The Pitfalls Of Outsourcing

David Tabachnikov

Remote CTO at ScholarshipOwl



"In 2013, I was managing the development of a company based in Israel. Because it was hard hiring quickly enough, we decided to work with an outsourcing company based in Belarus. We asked for three people from the outsourcing company to work for us full-time and worked with them for about four months. They weren't very productive and were only doing ¼ of the work done by our team in Israel, so I decided I needed to work out the low performance of the outsourced team."

Actions taken

"When we first started working with the outsourcing company, they had demanded we hired a part-time team lead to manage the three developers. At first, we thought that the goal of this was to assist with communication between our Israeli team and the team in Belarus. However, the performance of the outsourced team wasn't very efficient, so I decided to bypass the team lead who had been assigned to us. I decided to ask someone from my department to act as the team lead of the remote team. Luckily, I had someone in my department who was originally from Belarus, so he understood their culture and knew how to communicate with them properly. He started having daily meetings with them and communicated with them regularly in order to figure out what was going on. When they were unable to attend meetings, he would question why that was, and in that way worked out what the issue was. It turned out that while the outsourcing company was meant to have had the three employees we had hired working full-time for us, they were actually only working part-time for us. In addition, they were doing maintenance work on other projects and would do training about technologies unrelated to the work we were doing. Because of this, we decided to stop working with the company. We then opened a new branch of our company in Ukraine, where we did all the hiring ourselves. We sent one of our employees to manage the new branch and the new team ended up performing very well, with the Ukrainian branch ending up larger than our Israeli one."

Lessons learned

"If we hadn't assigned our own team lead to work out what was going on, we wouldn't have known why they were underperforming. I've now learned not to go to outsourcing companies, as it generally takes the same amount of effort to build your own team. While it's less flexible, the people you hire will be loyal to you rather than being loyal to the company that outsources to you. You will also be able to more incentivize them through things like bonuses, without worries about the bonus going straight to the company."

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David Tabachnikov

Remote CTO at ScholarshipOwl


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