Offshoring 2.0: Beyond Cost, Towards Capability

System says that we are live. We will wait for a few seconds. These few seconds are a little awkward. We should have something to talk about during these few seconds. So, let's talk about, what should we talk about? Let's talk about Koushik's illness.

Yeah.

and let's not tell everyone about what it is.

Yeah, what cautions.

So you said it like people think it is something really bad or something.

because I don't think we should talk about his illness in front of everyone.

I just have a ear pain. Nothing.

We have our first few viewers, so I think we can begin but wishing that Koushik gets well soon. With that, hello and welcome everyone to Momentum Office Hours. My name is Yash and I'm joined by my co-founders Jay and Koushik to discuss topic of the week which is building teams versus hiring vendors. Our goal is to provide you with actionable insights and practical strategies that you can apply to your own business.

Throughout the session, we encourage you to engage with us by asking questions and sharing your thoughts. This is fantastic opportunity to learn from each other and gain new insights that can help drive your digital initiatives forward. Let's get started. Jay, Koushik, how are we doing today? No point asking.

Koushik. But doing great. It's been fun, very active week and things are progressing step by step.

Yeah.

Nice. Koushik will soon do a little better. should get well soon. But interesting topic, yeah. Building teams versus hiring vendors. And this is something that I have a lot of questions about this. Especially, so let me start off with one, Jay. So one of the things that I want to understand is that

When I was starting my first company, I was encouraged by almost everyone that I spoke to that you should build teams, but then you should build your own team. But then as in when we started scaling, as in when we started growing, I sort of started to realize that having vendors in the mix is also helpful because in certain cases you'd be able to work out a deal with a vendor who can work on outcomes.

they are largely some amount of complacency is absent because they are vendors. So what is the structure? So at what point do you believe for an organization is building teams more important? At what point do you go ahead with hiring or working with vendors? How do you sort of think about it? Can you share a framework?

Yeah, sure. So first of all, if we talk about company, let's talk about the size of the company, right? Because obviously there are a lot of confusion that could come along with the same. So let's say, let's divide this into three phases. One, let's call it as startups or small companies. A few things will align accordingly to them. That's right. Then we can consider mid enterprises and then large enterprises.

So in these cases, especially speaking from startup standpoint, I really say that going for vendors in certain cases could be helpful. But from framework standpoint, if you're building something which is going to, if you need a team which is going to build a core offering from your company set, maybe you would like to have your own team, first of all, at your own place.

You will not want to outsource this because you will not have enough amount of control. Having said that, if you are in need of something which is just a let's say, a momentary thing which needs to be done, or you need to boost certain part of your execution of work, in those cases, I would say, go for a vendor. Because having a team in itself is definitely helpful, but

More importantly, what's important is getting the right set of team. And that's why we chose to have this particular topic, because we want to talk about having the right set of team members. Building the right set of team is something which is a challenge for people. And obviously, offshoring is something which people have been considering. But there has been lot of challenges in terms of lots of questions that have been coming up in terms of what should be preferred.

With respect to mid and large enterprises, obviously, if it's a prime offering of a company, I would say they need to build their team. But again, the challenge comes in with respect to what sort of team structure you are looking into. And if it's something which is a longer term, you always should go for team building. But still comes the challenges. So yeah, mean, with the following session, I would like to tell about

what priorities needs to be kept up on in terms of, especially if you are choosing to build a team in offshore setup rather than having it in house. So yeah.

But Jay, on this similar lines of what you are saying, I was trying to understand that. So at the end of the day, irrespective of whatever the size of the company I am, I want things to get done from the team that is offshore. So from a delivery standpoint, from a standpoint of getting things done, in the current scenario that is there, so what do you think? Which works out much better and much more efficient? Building a team or

hiring a vendor is which is a better solution.

I would say Cauchy also depends largely on the geography that you are setting at. What happens is with the advancements in the technology, there is some amount of scarcity in particular skill set because as I told you, since the technology advances, what happens is there are very less people who are available, first of all, in terms of right skill set, in terms of building the right set of product. Let's talk about the software development, for instance.

In this case, you are looking forward for a particular skill set, which is also having some experience. Now in this case, if you ask me what sort of approach needs to be taken, I would say if you have an access to write talent pool amongst your geography, you might want to build your team and go ahead. But if you don't have that, what happens is you would like to go ahead to extend your team to some other geography. That is where you need to then focus upon.

what particular points are to be taken care of in terms of building the team. Now in this particular case, if your requirement is just for a time being where you are stating that, I just need this particular piece to be built, let's say you want to launch an MVP, you don't want to build a team in this particular case because at that point of time, it's just, you would want to just build a product, validate the same and then take a next step.

