Monday, December 9, 2013

Growing pain

Global Image is that India is the best destination for software outsourcing, thanks to success stories and enterprise projects done by companies such as TCS, Wipro, Infosys, IGATE and Polaris…many more in the list. As it happens in all businesses during organic growth phase, application development outsourcing business rapidly expanded in India and many software factories cropped in all major cities in India targeting small-medium projects in B2B segment of US, EMEA and Asia Pacific countries. Furthermore, H1B Visa, US posting, fat salary package etc. started inspiring many students to sightlessly go for computer – software engineering and the result out is that we now have more than required software engineers in India.

Within the small and medium companies, it is observed that smaller companies are found less globalized than medium size companies but even for them, globalization is seen as main growth driver for their business. This is today’s a reality and considered as major milestone for growth; thanks to long time prevalent organic growth in demand for software project outsourcing to India. 

Most of such small and medium companies are propitiatory / owner driven. Majority or these business owners are technical or software engineers by themselves. They do have vision for growing their business in global offshore outsourcing business however their vision is short sited except for very few company owners who genuinely make an effort in expanding their company. They do get projects from their foreign clients but the limitation is that they have inadequate resources and expected project timelines are not client friendly with their projects. This has a bad reflection on the global image of India as the best outsourcing destination. Many of their projects are broken, dissatisfied users and dissatisfied clients are increased substantially which has started hampering the global image.

You might say that this was expected and there is nothing new about it; I agree and the point is valid but it is a “growing pain” now for most of the small-medium software companies in India. Within the small and medium company’s slot, smaller companies are found less globalized than medium size companies so they fail to understand the global buyer’s behavior and expectations. Engineers of such companies mostly come from unknown engineering college with mediocre knowledge and no experience. (This is another issue cropped up in India) They have no experience of working on international project. They may be good in English communication (particularly from South India), but their perception and approach to the project is highly unprofessional. They have simply tested few project closer (small) with the global buyers and think it is the same as treating and managing domestic buyers who always prefer "sasta" (low cost)

During 5 years of my experience with software outsourcing company, one thing I have learnt is that all global service buyers are very choosy while selecting their offshore service provider in India. Almost all of them give very high weightage to the company's capability, relevant experience, proof of it and references from their own countries compared to just the skilled labor procurement cost. By all means, development cost is important criteria however it is certainly not more important than the other parameters. Now the sign of organic growth phase is weaken and most of the clients have started demanding more for their money. It also means that they are more concerned about the “usability success” of their application.

All said and done, globalization is today’s hard reality and considered in India as major milestone for growth whether for large enterprise or small-medium Size Company and these SMEs do have a role to play at an international level.

Bhartesh Sagar
December 9, 2013

Friday, November 29, 2013

Think Learn Test and Adept

At present business climate is going through rough weather for small to mid-size software outsourcing companies in India. So called benefits in the outsourcing sector such as low development cost, lower cost of operations, 24 x 7 development cycle and an offshore team of engineers that is fluent in English are not sustainable in growing economy scenario. When Business is sluggish, most of the clients are likely to become extra demanding in terms of getting their business benefit out of the application that you are developing and not ready to pay more than the contact price (Not considering any new CR), there is going to be more pressure on profitability. They also expect that the offshore company will have flexible operating resources (timings) and they have the capability to get their product up and running in market quickly with no extra cost. This is the time when you need to be more efficient, identify gaps between client expectations & the effort estimate. You need to focus more on adding value and get the commercial transactions processing smoothly as per current version of SLA.

Some companies make the mistake of engaging a junior developer to build software.  (Or we can say save cost) These resources will most likely work on only one project at a time without any prior experience and domain knowledge. This can result into rework and delay development / deliveries. More issues crop up when the person falls sick or resign from the job. Who is going to take their place? Is there proper documentation for what they created so another person can take over? Is there any proper knowledge transfer system in place? For the sake of telling the client, all companies claim that they have such system in place however it reality, it does not exist.

For every software service provider company, skilled resources are their “products”.  Only they can fuel the growth engine and decide future road map for the company. Unfortunately in India, attrition ratio keeps going high for skilled engineers. Today it has already become major road block for almost all companies and hampering their image in global market. Had it been top four Indian IT services companies - TCS, Wipro, Infosys, HCL, or a midsized software companies operating from B and C class cities, all companies have recognized that retaining talent is the biggest challenge. Retaining efficient and loyal employees is a key factor for uninterrupted growth of a company in this domain.

In India, no one becomes a software engineer for an outsourcing company simply because they love coding or consulting. They do take a job with local companies but their intention is to gain couple of years’ experience which may be the compulsory clause in some countries under their high skilled migration policy.

Every software engineering graduate in India wants to go to the U.S. on an H-1B employment visa or Australia or in Europe and wants to earn quick money in short span. There has always been an organic demand for Indian software engineers both in domestic and global markets. Most of the software engineers coming from middle or upper middle class have a common dream of earning in $ and send enough money back to India to buy a house, status to get a good life partner which is a key factor in cast specific arranged marriages in India or start some business of his own. This particular attitude of skill set makes the medium and small size software companies in India unstable.

The global software services market is always under constant fluctuation and when business is sluggish, bench increases with offshore service providers in India. This is another factor that directly or indirectly creates the fear for skilled resources and this insecurity feeling is pushing them to lookout for other options. When it comes to “other options”, they take the easy route of contacting their current or previous project provider abroad and try for the job. This is absolutely unethical practice however it has become so wide spread that most of the industry people have now taken it as “new normal” trend of 3 to 5 years job cycle. It is mandatory for small to medium-sized businesses into offshore software development services in 2014 to find out ways in which they can live with it and sustain their growth.

“It is the job of clever people to ask difficult questions. 
It is the job of very clever people to ask simple questions.”….
Colin Shaw

Bhartesh Sagar

November 29, 2013

Monday, October 14, 2013

Shift in expectations

Shift in expectations of the global services buyers is observed in Q1 and Q2 of 2013. They now know the difference between a technical resources provider and an efficient solution provider partner. Customers or we can say offshore service buyers are trying to transform technology into the most effective apps expecting beyond-the-expected services for their application users. They even expect qualitative Architecture recommendations from their offshore solution provider partner. 

They have started scanning their offshore solution provider based on the parameters such as essential knowledge, methods, coding standards, effective usage of 3rd party tools and technics, intellectual property, SDLC practices and also experience of diverse industry experience.

Being just technical resources providers have lagged far behind the needs for offshore outsourcing services, whether in terms of cost-effectiveness or prompt development of application. Offshore solution provider should understand the changing expectations of their customers and focus more on shaping their services integrating industrial features into their services. In short focus more to improve the quality of services so as to qualify as industrial solution providers, system maintenance partners and even (function) maintenance partners.

Equally important is sound development of their technical resources for meeting the customer expectations. It is the expected trend of the offshore service industry. The service industry, being intellectual effort intensive, can provide a variety of custom-made solutions by making use of the advantage in large scales and varied industry experience.

Bottom line is that the core values of offshore services are now reflected on the core business value of knowledge-based development activities and enhanced capacity of service delivery.

Bhartesh Sagar