5 Disadvantages of Offshoring
Offshoring and outsourcing are two popular business models that have grown in recent times as businesses look to reduce costs, streamline processes, reach organizational goals and reap the benefits of specialization. However, many organizations have learned that there are several disadvantages to offshoring. If you are considering offshoring for your business, it's best to do your homework. What's the Difference between Offshoring and Outsourcing? Before diving into the disadvantages of offshoring, it's important to understand the differences between offshoring and outsourcing. In recent years, these two terms have been used interchangeably because some of the aspects of each of these processes are present in the other. Outsourcing is a practice used by companies to transfer portions of work to outside suppliers rather than completing it internally. Companies may be motivated to outsource work for a variety of reasons. The most significant factors usually relate to cutting costs and reducing internal infrastructure. Outsourcing is an "umbrella" term, and while the process has been used for years in functions like accounting and legal, it has become wildly popular in software development and support. Offshoring happens when you relocate the work to a different country and is a form of outsourcing. For example, offshoring could be when a company from within the United States may work with a company located in India or China for a specific project. So, offshoring is always outsourcing – but not all outsourcing is offshore. Get it? In many cases, these companies look to take advantage of a much cheaper labor market. However, there are several hurdles and risks involved with offshoring. Disadvantages of Offshoring Time Zone Differences One of the biggest disadvantages of offshoring is the time zone differences. Many offshoring companies operate within a 5-12-hour difference from their client. Work schedules may need to be adjusted to accommodate time zone differences when working with offshore companies. Furthermore, unless your offshore partner commits to staffing late night shifts that work with your company's time zone, you may have to wait for responses from the offshore staff. These time differences can also lead to lengthy delays in project deadlines as both companies struggle to accommodate one another. Misaligned work schedules cause internal friction as the staff must tolerate unnatural working hours that also do not provide the responsiveness and speed required in the digital economy. Communication and Language Issues When working with a company from a different country, it is usually safe to assume that most people on your team speak English as a second language. When working with someone who natively speaks another language, this can make communication and collaboration a unique challenge even if they speak English with relative proficiency. For example, some accents are difficult to understand when speaking another language (such as accents of various Indian dialects). So, even though a team can speak English very well (which is impressive in and of itself), that does not mean that communication will be as smooth as it is when communicating with someone who is a native speaker. Cultural and Social Differences Even if the language barrier can be overcome or minimized, an overseas team can have cultural and social practices that you will have to accommodate. For example, if you contract an agency from India, they can have up to sixteen public holidays a year depending on their regional location. Couple that with the US's ten public holidays, and that is twenty-six days a year that rarely coincide. While members of the team might tolerate Christmas Day conference calls, it's more "Bah, Humbug" than "Happy Holidays." So, you must consider the impact of the fragmented calendar during the project and it will affect your deadline. Work styles will exhibit social differences. For example, it is considered acceptable and expected for a North American worker to be assertive and straight-forward. However, this is not always the case in other cultures which view the employer-employee relationship very differently. These cultural variations dilute the valuable input and feedback loops expected in Western business. The discrepancies in culture and social practices can also lead to a lack of understanding of a complex business problems which in turn leads to business and personal misunderstandings and challenges that would not be the case when everyone on a team has a similar understanding of the project and overall business dynamic. Increase Domestic Unemployment Critics of offshoring note thatthe level of unemployment of the local economy increases. For example, if you outsource jobs to India, there is less opportunity and open positions for qualified Americans, which can hurt the national economy and livelihood of cities and towns across the country. By choosing a provider in the US, that creates more open positions for qualified local individuals and keeps more money circulating in the US as opposed to sending it overseas. Proximity Thinking about visiting your offshoring partner? This could be difficult considering the distance, costs, and time spent traveling to an overseas location. If meeting with your partner and having any face time is essential to your company, offshoring may not be the right fit for your business' needs. Geopolitical Unrest The unstable political climate in prominent outsourcing countries can causeincreasing geopolitical risks for businesses. The Philippines, one of the world's most popular outsourcing locations, is frequently a victim of political unrest which seems to flare up without warning. This is true of many developing countries that are generally go-tos when looking to outsource work. Whether the issue is a government shutdown, military coup, riots over an election, or pressure involving drug cartels – all of these "far away" issues could quickly become much more real when your project or business is directly impacted because of the fallout. An Offshoring Alternative: Onshoring within the United States Fortunately, there's no need to look overseas for quality software services. A simpler and more effective outsourcing alternative is onshoring. Onshoring is a business practice where companies source services from within their own country. Onshoring is highly effective. Onshoring offers improved communication and increased productivity between both parties, while still working to reduce costs. It also eliminates the risks of compromised IP and data, geopolitical uncertainty and contextual misalignment. For example, a company located in Los Angeles or New York City can reduce costs by contracting services from a company located in smaller cities in New Mexico or the South, where living costs and prices are much lower. The blend of finding quality talent at an affordable price point is quite advantageous for companies located within the United States. By working with a company located in the same country, both parties will benefit from more convenient time zones, faster and cheaper business travel, and easier collaboration. Rural Sourcing: The Nation's Leading Onshoring Partner If you’re looking for an offshore alternative for your organization's IT solutions, Rural Sourcing can help. As the leader in domestic sourcing, Rural Sourcing's innovative domestic model eliminates the obstacles of data security, IP protection, political concern, time zones, distance, language barriers, and more. We help bring jobs back to the United States and provide high-quality work at a fraction of the price of providers in major metro areas. With development centers strategically located throughout the United States, Rural Sourcing provides world-class solutions for organizations across various industries including pharmaceutical, healthcare, hi-tech, insurance, and consumer & retail goods. Get in touch with us today to learn more about our capabilities and to see how we can help your business outsource responsibly and economically without compromising quality.
What Exactly is Nearshoring?
