you’re not sure why that’s true, check out engrish.com and ask yourself if a native English speaker would have made those signs.
The second one is a question of culture. This particular example involves American business and engineering culture in India, but the same holds between any two different cultures — and the greater the difference in cultures, the more important this second characteristic. If you want your off-shore operation to be effective against your paradigms, then the manager has to understand them. That’s almost impossible if he hasn’t been directly trained in them and exposed to them in a direct working environment.
And finally, the third one. If you send someone off to somewhere in the world he doesn’t want to be and ask him to manage a difficult situation, I can almost guarantee failure. You need a manager who wants to be there. You have a young, up-and-coming manager whom you want to send over there? Great! But before you tap him on the shoulder, ask broadly for volunteers. If he doesn’t put up his hand, he’s probably not the right choice.
Conclusion
Are there other ways to be successful with off-shoring? Almost certainly. And if you have other success, I’d love the hear about them, either in the comments, below, of via email. But since that first foray into off-shoring development, I’ve had the pleasure of repeating the process time and again. And time and again, finding the right manager has been the difference between success and failure. And every time the right manager has exhibited the above characteristics.
Cheers!
Chris