Offshore Staff Augmentation: The Secret Weapon of Uber-Successful Companies

Teaser

Leveraging offshore resources, you can cut your product development process 50%, cut costs 75%, and get better software with less work…but only if you do it right. We explain how you get these benefits and how to do it right.

Introduction

In today's rapidly evolving always-on business landscape, companies are constantly seeking ways to stay competitive and efficient. One such strategy that has gained significant traction is offshore staff augmentation. This practice involves hiring skilled professionals from around the globe to enhance your existing team. This can deliver flexibility, cost savings, faster development cycles, and access to hard-to-find expertise. It is particularly valuable for fields with employee shortages like software development. In this blog, we will delve into the intricacies of offshore staff augmentation, offering practical insights and real-world examples to help you understand how to win by doing it right!

What is Staff Augmentation?

Offshore staff augmentation is the practice of hiring professionals from other countries to work remotely for your company. There are two ways to augment your staff: (1) hire directly; (2) contract with an agency that provides offshore software experts.

Option 1: Hiring Directly: This approach reduces your costs by eliminating the cost of the agency. However, it significantly increases the management burden. It also risks going wrong if you don’t know the culture, or your initial hires are weak: as they say A-players attract and hire A-players, while B-players attract and hire C-players. You might also get the taxes and legal issues wrong and create a mess. Hiring directly has the same challenges of finding the right skillset, the lag time between making an offer and hiring, and many more negatives.

Option 2: Contracting with an Offshore Agency: While the quality of agencies and their people and processes can vary dramatically, they do provide a faster and easier process that significantly reduces execution risk. In fact, I started MPH International because the companies I was advising were not having the offshore success we were having for the reasons mentioned above.

Management Responsibilities for Local Hires, Remote Hires, & Offshore Agencies

Cost Reduction: Approximately 4X Cost-Advantage

One of the most significant advantages of offshore staff augmentation is cost savings. For example, let’s look at the all-in cost of a US-based employee with an annual salary of $150,000 per year:

For this same amount, you can hire 4 top-flight software engineers in the Philippines, or 2 engineers in either Central/South America or Eastern Europe.

2X Your Product Pipeline Speed

If you employ a local team for 8 hours a day and a remote team for 8 hours a day, you can double your product pipeline speed. Even if you only outsource complementary functions like QA, your are increasing development speed, because every morning the development team has their code from the day before QA’ed, the bugs are entered into the tracking system and ready to be remediated. 

Cutting-Edge Skills

While many offshore agencies focus on low-level functions like manual testing, some agencies—including MPH International—focus on providing hard-to-find skills that demand a premium in local markets. For example, MPH International focuses on cloud-native (Kubernetes) micro-services development that can run $400K+ per year in Silicon Valley. We also lead in exploiting technologies like Golang, Scala, PWAs, React Native, Web3, Blockchain, Secure Contracts, sophisticated RBAC, and more. This makes it easy for companies to start with 1-2 hard-to-find positions, but they invariably expand from there.

Low Employee Turnover

Employee longevity is critical to the long-term growth of your company because they develop domain expertise and code expertise over time. Too many US and European hires put in their 12-18 months and then jump to a higher-paying big name company with stock options. Finding an offshore agency with very low employee turnover is key.

How to Select & Engage with an Offshore Agency

Step 1: Define Your Requirements

1. What roles are you looking for? Do you need UI/UX design, front-end development, back-end development, quality assurance (manual, automation, accessibility, load & performance, etc.), DevOps, project management, product owner, etc.
2. What skills do you need in each role? What tech stack and tools are you using? Make sure you have alignment with the agency and their people.
3. Budget: What is your budget and how many people in each role are you looking for?