As organizations seek out solutions to save on overhead and labor costs while continuing to scale, outsourcing has grown in popularity. Outsourcing has been an effective model that allows companies the option to adjust their resources to improve productivity and efficiency while giving them the opportunity to focus on their core competencies. It allows businesses to save on direct and indirect recruiting and labor costs. While overseas companies used to be the preferred choice for outsourcing as it offered the lowest cost alternative, many organizations have started to realize the unique challenges associated with offshoring and have started looking for an option that saves money and cuts down on the headaches involved. One of the options many companies consider is nearshoring. Nearshoring is a type of offshoring that occurs when an organization decides to outsource work to companies that are geographically nearer (hence the word "near") to them than some of the previously popular countries in Asia and Eastern Europe. For example, instead of offshoring development work to India which is between 9-12 hours ahead of the US, a company might choose a company in Central America, thus cutting the time difference down so work can take place in relatively real time. However, although nearshoring allows two companies to be in more similar time zones, this doesn't solve all problems with overseas outsourcing – just one of them. Nearshoring still presents contextual, cultural, and language challenges as well as those of cybersecurity, IP protection, and political uncertainty. Companies need to be aware of these dangers before considering this option for outsourcing any projects. In this blog, we explore nearshoring in depth, including its benefits and drawbacks, and how it differs from other outsourcing models. Nearshoring vs. Offshoring As companies sought out solutions for reducing operating costs and gaining greater operational scalability, many organizations looked to other countries overseas such as India, China, and Russia to outsource their activities, otherwise known as offshoring. Offshoring takes place across national borders and can be a cost-effective solution as offshore companies are willing to set lower hourly rates that are more in line with their cost living. For example, India became popular for knowledge-based offshoring (the best example being technology related) as India combines a relatively educated workforce with low wages. China became popular for manufacturing types of offshoring, with a lower skilled workforce and an even lower incomes. However, although offshoring is a cheaper option, there are many drawbacks. Offshoring can present many communication issues, as language and cultural barriers can get in the way of effective communication and put a strain on the workforce. Plus, deadlines are often extended due to the large gap in time zones, making it difficult to collaborate, stay on schedule, and communicate in real time. Tomorrow can mean different things in different parts of the world. Combine these significant intangible hazards with the material presence of risks around cyber-security, IP protection and economic and political stability, and risk soon outweighs a perceived lower price with uncertain delivery. Many United States-based companies wanted quicker turnaround times, which is why they started looking for partners that were located a bit closer to home. The Nearshoring Advantage The biggest benefit of nearshoring is that the organizations are physically closer, reducing time zone discrepancies. Fewer time zones differences allow teams to make faster decisions to stay on schedule and reduce delays. Closer time-zone alignment greatly enables operational cohesion, effectiveness, and team camaraderie. The geographic proximity improves productivity in both teams as they will no longer have to shift their hours to accommodate the outsourced employee group. Finally, travel between locations is made much easier under the nearshore model, making team interaction and regular inspection much easier. What are the Disadvantages of Nearshoring? As with any business model, it's important to be aware of the challenges associated with nearshoring. While nearshoring solves most time zone barriers, it doesn't quite answer all of the challenges that operating in an international context – usually with developing countries - presents. Different countries will have varying national holidays, languages, and cultural differences that can prove a challenge to efficient working and communications. For example, a US-based company that works with a Mexican or Central American company may run into some language barriers, which can make communication a challenge. National holidays can be different between US and Mexico-based companies, which can lengthen deadlines and delay turnaround time. Differences in work schedules can also prove to be a challenge, as typical work days may vary between countries. Furthermore, it's also important to consider any new laws and regulations you'll need to adhere to when working with a company in another country, which can prove to be a challenge. Finally, nearshoring does not inspire much more confidence around geopolitical balance, the threat of compromised IP, or the management of sensitive data. Frankly, nearshoring is illusory in its ability to solve the problems of delivering high-quality software, cost effectively, at the required speed with an acceptable amount of risk. Onshoring: An Alternative to Nearshoring While nearshoring brings two companies closer in proximity, this business model certainly isn't fool-proof. There are many language and cultural considerations that can lead to delays and problematic communication and navigating a nearshoring partnership - and the regulations associated with it - can be tricky. The real reason people opt for nearshore is nothing to do with the business conditions. It's just more fun, or at least less onerous, to travel "nearshore" to inspect their teams on a regular basis. Let's face it; most people would prefer a few days in Central, South America or The Caribbean than a quarterly 24-hour trek (maybe in coach) halfway around the world for a ten-day tour of duty inspecting your offshore resources in a far-flung country that feels as culturally uncomfortable as it is geographically remote. Fortunately, there is a solution that provides businesses with a cost-effective alternative to nearshoring and overcomes any apprehensions with cultural barriers and delays. Onshoring, also known as domestic sourcing, is when a firm seeks out services from a partner within the same country. For example, a company in Los Angeles may look to an IT group in New Mexico or Georgia for help with a project as the cost of living offers more affordable rates in these areas than Southern California. Onshoring cuts down on time zone concerns, language, and cultural barriers as well as preserving the rule of law over IP and data security. You can benefit from real-time collaboration and produce a high-quality product within budget, on schedule, and at the speed that modern business demands. With onshoring, you'll be less likely to encounter delays that would typically occur with cultural and language barriers associated with nearshoring so that you can get to market faster with a high-quality product at an affordable price. You'll also support jobs in your own country, so you can feel good about creating opportunities close to home. Rural Sourcing: The Leader of Remote Delivery IT Services Rural Sourcing is the leader in remote software development. To help companies lower their costs and create high-quality products, Rural Sourcing's innovative onshore model allows you to benefit from talented, qualified IT teams living in mid-sized and small cities across the United States. With our onshoring services, you'll eliminate time zones, language barriers, cultural differences, and delays to speed up deadlines and improve collaboration. If you think onshoring can benefit your organization, get in touch with our team today.
