The Real Reason Why Most Offshore Development Centers Fail

Nowadays, more companies are looking to open a software development center offshore as a part of their primary structure. This might come as a desire to cut costs, establish a follow-the-sun approach, or attract talents they cannot find in their country of origin.

If you google, there will be tons of advertisements promoting companies that can build an offshore development center for you with guarantees, best results and all you can imagine out of the box service. Sounds like a great deal. With office-ready and coffee machines hot, you can sign an agreement and get fully functional cross-functional teams in two weeks.

It does work for some, but most likely, you will need something else. Yes, all the frameworks and previous experiences are there to help you succeed, but many challenges are still on the horizon. Moreover, depending on your goals, you might look in a different direction than everyone else.

We have observed some challenges companies face while establishing an offshore development presence. Let’s look at the key challenges you must know while scaling your capability.

Reporting structure

Your new office will be a separate legal entity with all that comes from that combination. They will have a different line management structure and laws and policies. What has worked for you before in your primary area may not work there, especially if the region you are expanding to has different cultural, language and behavioural patterns.

You might be lucky and able to embrace correct behaviours from the beginning. Still, most likely, you will end up in a situation where the reporting that has been established there does not correspond to what you are interested in locally. They will be looking at different goals and care about various things.

It is okay for the local teams to pursue their desires to start as soon as possible, but you must ensure that you are aligned with what matters at some points.

Outsourcing or team building

If you are going to regions which have traditionally been built in an outsourcing manner - think about Argentina, India, Nigeria, Philippines, Ukraine. So you have to stay firm on what you are trying to achieve. Essentially, there are two models you might be interested in:

Outsourcing

You share requirements with some sort of manager, they share it with the team, the team deliver value, you pay money, and that’s it. It works for some, especially if the requirements are well known, you do not have any extravagant requests, and what you are trying to achieve has been done before. In some domains, this works, especially if the main goal is just to make work happen.

We believe that if you are reading this article, you have understood that to truly uncover the joy of unique thoughts, creativity, and team collaboration that can uncover unknown results, you must let people work out of the box. You will not succeed for this purpose, cutting them from all the communication and speaking only to managers who will deliver your requirements to the team. You need to build the same structure you have built onshore - cross-functional, self-managing and independent teams.

Team building

When it comes to building teams that can perform to their best - values matter, ways of working matter, and social contracts matter. None of this would be possible if the local leadership understood the assignment wrong. If the people you are hiring have been working in an outsourcing manner for ages - you are doomed to fail because there is no way it is going to work. Local managers will establish a dictatorship, measure some absurd metrics and care only about reporting good metrics.

You have to stay firm on your position. It will be painful, hard to find the right people, and super slow, but all ink some time to establish the culture you have had locally - why would you think it will be faster now?

Make them hybrid

Covid has changed how we work; many teams are now distributed around the globe, and people are working together who perhaps have never seen each other in person. This means there are plenty of possibilities to pair up people who are apart many thousand miles away and can collaborate and share thoughts and values. When onboarding new teams, especially in huge chunks from the new region, make sure you are not closing them in clusters where they have a limited view of what is happening outside the main office.

The way to make it much easier is when you have a hybrid team, and the true habits established for a long time are shared properly. Pair them up with experienced colleagues who know what, how and why you are building and even their presence will help steering in the right direction.

Define what you measure

We have discussed metrics before, and it is sometimes hard to understand the right thing to measure. There will be plenty of possibilities to understand what is wrong, but before you start, you must set the right expectations for the people, management, and the whole new structure. If you miss one of the three - they will be established locally, and considering all the challenges we have already discussed - that could take an unpredictable turn.

Provide correct framework, limit wrong behaviours and, of course, stable check-ins. All basic stuff is understood, but you will be tempted not to do that because you have some barriers.

It is good to start with Evidence-based management, not only for your offshore teams but also for the local ones. We have covered this topic in articles and recommend starting from https://hackernoon.com/evidence-based-management-in-business-will-it-make-a-difference.