Outsourcing: Managing and Hiring U.S. and Overseas Developers

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Confidential 2

Outsourcing:Managing and Hiring

U.S. and Overseas Developers

11/2/16

Contact:Ellen RaynorFounder, KeepOnMovin’Ellen@KeepOnMovin.com(415) 407-5457

AgendaSoftware Developer Supply and Demand (5 min)Introducing Outsourcing & Contract Development (10 min)3 Examples (20 min)• Replacing Existing Resources• Supplementing Existing Resources• New Development

Learnings (20 min)• Preparation for Outsourcing• Identification & Selection Process• Contracts• Working together

Please feel free to ask questions throughout the presentation.

SOFTWARE DEVELOPERSUPPLY & DEMAND

United States Computer Science Bachelors Degrees

SOURCE:http://www.geekwire.com/2014/analysis-examining-computer-science-education-explosion/

SOURCE:http://www.npr.org/sections/money/2014/05/09/310114739/whats-your-major-four-decades-of-college-degrees-in-1-graph

SOURCE:https://www.coursereport.com/reports/2016-coding-bootcamp-market-size-research

Bootcamps

SOURCE: http://evansdata.com/reports/viewRelease.php?reportID=9

2016 Stack Overflow Developer Survey

SOURCE:http://stackoverflow.com/research/developer-survey-2016

International

Note that China, India, Ukraine, etc. do not participate in 35 country OECD

SOURCE:https://www.infoq.com/news/2014/01/IDC-software-developers

U.S./India/China Engineers Comparison

SOURCE: http://issues.org/23-3/wadhwa/

United States Computer Science Trends

SOURCE:http://www.geekwire.com/2014/analysis-examining-computer-science-education-explosion/

OUTSOURCING& CONTRACT DEVELOPMENT

Types of Development ResourcesEmployment Type

Full Time Freelancer Contractor Outsourced

Companies Work for 1 company40 hours/week

Multiple clients at a time, must market & network to find work

Usually 1 at a time Usually 1 at a time

Pay Hourly or Salary Hourly, Submit Invoice to get paid

Hourly Hourly, Monthly, T&M, Fixed Project, Outcome based

Tax Withholding & Reporting

Company responsibility

Worker responsibility, itemize expenses

Worker (1099) or Agency (W2)

Vendor responsibility

Benefits Yes No None or Limited Usually includedSick, Vacation Yes No No Usually includedFacilities/Infrastructure

Company provides Work at home Depends Usually at remote facility (U.S., nearshore, offshore)

Training Company invests Rare Rare Vendor investsUtilization Less than 100% 100% 100% 100%Scalability Hard Medium Medium Easy

United States Gig/Flex/On-Demand Economy

The Business Builders – Primarily driven by the desire to be their own boss, they represent 22 percent of on-demand workers.The Career Freelancers – Happily building a career through independent work; 20 percent.The Side Giggers – Seeking financial stability by supplementing existing income; 26 percent.The Passionistas – Looking for the flexibility to do something they love; 14 percent.The Substituters – Replacing a traditional job that is no longer available; 18 percent.

1990 2015 2020

17%

36%43%

% of U.S. Workforcein On-Demand Economy

SOURCE:http://investors.intuit.com/press-releases/press-release-details/2016/The-Five-Faces-of-the-On-Demand-Economy/default.aspx

Reasons to Outsource/Contract Out

Not Strategic/Core CompetencySpecialized SkillTemporary or Variable NeedTalent ShortageTime to MarketCoverage while gaining TractionMaintenance of Legacy Products(Cost)

Image Credit: http://bit.ly/2i84NRT

SOURCE: http://www.networkworld.com/article/2931822/infrastructure-management/what-outsourcing-engagement-model-is-right-for-you.html

SOURCE: http://www.networkworld.com/article/2931822/infrastructure-management/what-outsourcing-engagement-model-is-right-for-you.html