Onshoring, Offshoring, Nearshoring and Outsourcing: What’s the Difference?
One of the biggest challenges companies face is finding ways to scale while being as efficient and productive as possible. Perhaps a company is looking to launch a new app, enhance their business intelligence, or has another significant software project that needs to be completed, but they don't have the staff or resources in-house. Many leaders and executives find the idea of developing an in-house team to be too expensive, especially if they are in a major US city where salaries can be high and competition for top talent fierce. In addition to being costly, hiring new staff can be time-consuming, and companies may not even have the recruiting resources to find qualified candidates. In many cases, these companies end up turning to more cost-effective alternatives that provide flexibility and convenient solutions for their needs, one of which is outsourcing. There are many ways to outsource a project – such as onshoring, offshoring, and nearshoring - each with its benefits and challenges. While all three of these most popular types of outsourcing models are similar, they differ in a variety of ways. The Basics: What is Outsourcing Let's start with the "simplest" term, outsourcing, as it has set the foundation for onshoring, nearshoring, and offshoring. Outsourcing is when you find a third-party company or individual to complete a specific project or many projects instead of completing the work in-house. There may be many reasons a company looks for outside help. They may not have the capabilities, breadth of knowledge or experience, or are looking to manage costs and simplify the process from idea to completed product. Not only does this open the door to new opportunities and experts with a breadth of capabilities, but outsourcing also gives you the flexibility to work with an outside firm for a project under a specific period and then move on to completion of the project. For example, your company may need assistance on a huge project, like developing an app, but may not need the additional resources once the project is complete. Plus, it will cut down on the need to hire individual's in-house, minimizing recruitment and operational costs associated with finding qualified applicants in your area (or moving expenses if you need to recruit specialists from other parts of the country). One of the significant benefits of outsourcing is that you'll work with experienced vendors who specialize in a particular field allowing you to complete projects faster and with a better quality output. However, while there are many benefits of outsourcing, there are several drawbacks and unique considerations depending on where and how the work is outsourced. Your company may run into communication issues around domain experience. In other words, if your chosen outsourcer is less familiar with your industry, you should allow extra time for some education. Traditional outsourcing business like accounting and law have overcome this challenge by setting up practices that specialize in vertical industries. The most obvious example is that of the outsourced team working in a different time zone with a significant language barrier. These communication risks become real as we look to an example of outsourcing, like offshoring. What is Offshoring? It's a common misconception that outsourcing and offshoring are the same things. They are not. The primary differentiator between outsourcing and offshoring is that offshoring is a type of outsourcing. Offshoring is when a business hires a third-party firm to perform work in a nation other than one where the business primarily conducts its operations. This business model developed from outsourcing, as companies looked for cheaper alternatives to services overseas, usually in a developing country such as India, Bangladesh, or Eastern Europe. While there are many reasons companies look to offshore their services, it mainly comes down to lower costs. As we have said, some of the most popular countries to offshore IT solutions and software needs are India, China, and Eastern Europe, just because they offer lower production costs due to lower local salaries and less stringent labor laws. Unfortunately, offshoring poses many risks. Working in different time zones, language and cultural barriers, cyber-security threats, political instability and intellectual property concerns are all challenges when working with a company located in another country. This misalignment may require some adjustments on your internal team's schedule, especially with time zones that could be well over 12 hours. You'll likely have to lengthen deadlines as work can take much longer with a team in remote parts of the world. Plus unless you find people in other countries who speak your native language fluently, you may run into language and understanding barriers, which could end up costing your company in delays. How does Nearshoring Work? Nearshoring is a subset of offshoring with the main differentiator being that the outside company is located a little bit closer to you, but still in another country. For example, a company located in New York City may outsource their work to an agency in Mexico or South America. When referring to nearshoring, the third-party companies will be in a closer time zone so that communication can happen either in real time or your schedules may only have to be altered a few hours. Closer time zones can help when it comes to collaboration and can allow for identifying problems faster. However, it's important to note that nearshoring isn't fool-proof and cannot overcome all the challenges that offshoring your work can present. It only solves the time zone issue. Even if the country is in a similar time zone, there may still be differences in holidays, language struggles, cultural misunderstandings, and geopolitical risks. Can Onshoring Benefit My Company? Onshoring is a unique outsourcing business model as it utilizes partners in the same country for increased efficiencies and productivity without the headaches of offshoring. As an advantageous and increasingly popular alternative to offshoring, onshoring is ideal for companies who are seeking outside resources but want the work produced closer to home enabling faster delivery of higher quality software. For example, a company in San Francisco may be looking for Sharepoint support but finds that a local provider's quotes are above their budget due to being located in such a high-priced area. To save money, they can onshore the work to a partner in a smaller city to produce a high-quality product without having to deal with the headaches, timeline issues, and questionable quality of offshore firms. Onshoring is beneficial for a variety of organizations as it breaks down barriers and hurdles that are typical of offshoring and nearshoring. As a result, companies can speed up deadlines and produce quality products – all while keeping costs lower than the resources in their local areas. Companies that seek out onshoring realize the benefits of real-time collaboration and enjoy working with a scalable network of qualified professionals who possess a breadth of knowledge and capabilities. Additionally, it's easier to explain to your partners your business problems and challenges, so there are no misinterpreted requirements, and you can feel confident in your partner's capabilities. Onshoring vs. Offshoring Once it comes to finding the solution to streamline internal teams and save money, it comes down to whether you want to offshore your projects or onshore your projects and what is ultimately best for your business. In comparison to offshoring, it's easier to see why onshoring is the smarter choice: • Offers similar teams regarding language and cultural barriers along with the ability to understand complex business problems. • Minimizes time zone concerns for improved collaboration and problem-solving • Allows for faster response time so that you can reduce delays • Lowers travel costs • Supports jobs within your county • Provides you with