Thursday, July 5, 2007
There’s a flurry of articles (NYT and WSJ) in the last few days on the challenges of outsourcing to India and debating whether the trend is changing or even reversing in some cases. Since we’re set up with more than 100 employees in India we debate the pros and cons on a frequent basis as we consider which side of the Atlantic to put projects on.
Our main offices are in Gurgaon, outside of New Delhi, and we have a small R&D operation in Mumbai. For context, our U.S. operation is bi-coastal: lead R&D, marketing and G&A is in silicon valley; sales, client consulting and business development is in New York. So we are used to running meetings at odd times of the day and night across multiple time zones and I certainly rack up the air miles.
Also for context, our business requires high end software technology skills – architects and algorithmists – and well as bench strength in engineering, research and services delivery.
When I walk through the allocation of projects and resources with my team we look at both sides of the coin:
Challenges managing India-based teams:
• time zone and cultural/language differences – successful projects need to be able to be specified sufficiently tightly to overcome the distance
• lack of experience with leading edge technology in our space – not surprising since it’s being invented every day in silicon valley
• outsource or subsidiary – today all our work is done by employees of our sub. We believe this gives us higher quality, which is why we do it, but less cost flexibility than we’d have with an outsource contract.
• ever increasing engineering salaries - they are climbing at such a pace that it’s hard to budget and the cost advantage over the U.S. is disappearing fast
Advantages managing India-based team:
• talent and ambition – sometimes our Gurgaon team reminds me of the wild west of silicon valley 20 years ago – ambition, drive and a hunger to grow and succeed that is exciting
• time zone differences – since our business is delivering research and analytics from the web to predominantly U.S. customers this works to our advantage.
• availability of well-educated talent – especially in software engineering and research/service delivery - hiring for growth is very competitive in silicon valley now.
The type of projects that get assigned to the silicon valley team therefore tend to be the breakout R&D projects – building a new database schema, making a categorization technology breakthrough, changing our duplicate grouping algorithms, designing the new UI to show off our product but follow the latest from the new generation of consumer UIs (like Facebook) at the same time.
In contrast the type of projects that get assigned to India tend to be the engineering and process projects – building the new UI to the specification, radically changing the customer delivery system to reduce latency, developing techniques to generate categorization rules automatically or changing the tools our researchers use to serve customer specific requirements.
But as with any generalization, there are exceptions. We have a few radical, leading edge architects in India, and we have some process folks and researchers in the U.S. So, we weigh our options every time based both on the general trends we see in the two locations and on the individual Rainmakers involved in each case.