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7 cool tips on how to manage an offshore team

With all advantages and disadvantages of offshore teams, there is always a great deal of uncertainty during the cooperation between companies. This guide shows how to communicate with and manage an offshore team to avoid common mistakes and misconceptions.

Outsourcing is one of the most dynamic market segments, especially when it comes to IT and programming. There are multiple advantages of outsourcing, including paying only for a service delivered, no need to worry about hiring a skilled professional, or keeping the team motivated.

According to Statista, the application outsourcing segment is projected to reach US$108,748.6m in 2021. Worldwide is not a coincidence – US companies, as well as those from established economies, seek savings and quality services abroad, and sometimes overseas. According to SharpMinds, India currently holds 44% of the IT offshoring market, followed by China (33%), Brazil (10%), South Africa (8%), and Eastern Europe (5%).

The greatest demand comes from the US (43%) and Western European (22%) countries, followed by Japan (15%) and other mature APAC markets (5%). For many companies that decide to outsource their IT, offshore teams are a natural pick.

What is offshoring

Basically, outsourcing is divided into three main branches:

  • Onshore – the situation where the company decides to outsource its processes to another company from the same country,
  • Nearshore – in this model the company is outsourcing processes to the abroad company, but the one that is in geographical proximity. A company from South Korea outsourcing to China or a company from the US outsourcing to Mexico is a great example. The distance is usually large enough to bring significant differences in wages, but not long enough to make a regular synchronization meeting a challenge due to the timezones. Usually, a one–day trip to meet with a team is not a problem,
  • Offshore – the situation takes place when the company decides to outsource processes to a distant country, usually overseas. When a US company is outsourcing programming in India or China, it is the clearest example of an offshore software development model.

Advantages of offshore teams

There are numerous reasons why companies decide to handle the code and the software development to companies that are far away from their headquarters.

Cost-effectiveness

First and foremost, an offshore team is usually significantly cheaper than an inshore one.There are two factors contributing to the differences:

  • Exchange course differences,
  • Costs of living. Considering that, hiring an inshore developer has to be significantly higher, while the offshore one gets paid three times. Once by the employers, the second time by the costs of living differences, and the third time by the favorable exchange rate.

Flexibility

An offshore team is both easy to extend as well as easy to reduce. The whole HR management in the development team is handled by the outsourcing partner. This applies both to finding an occupation for the developer that has been taken out of the project and quickly finding support for the team to be extended. In fact, offshore team building is not a client company’s headache as long as it is not willing to engage in the process.

Time-zone differences

Although this is a tricky one, it can do wonders. If the meeting takes place in the evening, the team in the offshore country has a whole day to make changes, sometimes delivering changes or features overnight. Thus, the client gets the work done in the morning of his day. When played well, time differences can be a surprising advantage.

Disadvantages of offshore teams

Despite multiple advantages, there are many voices against offshoring.

Cultural differences

Although the age of the Internet and globalization has brought cultures closer together, there are cultural and communicational mismatches. There are various norms and customs regarding terms like time or friendliness. From simple and tiny misunderstandings a major disaster can erupt at the moment least expected.

Time zones

Time zone difference is a double-edged sword indeed. While of course, the difference can work for the client, when it comes to establishing a meeting, this can be a trouble. There is no easy way to contact team leaders or developers to provide them with details regarding the features or the way the product has to be developed. That’s why considering time zones is important when planning a call.

Also, it is a significant challenge to meet the team in-person, and in the COVID-era it is nearly impossible, despite being risky.

Geopolitical challenges

Depending on the offshore placement, there may be multiple challenges regarding the geopolitical situation. There can be a war erupt, sanctions can be imposed or a new government can revolutionize the economy effectively disrupting the vendor’s effectiveness. Also, doing business with “risky partners” can come with multiple unpredictable implications.

Quality issues

With the distance between the development team and the client, the uncertainty about the quality of the code rises. The opinions regarding the offshoring countries vary and the clients usually have their own opinions as well as preferences. But in the end, the client has to pay and wills to get the best product possible for a decent price.

Displacement of jobs

Last but not least, if there are positions offshored, there are local specialists that have to be either laid off or not employed at all. This can be seen as a lack of loyalty toward a country and weakening the local economies for sake of maximizing the income.

Considering the points above, offshoring can be either a business blessing or a curse. The key is in the way the companies interact with each other. Luckily there are good practices and tips that can make the cooperation more effective and mutually beneficial.

How to work effectively with offshore developers

The core of the intercultural differences is the non-consistent set of basic principles like time or respect. To avoid future misunderstandings, the company needs to follow a set of rules shown below:

Set clear rules

The core principle and a basic foundation of any other rule shown below. There is a need not only to prepare a clear agreement that secures both sides of the cooperation. It is necessary to deliver a better-defined framework describing how the cooperation is run on a daily basis. The “cooperation constitution” would include:

  • Defined means of communication,
  • Progress tracking tools,
  • Rules regarding the invoicing and work management,
  • Contact persons.