access to professionals with years of experience and a breadth of capabilities which are all focused on helping your business succeed The Shift to Onshoring in Recent Years While offshoring to India, South America, and Eastern Europe was a method of saving on labor costs, the shift in recent years has favored onshoring. In addition to more businesses realizing onshoring as a viable solution for improving quality and convenience, wages in some of the top offshoring locations, are rising with a shortage of capable talent. This lowers the labor savings associated with offshoring and without the advantage of cost savings, the disadvantages of outsourcing at such a physical and cultural distance aren't worth the headaches, delays, and hassle. Digital business is unforgiving. Commerce moves fast and does not stop to grant second chances, so it's no wonder more people are choosing to reshore their operations back to the United States to improve quality and convenience while still saving money over in-house teams. Rural Sourcing: Your Source for Onshoring Support Rural Sourcing is the leader in onshoring within the United States. Whether you are looking to build a new application, enhance a product, or scale your business intelligence, our team can help. With development centers located across the United States, you can access a network of people for specific projects or areas of focus that are most important to your business' success. You'll get the results you desire at the cost you can afford with onshoring services from Rural Sourcing. Onshoring Capabilities at Rural Sourcing At Rural Sourcing, we aim to provide cost-effective and convenient solutions to our partners across a variety of focus areas: • Application Development • Business Intelligence & Analytics • Cloud Solutions • Enterprise Applications • QA & Testing What sets us apart from other onshoring companies is that our teams are experts in modern application development, and no one is more expert in remote software delivery. We work hard with our community partners in the selection of our center locations and in bringing jobs and a positive culture to those communities, our colleagues, and our customers. With our extensive network of brains' trusts and experienced professionals, you'll tap into a valuable resource across a multitude of IT industries. Along with having an experienced team with a deep understanding of your field, we utilize state-of-the-art technology to meet the ever-changing and ever-increasing market demands. Contact Rural Sourcing to Learn More About our Onshoring IT Solutions In today's fast-paced world, your company can benefit from the experience, knowledge, and capabilities of an onshore team. Not only is it a faster alternative to offshoring, onshoring breaks down time zone, language, and cultural barriers that can delay deadlines, lengthen problem-solving timelines, and hurt your overall bottom line. Tapping a firm that's closer to your organization will reduce response time and allow you to take your product to market faster, so you can achieve your overarching goals quick. If you're ready to see if onshoring is right for you, contact Rural Sourcing. We've helped clients across the United States achieve their strategic goals with our unique IT solutions. Get in touch with us today to see how we can help your business.
What is Onshore Outsourcing?
Onshore outsourcing, also known as domestic outsourcing, is an increasingly popular business model that uses US-based companies for internal business support as opposed to sending them overseas. IT offshore outsourcing to India, South America, Central America, and Eastern Europe used to be the first choice when businesses were looking to save money. However, many businesses are now choosing to bring their IT, software development, and business intelligence back to the United States to improve speed, quality and convenience while still saving money over in-house or local contractor teams using the domestic sourcing model. Rural Sourcing is a proud leader of onshore outsourcing within the United States and provides solutions for application development, business intelligence and analytics, cloud solutions, enterprise applications, QA and testing. As a cost-effective and convenient alternative to offshore outsourcing, your company will benefit from increased efficiency and productivity. Discover the onshore outsourcing definition, learn about its benefits, and see why Rural Sourcing is the country’s leader in onshore outsourcing. Benefits of Onshore Outsourcing Eliminating Offshore Outsourcing Headaches Many businesses look to external companies for business support but find that offshore outsourcing has a number of unique challenges such as time zone differences, language barriers, context and cultural misunderstandings – all which can cause delays, quality issues, and headaches. Fortunately, onshore outsourcing erases these roadblocks. You’ll benefit from real-time collaboration (as time zones are much closer) and access to a network of US-based professionals available to help ensure your project runs smoothly and you receive the product that meets all of the specifications. Increasing Affordability of IT Projects One of the biggest advantages of onshore outsourcing is that it is the perfect balance between affordability and quality. This is especially true for software development and IT projects as those industries tend to cluster around major US metropolitan areas where prices for services are generally higher due to higher living costs and stiff competition for resources in those areas. This high cost is then passed onto your business in the form of higher project charges that can be a burden and above your available budget. But, that does not mean that your only option is sending the project overseas – not anymore. Instead of outsourcing projects to another country, you can get higher quality and more affordable services within the United States using one of Rural Sourcing’s development centers located in mid-sized cities across the country. For example, if your company is located in a big city, like San Francisco or New York, and needs help with Java application development or DevOps project, it can be very costly to hire a new internal team or outside partner locally. However, if you could have access to a team of the same expertise and quality in a smaller city in New Mexico or Georgia where living costs are more reasonable, the cost of the project would be lower and more affordable for the exact same end result – a great delivered product that is on time and works as expected. Onshore outsourcing is a cost-effective and convenient solution for businesses in need of extra assistance in highly targeted areas such as application and web development, instead of attempting to manage a team thousands of miles and many time zones away. If you need IT support, and want to keep it close to home, onshore outsourcing may be the right solution for your needs. Rural Sourcing: What We Do As the leader in onshore outsourcing in the USA, Rural Sourcing is an expert in Agile Development, Cloud, DevOps, Digital Engagement, and Salesforce Integration to businesses large and small nationwide. When you work with Rural Sourcing for onshore outsourced IT solutions, you’ll support American jobs and accomplish your business goals with enhanced quality, speed and ease when compared to offshore outsourced projects. We have a network of scalable IT solutions across our US development centers, who are focused on your unique business objectives, so you can eliminate bottlenecks and headaches and accomplish your IT goals with confidence. Contact Rural Sourcing to Learn More About our Onshore Outsourcing Capabilities We’re passionate about connecting companies with talented, qualified IT professionals in the United States. With an average of 10 years of development experience, each team member brings something unique to the job. If you’re interested in learning more about our onshore outsourcing capabilities, get in touch with us and tell us more about your project needs.
