In case our comments distinguishing offshore vs. Other Shore development get construed as implying that the only difference between onshore and Other Shore development is physical location let us be clear and extinguish that belief entirely. It is clear that the preference should be whenever possible to keep a development group in a single location and as close to the customer as possible. Communications should always use the highest bandwidth channel possible and nothing beats a face to face conversation with a peer or client. Recognizing that this preference is less and less and option due to the global nature of our business, Other Shore development becomes a viable and valuable alternative to the standard offshore model. Our years of experience with global development groups have led to some additional observations that organizations considering Other Shore development should keep in mind:
- Talent Pool
The global talent pool varies widely around the world. Throughout Asia and Eastern Europe, it has been our experience that the intelligence potential and work ethic is quite remarkable. In Asia especially however, there is a recurring phenomenon where top students graduate from the top engineering schools and get hired into the top companies. These quite brilliant young developers quickly master the syntax and form of one or two programming languages or tools and proceed to grow in ability quickly for the next three years. At that point in time they are promoted to managers of other new programmers and never write another line of code again. Due to the hierarchical nature of the cultures and the nearly absolute lack of technical career path options, these countries are filled with brilliant talent with 3 years practical development experience. This is slowly improving (and was given a significant one time bump up after many expired H1's and green card holders decided to repatriate to their countries of origin from the US after 2001) but is still very clearly the norm.
We have addressed this and have been very successful at hiring top talent away from these offshore companies by offering technical career paths that provide equivalent titles and incomes as the management career paths of the competition. It doesn't hurt that the groups we've setup are also known for having more challenging and interesting projects than what is the norm for offshore organizations. It is very clear though that you must be able to identify who has the true potential to grow to be a strong designer or architect early on because you will have to make that investment to develop such talent as it does not exist to the same proportions as it does in the US or even Western Europe.
- Pay Ranges
Here are three universal truths about software developers that accountants espousing the standard offshore model consistently fail to comprehend. 1) Top technical talent consistently achieve 10 times the productivity of a good average developer. 2) Top technical talent is always in high demand and expensive no matter where you go. 3) Top technical talent does NOT cost 10 times as much as a good average developer.
Now consider that the price multiple between salaries for entry level and top developer in the US is no more than double or triple whereas the price multiples in Asia are consistently eight to ten times. The disparity of pay spread across relative talent levels is skewed highly in the favor for offshoring when you take the common accounting approach of costing based on bottom and average costs.
When you correct for the difficulty in finding those rare top developers who can provide the 10 times productivity improvement and the rampant wage inflation and high employee turnover rates (often 30-40% annually) caused by the rapid growth in offshoring in key locations, the cost savings predicted in the accountants' spreadsheets rarely materialize anywhere near the levels expected and the value is never realized because top talent is not pursued due to efforts to make these unreasonable cost savings a reality.
Proteus Technologies addresses this by always chasing the top talent and, while providing a very attractive wage, compete primarily on other areas of interest to technically motivated developers and not primarily on price. When we cannot easily find local talent with the experience to provide those high productivity multiples, we focus on identifying new talent with strong potential and consistently have the cream of the crop due to our otherwise intangible but very real competitive offerings. This keeps our retention rates high and our value proposition very strong.
Competing primarily on cost just feeds the churn and you will get neither value nor savings in the long run.
- Cultural Considerations
Due to the hierarchical nature of the cultures, we've seen how the talent pool has been stunted in terms of years and breadth of experience. Another side effect that often manifests itself when recruiting away from other companies is the extreme importance of the perception of one's place in the hierarchy. There have been several instances where we would be recruiting a promising candidate away from another company where we clearly were superior in terms of job interest, opportunity, and salary yet, due to the high technical capabilities of our group compared with other groups, the candidate would only rate a regular developer title rather than the senior developer or analyst role the candidate held in his current position. Often the candidate would, with great regret, turn down our offer on that one point alone. Understand that this often is not the candidate's own prejudices that cause this reaction but the perception of their families who do not appreciate the differences between a strong dev organization and a weak one but only see the title on the business card.
The remedy here is to abandon any notion that the title senior developer in the West means the same thing as it does in Asia in terms of skill of the developer. Forget about aligning your titles globally and make sure you align your titles locally. Do whatever you can to make your position and its accompanying accoutrements as prestigious as possible while remaining credible.
- Reactions to External Perceptions
Your foreign partners often care more about external (meaning YOUR) perceptions than local perceptions. Perhaps its a combination of "familiarity breeds contempt" with the recognition that Western firms are clearly the market leaders and innovators when it comes to software development, much of what you say will be treated as authoritative by default. They want and appreciate critical feedback but will always receive it through their own cultural biases (just as well all do). Your words will be parsed, considered, and then parsed again. An innocent comment or question to a foreign colleague can easily be taken as an assignment for immediate action overriding his own local manager's instructions to the dismay of everyone. (This has happened to me personally on more than one occasion.)
This new found respect can quickly go to one's head and, if one starts to believe one's own press, can quickly slip into areas outside one's area of expertise causing unintended cultural conflicts. Before investing in your new country you must investigate and understand its political and cultural aspects beyond what is directly relevant to the industry you are pursuing. If that country has a coup every fifteen years or so or places severe restrictions on women, the media, or the practice of certain religions, you had better understand that and check your own cultural bias at the door before entering.
- Gender Equity
Womens rights in Asia may arguably be considered generally behind the West in many regards but in terms of technology and knowledge workers the differences from the West are striking! I have heard and subscribed to many different theories explaining the phenomenon such as wider appreciation for education, the lack of a youth dating culture as in the West, children generally living at home until they are married, etc - but the ratio of female to male knowledge workers in Asia is extraordinarily high compared to that of the West.
There isn't any conflict or problem here it's just that, coming from the West, the supposed predisposition that men are the alpha-geeks and therefore more suited to software development is quickly shown to be a cultural bias on our part. This simply means that one needs to consider that the intangibles that attract and keep the typical male employees happy at work may be different than those that keep the female employees engaged long term with your organization so consideration must be given to both.
I am happy to report, however, that geekdom seems to be a universal culture that crosses not only religious and racial boundaries but also gender differences. This is anecdotally demonstrated by the example of one of my female staff members whose IM presence changes to "Must kill all noobs!" whenever she takes a break to play World of Warcraft. This only confirms my long held belief about cultures and diversity which is that it is our similarities that bring us together and our differences that make it interesting. Noobs indeed.