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Don't Get Burned: 4 Startups Share Their Offshoring Strategy

Don't Get Burned: 4 Startups Share Their Offshoring Strategy



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Published by rimam1
Advice how software and web 2.0 startups can go offshore without getting burned; given by startups that are successfully offshoring already.
Advice how software and web 2.0 startups can go offshore without getting burned; given by startups that are successfully offshoring already.

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Published by: rimam1 on Jan 29, 2008
Copyright:Attribution Non-commercial


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These days, everyone's looking for a rock star coder , but they're not that easy to find. That's why more startups are sending work offshore (not to mention that more VC's aredemanding an offshore strategy from their portfolios
)Big companies set up captive development centers that serve the same purpose. Startupscan't do that, so the trick is to find a mature and reliable team that will become a part oyou. Outsourcing can not be transactional... the offshore team has to be a part of your team. That way they actually understand you and are committed to you. Outsourcing isabout high value, not low cost. The real benefit is nurturing a team that's an extension of you.That's exactly the type of offshore development that we advocate. Check out what other startups are saying about their offshoring experience and ask yourself if you're goingoffshore the right way:1).The first a product engineering outsourcing case by Jeff Angusdescribes how eProject,(now called Daptiv)
a Seattle based SaaS provider of project management systems hashad unabashed success partnering with an outsourcing firm located in the Ukraine and in Redmond, Wash."We went out and got references for offshoring partners. The qualifications we werelooking for were unusual," says Chris Lynch, eProject's vice president of engineering."We were looking for quality of work rather than lower costs ... I was hiring locally, socosts were budgeted," he says."Quality was always the biggest need. Our specs called for a partner that as technicallycompetent and independent, [who] would tell us what they thought we were doing right or wrong, and who would function as an extended part of our team. We wanted a peer who had enough expertise of their own to recommend content and coding techniques aswell," 
Lynch explains.
This is a quote from Mike Volpe, VP Marketing at Hubspot.com.Hubspot.comhas akiller marketing blog that is required reading for every startup and small business.Dharmesh Shah, the founder of Hubspot has agreat blog about startupsas well. Here'swhat Mike said about their offshore team, there's a valueable lesson here:"
 for the record, we do have some overseas development done at HubSpot, but the folksabroad are really part of the team - we interact with them daily and the only differencebetween the folks here and there is the actual address." 
3). This is a great quote posted by Stephen Wiehe, President and CEO of SciQuest.Hewrote a response to a comment I posted in the Wall Street Journal's Business TechnologyBlog
"Anyone who questions just how significant hidden costs can be when outsourcing onlyneeds to look at the recent recalls of toys manufactured in China. Many companies focuson costs they can see, but fail to consider the unknown costs that are often the greatest  source of risk when offshoring jobs. Forward-thinking companies know that you can't be high touch, high tech and low cost without sacrificing one or more over the others. For example, offshoring service jobsmight lower costs, but you're likely to lower your customer satisfaction rating at the sametime. As wages continue to rise in India, organizations need to take a serious "look under thehood" and begin to articulate the unknown costs of augmenting their workforce withoffshore staff. As stated in Raza Imam's post, organizations should seek to expand their workforce with overseas talent to bring more value to the organization, its stakeholdersand its customers, rather than solely as a means to cut costs.We began to notice the trend of rising overseas employment costs several years ago and have downsized our offshore team to just 10 percent of what it was at its height. We've solved the communication issue broached in the study by bringing members of our overseas staff to our headquarters for three months on a rotating schedule. Our offshoredevelopers have gained a sense of unity and camaraderie with our U.S. staff while furthering their knowledge of our procurement solution suite. Effective communicationwith your offshore workforce, as well as the uncovering of unknown costs is 90 percent of the hurdle to a successful partnership. As a result, you can eliminate what may be the greatest hidden cost of all-inefficiency.

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