A 3 Step Process to Quality
In today’s digitally charged environment, executives leading software development companies consistently walk a tightrope as they balance two very different interpretations of the word, “quality.” Users’ perception of quality focuses on software that meets business requirements, while development teams concentrate on building programs and applications that satisfy product and system requirements. These diametrically opposed perspectives put software executives in the crosshairs of a heated debate as both sides attempt to evaluate quality. In reality, business requirements spring from the minds of customers and stakeholders who seek a software solution to a conceptual business challenge. Business requirements, which refer to the “what” of software development, do not translate smoothly into product requirements. In most, if not all, cases, several technology-based solutions can resolve the stated business problem. To select the most technically appropriate and efficient path to resolution, business requirements must be broken down into detailed capabilities, or “hows,” that align with business needs. The tightness of that alignment produces value for the end user customer. Loosely aligned technical capabilities are seen as less valuable by customers, often eroding the software’s price point and damaging the development company’s reputation. To protect the bottom line and reputation of a software development operations, company executives can take a three-pronged approach to extend quality assurance across the entire development process. This three-step methodology, which embraces a universal definition of quality as contrasted to value, incorporates best practices associated with a “right the first time” development approach, and calls for a cultural shift to reward the early identification and resolution of issues, is particularly relevant in today’s fast-paced marketplace. First: define quality, value For software company executives navigating this tightrope of conflicting expectations, it would be useful to distinguish between the concept of quality and its value in the marketplace. Conceptually, quality is a measurable outcome of development. The amount of quality associated with any software development project is constrained by available resources and the business priorities of a software development company. One approach to evaluating software quality uses three dimensions: Quality of design – the functions, capabilities and performance levels required by stakeholders. Quality of conformance – how a software product conforms to design, leverages appropriate standards and is completed on time and on budget. Quality of performance – how the software functions post-delivery, especially as it meets user needs, functions as intended, manages its workload, and is supported and maintained over time. While most customers will agree that some degree of quality is a baseline expectation, it is critical to understand that a high degree of quality may or may not be perceived as valuable in the marketplace. Customers perceive quality as driving value, and value is relative when compared to the software’s cost. For example, a customer’s limited budget can eliminate a high-value software solution from consideration when company finds a lower quality product acceptable because of its price. Second: Implement ‘fail fast’ In the digital world, customer expectations change on a dime, which can force development teams to pivot frequently. This rapidly changing environment, which has increased pressure on development companies to deliver software faster and at more competitive price points, calls for a new approach such as “fail fast” and “continuous integration.” However, misdirected emphasis has muddied the perception and value of the widely held fail fast principle. More than a few people place importance on the first word, “fail,” when it’s the second that matters. The success of a failing fast development initiative hinges on identifying issues, bugs and errors early in development, the sooner the better. To support failing fast, taking a “continuous integration” approach can help software development companies increase quality and keep costs in line. In this agile development practice, developers integrate their current work into a shared depository several times each day. Automated builds verify each integration, flagging problems and assuring immediate correction. As a result, the software stabilizes at a faster rate. Additionally, many software development companies share software in development with intended users at regular intervals in development. For example, presenting in-development software to users after major agile iterations can be another way to implement the fail fast approach. These frequent releases to end users brings defects to the surface faster than waiting until the development team is deep into the project to find issues. Three: Shift culture to reward early detection, correction Often, implementing a fail fast approach requires a culture shift in the software development organization. The importance of this cultural shift cannot be overemphasized. In the fail fast environment, quality assurance spans the entire development process rather than being an exercise that takes place at the end of development. When developers understand that identifying and resolving bugs early in the development cycle is rewarded, improves productivity, boosts quality and saves money, the organizational emphasis continuous improvement will begin to resonate. In the digital environment, customer expectations change frequently, and development teams must pivot quickly to maintain the tight alignment between technical capabilities and business requirements. Applying the fail fast and continuous improvement tenets to the software development process can increase the velocity of response to evolving customer requirements.
Understanding the risks of offshoring in today’s digital marketplace
Offshoring, the approach many U.S-based companies take to secure IT talent, has lost much of its original appeal. In the past, U.S. companies sent IT jobs overseas for one key reason: to capitalize on inexpensive labor. In many cases, offshore vendors claimed hourly rates that were 80% less expensive. IT leaders, originally seduced by offshoring’s attractive bottom-line savings, quickly found out that offshoring’s challenges and risks often increased project costs, eroding the much anticipated savings. A few of these risks include: Time zone differences Language compatibility Cultural barriers Domain expertise Employee turnover Geopolitical risk IT leaders, now familiar with the risks associated with offshoring and its eroding potential savings, are replacing offshoring with a proven alternative to talent acquisition: domestic sourcing or onshoring. Domestic sourcing taps into talent inside the United States to deliver the speed to market and responsiveness IT organizations require in today’s digital marketplace. In addition, it leverages a deep familiarity of complex business problems, a depth and breadth of capabilities, access to a scalable brain trust, efficient collaboration, and attention to quality. However, determining the value of domestic sourcing has been difficult to illustrate. Today, companies can utilize the Rural Sourcing TCO Calculator, a robust tool that enables the customization of six distinct and commonly accepted productivity factors to a company’s current situation. This allows for a more accurate assessment of their total cost of ownership of outsourcing needs. A key advantage to domestic sourcing however, is its ability to deliver the agility needed to pivot IT priorities in response to changing customer expectations. It allows companies operating in this hyper-responsive digital environment to add and recast IT talent as needed. For example, this agility was recently demonstrated when one of our FinTech software clients asked Rural Sourcing to refocus our existing team and add a second scrum team to meet the regulatory demands of one of their largest clients. Taking a flexible approach allows IT teams to adjust project priorities and delivery timelines on the fly – based on the actionable recommendations that come from real-time analysis of customer expectations.