These rules need to be as clear and defined as possible. As mentioned above, the intercultural differences sometimes make communication challenging, so the clear rules defining the time of meetings, the frequency, or the tools to use for example for time tracking are crucial and will save a lot of effort and nerves later.

Implement heavy analytics on your side

This is a tricky one. While there is a need for mutual understanding and trust when it comes to cooperation in an offshore model, there is also a high need for evaluation. That’s why as many tools and data as possible should be on the client-side.

For example, in most cases, the offshore partner will invoice the company for hours worked. So if the partner sends only a spreadsheet with no clear information on what and when has been done, the uncertainty rises. Also, a spreadsheet is easy to manipulate, raising even more questions regarding the precision and accuracy of provided data.

That’s why keeping the production environment and utility software is the best way to ensure the process is done in the best way. The offshore partner will appreciate that the client has provided them with a convenient tool system to work with, while the client will have access to all the required data.

Also, using time tracking software like Calamari can make the process even easier for both sides. The offshore partner will have a lot of paperwork reduced – all his employees working on a particular project will track their time using Calamari, so any additional summaries or spreadsheets will be required for invoicing. On the other hand, the client will have clear information on what has been done, by whom, and for how long.

The data acquired this way will be of more usage when there will be a need to count the total cost of the product and the overall feasibility of the cooperation. The outcome can be surprising, but without good data, it would have remained hidden.

Ensure seamless communication

Seamless communication is not only about using proper tools or establishing frameworks. It is also about setting rules regarding the contact persons, their availability, or even an expected response time. There is nothing more frustrating than a void when the client waits for the response. With this in mind, a correct attendance schedule, tracked by time tracking software, is a must.

If there is something bigger to deliver with an offshoring partner, for example, a whole service, a set of mobile apps, or a complete product, the client should consider participating in an intercultural communication workshop. The cost can appear high, but the gains from understanding why the offshore partner behaves in a particular way can be priceless.

Set a clear vision of a product

Another challenge is in communicating the vision of the product in a clear and mutually understood way. If the offshore partner doesn’t share the vision, the project will end with a disengagement at best and a catastrophe at worst.

To reach that, both sides should attend a product discovery or design thinking session, where the managers and product owners will together build an image they share and agree upon. That’s a foundation of working agile with remote teams – having a solid base.

Ensure building good documentation of the product

Software development is a challenging venture, with products composed of thousands of lines of code. With changing people working on a particular part of the product, switching teams, and multiple reviewers, it is no surprise that the code gets swampy. There is a term coined for that – a technical debt.

The technical debt is amassed when the company’s software is being constantly developed without a strong emphasis on the code quality and making the software future-proof. With that, the hidden dependencies or suboptimal solutions amass and get hidden deep inside the code.

According to various estimations, the value of technical debt is on average $3.61 per line of code.

Is that much? It depends on the size of the project. There are 2 million lines of code in Hubble Telescope software, amassing for over seven million dollars technical debt. Considering the fact that the 30-year-old machine has recently entered into the “safe mode” after a software glitch, the problem is more than real.

And by the way – two million lines of code is not that many – Microsoft Office 2013 had used 45 million lines of code and Facebook runs on 62 million lines of code.

If the company wants to build a modern software product, comparable with Facebook or other popular internet services, it is crucial to prepare solid and informative documentation. It will not only serve the developers themselves but also help future team members to tackle the technical debt and solve problems no one ever thought about when writing the code.

Trust the offshore team – they are your partners

When thinking about the challenges mentioned above, one would think that working with an offshore team is too much effort with little to no gain. But that’s not the case. A skilled and affordable offshore team is a great way to build a competitive advantage and deliver cool products on time and within a budget.

Thus, when the rules are established and communication is ensured, the company needs to trust the partner. If there is no mutual understanding and trust, there is no point in continuing the relationship – be that friendship, dating, or offshore software development.

Provide instant and clear feedback

Last but not least – if there is any problem, it is not a reason to cut all ties instantly. But on the other hand, the partner will never find out if something is wrong if the company will not share this information.

The key aspect is to provide feedback based on real data gathered in a reliable system. It also regards the employee time tracking and project time tracking. A modern solution like Calamari supports both types of filtering.

When the communication lines are secured and the framework clearly established, the feedback should be as swift as possible. There is no point in waiting for the tensions to grow or even explode in a violent eruption of mutual anger.

Summary

Hiring offshore developers is an interesting way to gain a competitive advantage and deliver powerful digital products for a decent price. Due to various factors like time zones, cultural differences, and work approach, offshoring can come with unpredictable and sometimes unpleasant surprises. That’s why it is important to find outsourced developers who are trustworthy and eager to adapt.

But when the client secures the basics, the gain usually outweighs the risks.

If you wish to discuss the advantages and disadvantages of working with offshore companies, how to hire offshore software developers and not regret it, and how to make the cooperation as smooth as possible, don’t hesitate to contact us now!

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