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Lessons From Setting Up an Insource Operations Offshore

Scaling Team
Remote
Leadership
Sharing The Vision
Hiring
Team Processes

3 May, 2018

Arnulf Hsu
Arnulf Hsu

CTO at SalesDirector.ai

Arnulf Hsu talks about his experience of setting up an offshore operation and the lessons he has learned.

Problem

At my previous company, we were running a successful VC backed SaaS company, I was the CTO, business had about 60 employees with 15 engineers and a roadmap chalk full of features and capabilities. We were scratching our heads to figure out how we can accelerate the roadmap and deliver all the awesome things our customers were asking with the new budget for the following year. We knew what the cost and output of a local engineering hire, but wanted to figure out how to get more done in a shorter period of time.

Actions taken

Offshoring was always on the table, but we had heard many horror stories about the outcome. We knew to even go down that road we needed the right people. Luckily we knew someone close to the company who had ran an operation offshore successfully for the last decade or more. He knew the people, the culture, the infrastructure, etc... We hired this individual to become our VP Engineering and we spun up an insource operation in India. This was not a typical "offshore" arrangement, it was our office, our people, our culture... Over the course of two months, we hired 30-40 engineers. We then sent numerous people from our US based engineering office there each month for technical and process training, try to instill our culture there (innovation, agile, try new things, ok to fail, challenge the norm, etc..) While on paper, our plan had made sense in terms of our resource and funding requirements, we hired way too fast, we had communication challenges all around, we didn't have the right frameworks in place to make this successful, and it took us about nine months to realize our mistake. And by frameworks I don't just mean technology frameworks, but frameworks for everything. The time difference also created a lot of fatigue on both sides.
Net, we thought that our cost leverage was 1:5. It turned out that the actual output was 10x lower than a US head erasing all cost savings, and effectively causing it to be significantly more expensive than the known quantity locally.

Lessons learned

If you're going to undertake setting up an offshore location, start slowly. Find one or two employees who have worked in your codebase for some time who can lead the offshore site. To make an offshore site work, you really have to have a strong technical leader at your offshore location, who has worked with the organization so they understand what is required culturally, as well as technically.

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