3 Key Ways to Manage Speed to Market
Today’s age of digital adaptation mandates innovation and quality – at great speed. Way back in 2000, Jack Welch, in GE’s Annual Report, warned us, “If the rate of change inside an institution is less than the rate of change outside, the end is in sight.” For some companies, delivering innovation and quality simultaneously is exhilarating, while, for others, it’s a fast path to disaster. Consider these pivotal questions: Why is it that some companies can marry methods, such as Agile and DevOps, to continuously deliver successfully, while others struggle? What puts some software companies at the forefront of market demand, while others strain to keep pace with the pack? Success, it seems, often comes down to the ability to unleash technology’s inherent productivity. "Leading technology companies have been early adopters of these capabilities and have reaped the benefits. Amazon for instance can release code every ten seconds or so, update 10,000 servers at a time, and rollback website changes with a single system command," as Satty Bhens, Ling Lau and Shar Markovitch of McKinsey point out. While most software companies' leaders would love to bask in the reflected glory of these technology icons, the reality is most of us are not Amazon or Google. But, we can all learn from these market innovators that speed is an important factor in their success. They are constantly adapting and striving to be first to market. To meet the speed-to-market demands digital adaptation presents, software executives should consider: Building collaborative development organizations to expand market capabilities. Empowering a cross-functional mindset that bridges internal and external resources. Creating partnerships that flex and reflect the need for speed. Collaboration is one of the keys to delivering software at speed and getting it right the first time. For example, traditional brick and mortar financial institutions, under siege from digital-only startups, tapped internal development resources to create their own digital products and services – often carving out a competitive advantage for themselves in the process. Marcus, an online lending platform from Goldman Sachs is an example of how digital disruption re-energized collaborative internal development to expand the firm’s footprint in an underserved market segment. Originally begun as a way for retail clients to refinance credit card debt, Marcus leverages Goldman Sachs’ technology expertise to appeal to its smaller segment of retail clients. Smaller banks have little incentive to help retail clients refinance debt, which was the driving factor behind Goldman Sachs effort to build the Marcus platform specifically for that purpose in 2016. Having a cross-functional mindset helped Goldman Sachs identify an untapped market opportunity and quickly develop a solution to meet that need. Today, Marcus has expanded from a one-product platform to a multi-product business, which has created a competitive advantage for Goldman Sachs. Finally, consider combining internal skills with partner capabilities. With the precipitous growth of niche skills, the expense of hiring and retaining these resources on staff may not be feasible for the long term. Looking to partners for these skills allows you to flex your staffing as you grow and keep pace with market demands. In addition, supplementing internal resources with assistance from a partner can enable you to deliver to the marketplace a high-quality product quickly -- likely ahead of your competition. Today’s rate of marketplace change requires innovation and speed to market – a tough order for most companies to fulfill. However, taking a collaborative approach that unites internal and external resources behind shared goals can build the sustainable competitive advantage needed to prevail.
Four Trends Redefining the Workforce Model
As digital adaptation takes hold, four over-arching shifts are converging to change the way organizations build and evolve their workforces. 1. Access to Evolving Skills In this era of digital adaptation, organizations’ staffing needs change on a dime as they respond to evolving customer requirements. To react quickly, today’s workforce models need to combine in-house candidate identification, recruitment, and more thoughtful retention with precision-driven third-party staffing utilization. External staffing resources will need to meet the needs for specific technology domain expertise, industry experience, creative workforce models, innovative engagement structures, technical innovation and creativity, and much more. Hiring organizations will prefer third-party partners that can deliver on these increasingly complex staffing requirements while adding value in new and unexpected ways. 2. Need for Skill over Scale In the past, IT demands preferred scale above all else. That’s because the type of project being staffed required rote repetition of key tasks – an assignment perfectly suited to offshoring. Today’s technology projects demand a wider range of skills in smaller quantities, as well as a heightened need for collaboration and communication. The once-dominant waterfall approach to software development has been replaced with a more relevant Agile Methodology popularized by digital adaptation’s ebbing and flowing needs. Today, the skilled project team – one that has been created and staffed for a particular assignment able to cover everything from User Experience to backend database demands – dominates the workforce landscape. Agile teams are smaller, command a wider variety of technology skills, and require broader “soft” skills such as communication, real-time creative problem solving and collaboration. 3. Demand for Innovation, Collaboration Collaboration leads to better outcomes, and that’s true across all industries and markets. In acknowledgement of this widely held belief, market-leaders such as IBM and Yahoo are moving remote workers back into corporate offices. Why? It’s certainly not the opportunity to pay sky-high rent on urban offices. It’s an effort to reclaim the creativity and innovation that comes from sharing close quarters. While not every company can make such a significant investment in expensive office space, many companies are taking time to reevaluate and rebalance their approach to workforce building. Partners with innovative staffing delivery capabilities and those that adopt the latest communications tools and platforms to encourage collaboration are winning favor as hiring organizations seek expert help in balancing cost against the need for quality output, a chief motivator behind the “rehoming” trend. 4. Push to Expand Talent Pools Although the US technology-based talent pool dwindled as offshoring started to grow after 2001, efforts to promote STEM-based education have picked up in recent years. Despite that push, the slight uptick in STEM-based hiring that happened in 2016 came about because of foreign-born STEM-educated candidates. While STEM-based hiring is on the upswing, demand for technology skills continues to far outstrip supply. Today, public and private sector hiring organizations are competing with contracting firms, staff augmentation firms, and offshore companies for a limited number of STEM specialists. To rectify that imbalance, hiring organizations are partnering with high schools and universities to foster interest in and pursuit of STEM-based careers for US students. To learn more about how organizations in the midst of digital reinvention utilize workforce partners to build out their staffs, download our white paper, "An Introduction to Digital Adaptation.”