But if you are already having a running function and it is something where your whole company's overall performance will depend upon, you would want to build a team. But then I would say you need to build it right.

So what would you say are, so let's talk about challenges, right? What would you say are challenges that a company is likely to face while they build their teams versus hiring vendors? So one of the things that I largely see is that hiring vendors is significantly easier than building a team. It really seems so. Because I might be facing a very specific challenge in my business.

Yeah, because.

which is very nuanced, that applies to my scale, my category, my geography. Finding talent or finding teams who can solve that problem is going to be significantly harder than finding a vendor. Because a vendor would have done it like, you know, maybe 10 times for other organizations and they can just replicate that as a solution for me. Building a team feels like reinventing the wheel, right? So they'll have to hire people for their capability and then they will learn on the job.

significantly more expensive and then I'm also going in for a long-term commitment. What do you think is like what are the challenges of building teams versus challenges of hiring vendors?

To start with talking about the challenges of hiring vendors, of course, let's say you looking forward to hire a vendor. The primary challenge you will be facing is you will get a lot of people who will claim that they have done that particular job and this is a repetitive task for them. You might be feeling that the skill set is already there. So let's just go for that particular aspect. then,

obviously and you choose to go there but then what happens is later on you realize that you know it's not right and then you will go for another vendor so then this particular cycle will keep on repeating unless you are lucky enough to get the right vendor because over here everyone is marketing so well trying to sell and the competition is very high right so that is one particular case so challenges with hiring vendors is of course in identifying whether have they done the actual work or not

Also, the other fear that comes from the subconscious is let's say they have done some particular amount of work, which I am also in need. They have already done it for someone else and now they are ready to do it for us. What if they also do it for our competitors later on? So there is a subconscious fear when you talk about hiring particular vendor. that, you know, the security part, which is there would obviously be compromised. And that's why most of the cases like, you know,

Like almost 30 % of CTOs do fear about this particular part when they are, you know, outsourcing their work to any other vendor. from software development standpoint, so this is one primary part. The other piece about building the team, of course, as we mentioned, geography is a primary challenge. So that is there, especially for the developed economies and like Fortune 500 companies, we look into largely they are facing the similar challenge.

But again, terms of for either for any of the categories, the primary challenge in terms of building teams would again be the same where, you know, you are first of all, you are taking some time in finding the right set of people, giving them time to learn, understand about your part and then the output of the same, whether it is or you can say there is a longer period for us to wait on the outcomes. would take a lot of time and money.

to validate whether the team that has been built has done the right amount of work or not and hence there is a big obstacle over there as well. So availability of the talent as well as longer duration of the outcome are the primary hurdles when it comes about building.

So Jay, like so if you take one item right like when I'm trying to build it what all are the things that I need to keep in mind with respect to you know few quick pointers or few checkpoints in my mind is that I take the right decision about building things similarly for like you know for hiring vendors back what all are the checkpoints that I need to keep in mind while like

If we...example. the option.

I'm on my first discovery call with both of them. So what are the things that would be...

Yeah, so let's try to first understand on how the offshoring in itself has changed, right? And then I'll tell you about the checkpoints that you might want to have. So offshoring initially was just something which big companies used to do. I'm talking about a decade back where only very large companies used to do it. But then with the advancement of technologies, ease of communication that has, you know, become more and more easier.

It has happened that even the smaller companies now look for the offshore. The primary part which was there is only about the cost cutting or you can say you just want to lower down your cost and still the approach could have been vendor led where you are choosing a partner who is just giving their, you know, let's say some amount of people in their bench. Even the engagement is more about on a fractional bandwidth and things like that.

Now, eventually what has happened is in Offshore in 2.0 the primary focus has shifted from there to looking forward to a dedicated team member who is only going to work for you. It's just you are taking the advantage of the location first of all. Also you are taking the advantage of the right set of talent because there is a talent scarcity in your own region. So the team member that you are trying to build or you are building it in offshore you are trying to

focus primarily on getting the right set of talent, making sure they are educated and also taking care of the culture part. So if you are talking about offshoring, you would want to look into a partner who is going to help you with these set of things, the best quality of because that is something very important at this point of time, right? Otherwise it will still be an iterative phase where you are doing this thing with vendors. So when you mentioned that during offshoring, when you're building a team,

what is the primary thing we need to check upon. So one thing would be what sort of processes they have in terms of hiring, how are they accessing the right talent along with that, what is the way of security that they are trying to make sure, how is the, how are they trying to instill the particular culture and things like that. Whereas in terms of part like in vendor, it could be if you're talking about just outsourcing particular piece of your work.

You would just want to look into their cases. So the first call would look like understanding again their processes but more about their cases, more about the compliance in terms of how secure your work would be once you are going to engage with them and things like that. So yeah, primarily these two approaches would be there in the first.

