Offshoring has been a hotly-debated topic for many years now among Fortune 500 companies; however, several factors - the increase of skilled citizens around the globe, the near-ubiquity of internet access, the continued relaxation of trade barriers, cost savings via an efficient marketplace for international labor - have recently made offshoring an attractive option for smaller businesses and startups.
Factual is headquartered in Los Angeles, but has an office in Shanghai, where we do much of our UI and web development. We think the Shanghai office has been a success for us. But we’ve also learned many lessons along the way. Here are some we feel are among the most important:
1) For long-term work, instead of outsourcing, set up a subsidiary and hire all your employees
If there is one lesson we would choose to convey, this would be it.
Setting up a subsidiary is certainly much more challenging than simply working with an outsourcing firm, but there are many disadvantages with outsourcing:
In a subsidiary, all these disadvantages can be turned into advantages. You can set up a nice work environment with good working conditions, hire great employees, and offer them incentives and equity stakes in the company to make them true partners in your business success.
2) Leadership “bridges” between offices
At Factual, we have quite a few “bridge” people between our Shanghai and LA office, all of whom are fluent in both languages:
We mention all these people to show that we have a team that connects our two offices, and with their knowledge of issues on both sides, they are critical to the success of the overseas office.
3) Communicate, communicate, communicate
Communication on three levels:
Erring on the side of too much communication can help compensate for the natural language barrier that is always present.
4) Face-to-face interaction
This is an aspect of communication that we feel is important enough to emphasize on its own, and this is what transforms your relationship with your offshore employees. We’ve found that having a program where employees from our offices regularly travel to see each other makes a huge difference, in that it facilitates communication later when you’re no longer face-to-face. When you communicate via phone or IM with someone you’ve met in person, you can visualize their real tone of voice, their mannerisms, and their physical presence; this makes the communication more personal and friendly. Suddenly, you’re talking to a real human being and not just that-remote-guy-who-keeps-asking-me-questions.
5) Maintain cultural, regulatory, and political awareness
6) Strong process…with agility
Strong process is sometimes associated with being less “agile”, but for us, our process came about because of our agility. We try to be quick to identify interactions that aren’t working for us and we’ll put process in place to make sure it doesn’t happen again. Most of our current processes are an accumulation of these small adjustments.
For example: The Shanghai office starts their week when it is 5pm on Sunday in Los Angeles. If they don’t have all the information they need, it can be hard for them to get in touch with people in LA who are out enjoying the last bit of their weekend. So as part of our process, the LA office has a standing promise to the Shanghai office: do all the planning for the following week and have it ready by Friday evening.
Our experience with offshoring has given us new international friends and has helped us think more globally in all aspects of the business, from technology to company strategy. It’s worked for us - perhaps it can work for you.
Please let us know if our advice helped, and if you have experimented with off-shoring, we hope you share your experiences and lessons learned. But no matter where your offices or workers are located, we wish you success in your endeavors!
Director of Engineering, Factual