Why Rural Sourcing is the Next Starbucks
True confession, I’m a Starbucks coffee fan. Each day starts with a triple grande nonfat cappuccino. I’m also a big Howard Schultz fan; I even have an autographed copy of his book: Onward. More importantly, I respect his social and civic activism as well as admire his vision of creating a 3rd place to have a coffee experience. Whether you like the Starbucks brand or one of the tens of thousands of other coffee options in America it was Schultz’s vision of creating a third place that began this lovefest with the consumption of coffee somewhere other than your home (#1) or your office (#2). This vision created a new alternative at a scale that didn’t previously exist. The Rural Sourcing business model follows the same concept and vision. Up until recently, businesses had two options for their IT workforce strategy. Businesses could bring in the talent to their office in their city, often at expensive hourly rates, or they could offshore the work to an outsourcing firm for less expensive hourly rates and figure out how to manage the cultural, language, and time zone challenges. At Rural Sourcing we saw the need to create that third option at scale. Onshore domestic technology talent is abundant in smaller cities such as Albuquerque, NM; Pensacola, FL; Augusta, GA; or Mobile Alabama. These cities, complete with large universities, low cost of living and high quality of life, represent millions of available technology talent waiting to be deployed to solve IT problems for the world’s greatest companies located in much higher cost locations. Rural Sourcing selects cities like these based on our proprietary data analysis of the qualified talent pool, the quality of life and the affordability of living in these locations. We then establish software development centers complete with the look and feel of a Google-environment where software developers and quality engineers can focus on creating applications to support our client’s on their digital journeys. The beauty of this third option, unlike Starbucks, is that it actually costs less than the other available options. With a substantially reduced cost of living in these smaller cities, the dollar goes a lot further than in San Francisco, New York or even an Atlanta. Also, when measured against offshore, domestic sourcing is more cost-effective when evaluated by the total cost of ownership or TCO of completing a successful project in today’s agile software development world. I’m not saying that businesses shouldn’t consume the available talent within their own cities or even offshore, as both have their respective roles to play in the sourcing strategy. For certain types of projects, these sourcing models may be well suited for the task. What I am saying is that there is a new coffee shop available that serves an amazing third alternative that may just taste better than your traditional sources. Find out more about our blend of services here.
Amazon in “Your Town”: Awesome or Apprehensive?
How Will You Compete for Tech Talent? Most people’s first response to the prospect of Amazon coming to "Your Town" is awesome. Amazon is considering twenty top-tier cities as the site of its HQ2, which will inject 50,000 high paying tech jobs into the local market. The construction of offices, facilities, and infrastructure can be expected to provide more jobs. Finally, the projected growth in support businesses results in, guess what? Yes, even more, jobs. The question for established companies already operating in the community is this: How are you going to recruit new hires and retain tech employees when they're all flocking to Amazon? For employers in all industries, the war for talent, especially technology talent, is difficult – considering as US employment continues to grow with payroll employment up by 261,000 in October alone. According to UPP Technology, the high-tech employment rate in the US is approximately 97%. This information is not new news for most. There's a shortage of high tech talent and has been for some time. The prospect of Amazon showing up in your town seems intuitively attractive. Everyone wants to get behind it – at least publicly. So much so that 238 cities submitted proposals to become the next Amazon HQ2. Now that 20 cities have made Amazon’s short list, fear and trepidation about hiring in a new competitive landscape have begun to set in. Corporate headquarters already located in the 20 cities under consideration are reevaluating their hiring plans, knowing that they will be competing head-to-head with a new corporate citizen with as many as 50,000 six-figure jobs to fill. Employers are asking, “What are the unintended consequences of the inevitable imbalance of that much demand on a local technology labor market?” As Amazon contemplates its potential HQ2 sites, the local availability of talent is a critical factor driving site selection. Amazon may be a pioneering retailer, but it is not alone in this strategy to chase the talent pool. Companies, such as McDonald's, Aetna, GE, and Marriot, are abandoning their suburban offices in favor of millennial-friendly locations in large urban centers as market leaders embrace this relocation trend. Chicago Mayor Rahm Emanuel pointed to technology’s growing influence on nearly every industry as the driving force behind urban offices. Highly sought-after technology-skilled employees often prefer the convenience of a live/work/play environment in or near an urban center to a time-consuming and expensive commute. The appeal of urban offices signals a reversal of company executives’ previous preference for offices located near their homes. Today, the ease of recruiting and retaining technology workers is driving top-level corporate decisions. "It used to be the IT division was in a back office somewhere," Emanuel said. "The IT division and software, computer and data mining, et cetera, is now (located) next to the CEO. Otherwise, that company is gone." While Emanuel’s words are strong, we get the point. Long ago, many organizations paused their on-campus recruiting of Computer Science majors in favor of outsourcing their technology work overseas. These companies now realize that re-engaging that corporate recruiting muscle is easier said than done particularly when targeting highly discerning millennials who are as interested in what you stand for as what you pay. The pervasive digital adaptation of business means that not all companies will compete and win in the war for technology talent. Once you add to this uber-competitive race for tech talent the allure of Amazon’s 50,000 positions, then the competitive landscape becomes downright daunting. To increase your company’s chances of prevailing in this complex hiring environment, consider enacting some or all of the following recommendations: Implement effective strategies to reactivate your on-campus recruitment program. Consider bringing recruitment back in-house or taking a more “hands-on” approach rather than delegating this important function to an outside recruiting firm. Closely examine your retention rate. It'll take more than increasing a few salaries and throwing in a ping-pong table to win the talent retention war. Take a long, hard look at what your competitors are doing and consider doing more than matching them step-for-step. Survey your current employees to understand why they stay and interview millennials to understand how they make their employment decisions. Look at the models you can use to manage the risks of an overheating local labor market better. Understand which skills you absolutely, positively, must keep close to the center and which you can distribute. Take a critical look at those remote or dispersed models such as remote onshore development. Can you manage remote software development yourself or do you need an expert partner who might not be in the building but is situated in-country? To learn more on how you can create mitigating strategies for tech talent in a highly competitive market, contact us today.