So generally, I... So the question about or the concern about not a large amount towards data security, but in terms of my processes being sort of repackaged and offered to my competitor as an expert solution is why that is real. The other...

benefit that I really see with hiring vendors. I'm sorry, there's just a colleague who was walking by and they waved goodbye for it's Friday evening over here and so it's a weekend.

I thought you recalled an experience regarding hiring a vendor and you wanted to share that.

No, no, I have a lot of experiences but today, so you see, today I want to like genuinely understand as to why not hire a vendor, right? Because, while that concern is real, when I hire a vendor generally my understanding is that they will be the expert. So I'll be the student, they'll be the expert, I'll tell them what my challenges are. So it's like getting a doctor, right? I will tell them what my challenges are and they will help me fix it because they have the

understanding of the industry. When I think about building a team, the first question is who is responsible to fix the problem? Like what happens if the problem still doesn't get fixed? And because we can hire as many people as we want, but a vendor will take that responsibility of the outcome in some way, shape or form. So I'll give a very simple example. Let's say I'm a retail company based in a developed economy that

that we talking about. So let's say I'm a retail firm in Australia with about 200 outlets. I want to implement, you know, buy online, pick it up at store. So, so Bopis is what what we call buy online, pick it at store. If I want to implement that, and if I think about building a team, let's say a five people team who will actually do it, local talent is not available. So I look at let's say India, Philippines, Vietnam or whatever to build my own.

Versus if I find a vendor, I'll pay more to the vendor for sure. But they will take the responsibility of the outcome. When you build a team, who takes that responsibility?

Yeah, so obviously when you are building a team and if this is the situation where you a retail company having 200 stores and now you are trying to have this particular buy online and pick it up at store or any other particular need. If you are building your team, you would need to have a CIO, CTO who are going to take care of that particular pieces of your tech infra. Also along with that, we're going to take care of your complete operations. So COO as well.

So largely they would be the primary people who are supposed to own and execute the particular part. Of course, if you don't have, I mean, they're going to build the team and get it executed. So that could be one approach. Of course, if the it's only about a particular piece, just like you mentioned on executing this particular set up in your existing infrastructure, it can be a good approach to go ahead with a vendor for sure. But then if the goal is more about

Okay. Once I have fixed that, I would like to also talk about other pieces in tech side, other pieces in improvising my operation side. And if let's say the roadmap of next six to 12 months looks like a constant more amount of, you know, development or improvement in the overall processes. In those cases, even going for a vendor would be very costly, but again, even it is not going to be feasible because

For a particular piece if you were going for a vendor it could be helpful. They can take the ownership and it's a one time engagement most likely or engagement can have a lot of shape or forms but then it's a particular milestone based thing. Once it is done, it is done. If it's about the team, if you are looking to, if your company's vision is more about, you know, centric towards particular technology or particular operations, USP is in that particular area.

I would say having their own team is helpful but I guess the important piece which we need to talk about you mentioned this particular company is in Australia right so now let's try to understand that let's say this retail company is in Australia they want to build this kind of setup but they don't have the right set of talent pool existing inside Australia how would they go about it then that's where the main that's also one of the primary challenges these sort of

talent is to come up with companies at a certain scale which are into developed economies. So what happens is, mean obviously talent is accessible but it is costly as well. So again there is no cost arbitrage involved and obviously there is a risk of failure in 6 to 12 months which will be realised later. So how to approach that? That's where largely the companies are focusing, companies have been focusing but now they are focusing towards obviously

offshoring their team setup where they just extend their team and how it is different than having a vendor partner relationship is because the team members which are going to be a part of their offshoring team first of all the right set of talent will be hired but along with that the right culture will be set amongst them it will not be just slack messages or slack groups where you know

just a particular task is being given and getting executed but everything from workflow implementation any other cultural activities up to certain extent and maybe you know tools right set of tools are also integrated so lot of things will fall into place in which they are just in a different geography but then completely acting as the same team members.

Obviously, are levels of hierarchies involved in the same. There is a, we can say, Chief Happiness Officer who is making sure that this type of team structure is also happy as well as well aligned with the culture in the headquarters. So that is the ideal approach in a midway where people are looking into right now because there are challenges in both the other options as well.

So it'd be fair to say that if I want my organization not to have like one time quick fix to something that I'm looking for or that my company is looking for. However, I'm looking at an organization that continuously evolves and continuously improves and brings in newer and newer, like believes in bringing newer experiences for my customers or believes in investing.

time and energy into making our process better, more efficient over a period of time instead of just quick fixes as and when required. You'd say building teams is better than hiring vendors.

Yeah.