EXAMPLES

Ex. 1 – Replacing Existing ResourcesPublic Fortune 500 CompanyMature, global, on-premise product line (10 years)Initial Outsourcing 2005, India• Software Engineering, Release Engineering, Localization(L10N), QA,

Documentation, Tech Support• US Based Product Management & Training• Corporate Commitment

Refinements• Brought back some QA, Doc, Tech Support, Sr. Engineers• Switched providers to captive offshore dev and

handpicked team• Added offshore PM• Process improvements (strategy sync, sprint, visits)

Turnover• Captive still requires HR attention• Turnover now is to Startups

Image Credit: http://bit.ly/2jxwWSH

Ex. 2 – Supplementing Existing TeamVenture-Funded Silicon Valley CompanyAdolescent, SaaS product (4 years)Initial Outsourcing 2012, India• Trained QA first• Engineering followed after 3 months• 1 week to set up dev environment• Team lead visit for 1 month, then another next Qtr• Primary & Backup for each product area

Process• Email daily standup• Weekly call• Emphasis on synchronous written communication• Best English may not be Lead or even Project Manager

Learnings• Training key to success• Timezone pros & cons• Complicated features require multiple releases to get it right• Ready availability of specialty resources• Frequent turnover, but knowledge transfer behind the scenes,

and promotion from within team

Ex. 3 – New Development

Bootstrapped StartupInitial Product, SaaS, Consumer, HIPAA, VideoInitial Outsourcing, 2014 Ukraine• Design Project, Fixed Price v1.0• Daily Video Skype

Contract Dev, 2015 SeattleHIPAA Hosting, 2015 MadisonVideo Production, 2015, RenoLearnings• Glossary• Milestone Stagegates• Design Iterations before Coding

LEARNINGSPreparation, Identification & Selection, Contracts, Working Together

Preparation

Local ArchitectScope Definition Define Success MilestonesLong Term Vision

Image Credit: http://bit.ly/2jnNfxg

Selection Process: Partner & Team Members

Partner Selection• Time Zone & Cultural Fit• Partner Size• Ability to Add Value

• Diversity of Skills • Industry Experience

• Synergy with your processes• Ability to Scale• Turnover• Communication Skills• References• Cost• Financial Health

Team Member Selection• CV, Interview, Tech Stack• Get help with personnel

review if necessary• Incentives

Image Credit: http://bit.ly/2id634A

Contracts

Business Terms• Fixed Price

vs. Time & Materials • Specs & Change Orders• Payment Terms• Service Level Agreement (SLA)

Legal Terms• Intellectual Property Ownership• Confidentiality/Non Disclosure Agreement (NDA)• Warranty/Indemnification• No Hire Provisions• Jurisdiction& Dispute Resolution• Reviewed by Competent Attorney• Rigidity of contract with big companies

Image Credit: http://bit.ly/2iYq2or

Working TogetherGlossaryVisitsCollaboration• Daily interactions• Handling the code• Empower as extension of team • Keep communication open

Checkpoints• Wireframes• UI/UX Design• Architecture• Data Design

Employee with responsibility for vendor success• Client side reviews on time• Clear Expectations (what and when)

VendorsCode Fellows, Brook RiggioiTechArt, David DeSantis(Cybage), Raj GhosalNew Leaders, Robert BousquetSoftServe, Michael BechlerTangoSource, Eric Siegfried

LegalAccelerate Legal, David Raynor

CustomersScott ArnettMatt GirvanClayton GrayDaniel RiegelTony ThomsonSkye ThompsonJørgen Vos

Image Credit: http://bit.ly/2iyOEks

05/03/2023 Confidential 29

Discussion

Set GoalsLocal ResourceChoose Right VendorGet Legal Review

Make part of teamGlossaryVisitCommunicate

Ellen Raynorellen@KeepOnMovin.comhttps://www.linkedin.com/in/eraynor/