Step 2: Research Agencies

1. When you talk with an agency, ask them to show you some products they’ve built. They should be proud of their apps. They should be beautiful, powerful, and useful.
2. Fit: You need to be comfortable with the language and cultural fit. There is nothing more frustrating than trying to work with a team you cannot understand or you have incompatible cultures.
3. Time Zone Compatibility: Some companies prefer a similar time zone, while others like the round-the-clock approach. Communication and development tools like Jira, Slack, Teams, etc. significantly reduce the need for real-time interactions and physical presence. Some developers also prefer working odd hours increasing time zone compatibility.
4. Ask how the agency provides information for you to monitor progress. You want total visibility into the project at your fingertips 24-hours a day. If your boss asks for the project status, you want to show her right away. Ongoing KPIs, communication, timeline, feature lists, designs, should all be visible.
5. Make sure you have management in your time zone to speak with, someone who has the authority to get things done quickly on your behalf.
6. Get references & testimonials: A good agency will become a partner. Make sure you like and respect them. Make sure you can work with them. You don’t want an agency that just does exactly what you tell them, you want one with experience and insight who can help you through the process where you are both learning and growing from each other. If the agency owners haven’t built their own successful products, this is a big red flag…how will they know how to build a successful product for you?

Step 3: Contract Negotiation & Pilot

1. Make sure there are no hidden costs, that everything is spelled out in their contract.
2. Make sure the timeline, payment terms, termination and other contractual issues are acceptable.
3. You may want to consider starting small with a pilot project and then growing based on a good experience. We haven’t had customers start small, but we have had customers scale-up considerably once they have a good experience.

Real-World Insights to Drive a Winning Result

Reference Checks & Testimonials

Selecting an offshore agency is like selecting a partner or a spouse. Imagine getting reference checks on your future spouse from old boyfriends, friends, enemies, co-workers, etc. Your future spouse might quickly become an ex-girlfriend if you did that, but it would be useful info. When selecting an offshore agency, reference checks are important. 

The Value of a Learning and Improvement-Focused Culture

At MPH International, we have found that a culture focused on continuous learning, personal growth and product ownership, is far more important than hiring for a number of years of experience. We like to develop talent internally and infuse them with a winning culture, instead of hiring experienced outsiders. The few times we’ve brought in senior individuals with say 10 years of experience (often one year of experience repeated 10-times), we’ve often found that a 2-3 year homegrown talent is more skilled and productive. This underscores the importance of not falling into the trap of equating years of experience with capability. A culture that promotes learning, personal growth, and an attitude of product ownership often yields far more effective and innovative results.

…But They Aren’t Our Employees

I hear this a lot. I can tell you, as someone who runs an offshore agency, we do everything possible to make them feel just like your employees. We recommend to clients that they extend their infrastructure—such as email, chat, team cloud storage, development tools, etc.—to the offshore team. You can also pick and choose which functions in the table above you want to do. Some clients fly team leaders to meet the in-house team members. It’s totally up to you. We even invite clients to our year-end party. Because of our low employee turnover, our teams typically become the stable foundation of the development team bringing new local hires up to speed. We often joke that were more “employee-like” than the employees. 

The Importance of Local Support in HR

Having local support skilled in HR is crucial to the success of offshore staff augmentation. Local HR professionals get to know the individuals on your team as people, understanding their personal issues and aspirations. They guide them in a way that maximizes productivity while keeping them happy. This approach results in much lower employee turnover, which is critical for productivity because long-term employees develop domain and code expertise. 

Agility for Scaling Up & Down

Hiring local employees can take a long time with headhunters, finding the right candidates, extending offers, waiting for the notification period from their current job. Offshore agencies typically have people on the bench and a constant flow of candidates, so the hiring process can be very fast. Then you have the termination process, which can require putting someone on a performance improvement plan or laying them off and paying a several months of severance pay. Offshore agencies typically only require a 30-day advance notice. These may seem like small things, but they significantly reduce friction and improve the ability to scale up and down.

Communications Style

Be sure to inform the team how you like to communicate and how you want the team to communicate. Some clients want to be informed only when there are issues or accomplishments. Others like to get into the communication flow of the team. One time a client said, the team doesn’t chat among themselves asking for advice, insight, feedback. The team was doing that on a separate chat app because they thought the client would be annoyed by the banter. When you set up a team, be sure to align communication expectations with the team. 

Conclusion

Offshore staff augmentation offers numerous advantages including cost savings, accelerated project timelines, ultra-low turnover, and access to hard-to-find technical skills. By understanding its benefits and implementing it effectively, companies can stay competitive and drive rapid product innovation. If you're looking to enhance your team and drive business growth, consider exploring offshore staffing solutions with MPH International.

We invite you to share your experiences and questions about offshore staff augmentation. For expert offshore staffing services in UI/UX design, programming, QA, DevOps, project management, and product management, contact MPH International today. Let us help you build the team you need to succeed.