4 Things Developers Should Consider Before Accepting Their First Job
The first “real” job that a developer accepts will become the foundation upon which their whole career will be built. Imagine this: After sending out her resume, Jill lands her first job at an in-house Java shop. The company gives her the tech stack she’ll be using: Java EE, Hibernate, and MySQL and with that, it’s time to get to work supporting their application. Fast forward. Three years have gone by and Jill is still supporting the same application with the same tech stack. The work is getting monotonous. But where can she go from here? Jill has only worked on a single project with a few technologies. Do you see her problem? Jill can look for a new job at a higher position based on the skills she has acquired, but where’s the challenge? Where’s the growth? If she wants to work with a different tech stack, she’ll likely have to search for another entry-level position to continue to build her skill set. But, what if that company who hired her had encouraged continuous learning? What if she had gotten to work with several different tech stacks over those same three years? Jill would have built a more solid and extensive foundation to her career. One way to obtain diverse experience is to join an organization similar to a professional services company, and not necessarily the consulting kind. According to MindTools, a professional services company is “any organization or profession that offers customized, knowledge-based services to clients.” In the technology field specifically, a simple definition could break down to “a company that hires developers to do contract work for various clients.” At a professional services company, continuous learning is highly encouraged. Developers with 20+ years of experience are willing to teach, and you’ll most likely be able to work with multiple clients which means learning both the programming languages and the business tools to support development. So why is this so important, especially as a first job? There are several reasons. 1. It can offer twice the experience in half the time. Think back to that earlier example. Three years spent learning the ins and outs of one company using specific technologies. Imagine if Jill had instead been hired by a professional services company. Her first year she would potentially be on a client project that uses those same technologies (Java EE, Hibernate, and MySQL), but that client contract only lasted for a year. Then what? She is then assigned to a different client that needs a REST-ful web service using the Spring framework. What just happened? Jill was given the opportunity to learn twice the amount of skills in less time than our previous example. 2. Employees are constantly encouraged to learn These types of companies are constantly encouraging their employees to learn and grow and keep up with new technologies. It makes sense if you think about it. Professional service companies are only selling one thing: services. The more extensive knowledge that their employees have, the easier it is to sell their services. 3. Expert resources are only a desk away. Developers who have been in the field for 20+ years are usually sitting nearby. Got a question about .Net? That developer two feet away, is an expert. Need some SQL help? That guy across the hall worked his last job as a DBA. And the best thing about it? Most experienced developers want to share their knowledge. At a professional services company, there needs to be a wide range of knowledge so there can be a wide range of clients. These companies thrive when their developers are highly trained on a variety of technologies. 4. Communication skills will expand. It’s easy to see the benefit of working with different clients to learn new technologies, but what about the benefit of working with different clients to learn about different clients? Because many developers move from project to project, they have the opportunity to learn the business tools of a variety of clients. Maybe one client uses Slack to communicate and JIRA for task management and the next prefers Skype and Asana. Being a developer is two sided. Knowing how to program is just one part. Knowing how to communicate and how to work well with a team are equally if not more important than just being able to write code. Starting your career at a company that encourages learning and the exploration into different technologies will put you on the fast track to success. For developers specifically, working at a professional services company is one of the next best steps to take.
Three Ways to Overhaul the H-1B Visa Program
The Trump administration’s focus on immigration has brought the H-1B visa program to the forefront of the news. This visa program was originally intended to import talent to meet the void between the growing demand for high tech skills and the lack of available U.S.-based talent. Unfortunately, over the years, the program has been abused to the point that some American workers have been forced to train their replacements who lacked the skills and experience to take over their jobs. It goes without saying that this program needs a complete overhaul and a redirection of its intended purpose. Following are three ideas that could help the U.S. build a sustainable workforce strategy. First and foremost, the Trump administration should create an import tariff similar to the proposed 2008 legislation on oil companies that would’ve encouraged development of alternative energy sources. Levying a tax on H-1Bs of $10,000 per approved application would generate $650,000,000 in funds that could be used to train individuals with base-level competencies for a career in technology. Putting a program such as this in place would enable displaced workers from, for example, the coal industry to reskill themselves; it would enable military veterans to gain valuable training to jumpstart their tech careers; and it would enable the underemployed to increase their earnings potential. This workforce enablement strategy could produce enough U.S.-based talent to cut in half what Code.org said will be a 1,000,000 shortfall of tech talent by 2020. Second, Trump’s senior policy adviser, Stephen Miller, proposes that we should scrap the H-1B lottery system that is inundated with applications from large outsourcing firms. I couldn't agree more. Would Nick Saban (University of Alabama’s highly successful college football coach) recruit the best football players in the country by picking their name out of a hat? No way. I believe we should import truly talented individuals to the U.S. as needed to fill the shortfall in our workforce and to put the very best team possible on the field. In order to do this, we need to validate that the individuals granted H-1B work visas possess the skills needed and are qualified for the job. Third, Congress should incorporate the portion of the “Protect and Grow American Jobs Act” which raises the minimum salary of the H-1B worker from $60,000 - $100,000 into a broader, long term solution. This salary raise (which hasn’t changed since 1998) would help ease some of the abuses of the H-1B program by reducing the economic incentive of companies to replace U.S. workers with cheaper foreign labor. While this simple act addresses the “Protect” portion of its title, it does not address the “Grow” portion. In order to do this, Congress should incorporate the tariff mentioned in point one to fully address the intended desire to make the U.S. more reliant on our own willing and able workforce. By implementing these points, the Trump Administration would effectively enable U.S. workers to gain the skills needed to launch a career in the tech industry. It would also identify the best talent to enter the U.S. while eliminating the abuse of the H-1B program that undercuts U.S. talent and leads to offshoring the work.