One Startup’s Story: The Evolution Of An Outsourcing Strategy

Guest author John Fearon is CEO of Dropmyemail.com, which backs up emails in the cloud and Dropmysite.com, a cloud-based backup company.

At any startup, the first hurdle is the lack of resources - lack of funds, lack of manpower, lack of time. Outsourcing – or relocating - the work can be a great to overcome those obstacles while controlling costs, increasing efficiency and even making workers happier

But it’s not a simple, one-size-fits-all process. In building my company - Dropmysite / Dropmyemail – I found that managing outsourcing was an ever-evolving combination of local and remote capabilities that stays flexible enough to meet changing conditions.

(See also Are Crowdsourcing And Outsourcing No-Nos For Startups?)

Learning The Hard Way: My Outsourcing Experiences

When we launched two years ago, for example, the whole development team was based in India. As a one-man founder bootstrapping the business, this allowed me to hire a team for much less money.

Plus, with India being 2.5 hours behind my Singapore headquarters, my productive workday was effectively extended. In the morning, I conducted business deals and meetings. Then, in the evening - as the team returned from their lunch - I would concentrate on working with them in real time over Skype on building our product.

After six months, I was able to sign up a local CTO to help build a Minimum Viable Product (MVP) that enabled me to secure funding. With some cash in hand, I started building a local team of developers to be able to improve the product more quickly.

At that point, I had two teams of technical workers in different locations – which started to cause problem. We had constant confusion, communication issues and lack of control. At this stage of the business we needed top talent, no low cost workers, so I ended the contract with the Indian team to focus on the local team.

So far so good, but soon my lead technologist decided to go back to Argentina for family reasons. He had consistently delivered good work so we decided to try a long-distance relationship. He hired a few ace developers for the Argentinean team and everything seemed like smooth sailing.

Eventually, though, the 12-hour time difference started to take a toll. Meetings were impossible to schedule and both teams were exhausted. Work delays proliferated, as even the assignments were received 12 hours later. We closed the Argentinian office, bringing one developers to Singapore.

(See also The Pros And Cons Of IT Outsourcing: Globally, Nationally And Locally.)

6 Outsourcing Lessons Learned

My experience with outsources taught me a variety of valuable lessons:

1. Keep Teams Together In One Place. Specific functions should be grouped in the same office and time zone to reduce miscommunications or time lags performing urgent work done. It also makes brainstorming sessions easier to coordinate to create better products.

2. Not All Functions Need To Be Together. That said, it may not be necessary for different function teams to be together. Front office teams (sales and marketing, for example) should be in their home market while the back office (IT and operations) can be anywhere.

3. Give Each Team A Focused Goal. Beyond stating the obvious, all teams need clear directions and key performance indicators (KPIs). Just as important, local and remote teams work better when staffed with self-starters who need less direct supervision.

4. Contract Remote Teams On A Per Project Basis. This frees them to do their work without having to rely on other teams to proceed. The offshore work should be completed parallel to that done onshore. If the remote team isn’t pulling their weight, this approach contains the impact, reducing contamination of other teams and projects. Finally, per-project deals make it easier to replace them if necessary.

5. Daily Communication/Alignment Is Critical. There needs to be constant two-way communication between teams. Remote technology development teams must make frequent reports back to the home base. The lead tech officer has to ensure that their work remains aligned to the overall company direction. Communication between business functions is also essential. Tech teams having to speak to each other, and also keep the salespeople in the loop so clients and partners stay informed.

5. Outsourcing Strategies Must Continually Evolve. Currently, Dropmysite / Dropmyemail keeps core functions and technical development in Singapore, but we have business development staff in India, Japan, and the U.S. And we have outsourced side projects to other locales, including Vietnam. The key is to find and execute the right strategy at the right time.

 

Lead image courtesy of Shutterstock.