And also I think in development, are no, I have a feeling that in development, is no quick fixes, right? Like you always think that, oh, I'll just do that one UI UX get done from a particular vendor. But if you're changing and let's say you've got a really good vendor and have done a really good UI UX fix, that means that the flows have got updated and changed, which needs a developmental change that is there. So it's never, at least from a development standpoint, I feel like.

It's never a quick fix. It's always something after that, after that, after that that keeps coming up. Where the people who worked on it before are the best judge and jury to, you know, take it up and, you know, to fix it always. I think it starts as a vendor engagement and then gets into a building a team engagement kind of a scenario is what we are seeing in most of the vendor cases.

Yeah, that is also one of the ways definitely as companies are approaching but see the primary piece which in terms of let's say even if you are going ahead with either a vendor partner or building your own team the primary piece which is there is all about how much skill the person who is going to work into who is actually going to work hands on is otherwise as you mentioned it's never going to be

where you have planned a timeline and it's going to be executed. It's always going to be, you know, something or other like code quality will be compromised or roadmaps will not be achieved and things like that. So it's always about the right people and the alignment of that people with the overall company's goal is what one should look for in terms of whom server is working, whether it is a vendor or an extended.

And also if I'm a retail industry in Australia, I'm pretty sure not coming just for UIU expense. Right? So I'm looking for something much more large. I'm planning much more. I'm mature enough to plan for something that's Ideal scenario for that.

Definitely.

So with respect to offshoring 2.0 what we are looking forward to see like as our topic says beyond cost towards capability it's primarily what we are focusing is that now for companies just not looking towards offshoring as you know helping in terms of cost arbitrage but now the next primary focus which companies should rather do is

also about making sure that right talent is being picked up on but along with that same amount of culture is also instilled and also making sure that everything is well secured and that is only possible when they are not outsourcing it but when they are actually setting up their team because they want to take the advantage of people in different geography and the actual talent pool that is available. So that is one thing and

The primary part which many companies miss out is that when you are looking for this set of you know helping offshore you would not just want to look into whether the opposite person has right amount of people available with what I looking into but are they also helping us with all the other over at the same time because generally offshoring would happen and offshore partners will be available in

developing economies. So over there is a good advantage in terms of overheads. But so to take the advantage of this, how well and better these executions can also happen from the offshore partner is important to see.

So I wanted to understand a little bit. So you said three things out of them, one thing stood out. Like, how can culture like for a company based in Europe, let's say Germany, a German manufacturing company, how does their culture translate to let's say an Indian offshore development sector? How does that happen with Offshoring 2.0?

Yeah, so when we mean culture, yes, it is not about, you know, primarily the right festivals or it's not about that culture. What we mean is, let's say this particular German company is having certain set of vision. Let's say it's a people first company. It always takes care of people. Clients come second for them and things like that. What happens is earlier,

when there was just outsourcing happening or early level of offshore happening, it was called as offshore but the teams which were actually working on the project or working for a particular client were only focusing on having a culture based on that particular company. So let's say this

Also, it's a German company. So discipline comes first, everything else is... There's no clients, there's no stakeholders. Discipline is first, everything else is later.

Exactly.

Yeah, so how can that happen where you know a particular culture of company discipline people foster whatever approach that particular company wants to instil how can that also come and be replicated over here in the Rockshore Centre also right so for that that is where they need to choose the offshore partners who are also providing Chief Happiness Officers or

or educated person who is making sure that first understanding what is the right culture in the actual company, what are the core vision, priorities and how things are actually operating and then same thing can be just checked upon by this particular person. So that sort of setup needs to be there. If it is not there, there won't be any culture because you know how I mean, it's not a, you know, how otherwise things would fall into place.

I know.

Yeah, I've there on both sides of the table and I've seen things that I've not been happy with and I've experienced things that I've gotten angry with also and I've done things that I'm not proud of. So, I've been there in a lot of different situations. So, fair point. I think that brings us to the end of the conversation today.

Thank you, Jay, for taking out the time and taking us through what should and in what scenarios, what circumstances should a firm think about building teams versus hiring vendors and also sharing some lights on off-shoring 2.0. Next week, let's hope that Koushik gets better and we will have Koushik talk about something interesting as far as off-shoring and building engineering and...

digital experiences, unlocking value is concerned through technology is concerned. And so looking forward to that if you want, if you don't want to miss out on so this, this I'm sure you you found Koushik's questions insightful. Just imagine these questions Koushik is able to ask when he's Imagine the answers that Koushik will be able to give when he's healthy. Right? So, so if you don't want to miss out on those.

then do subscribe wherever you are, whether it's on LinkedIn or YouTube and drop in a note, ask your questions and we'll see you again next week. Until next time. Bye.

Bye, everybody.