At times like this, outsourcing the development of your software to an engineering team aboard is a popular route to delivering a product at lower cost. But how often does it work, and is it an effective method or just a false economy? MD for Solutions & Consultancy, Charlie Sell looks at the pros and cons of outsourcing development to an offshore team.

The risks of outsourcing

Over the years, I’ve worked with many clients who have experimented with outsourced development. One model involves a handful of experts in a London office and 100 mid-level developers in India. In theory, each team plays to its own strengths, but in this blended approach the outcome is often plagued by difficulties with quality control, troubleshooting, bug fixing and frustration.

If an engineer has a question that could be answered in 30 seconds, everyone is in the same room (or on Slack), English is their first language and there’s an understanding of the culture among the team, it will get solved quickly and efficiently.

In distributed team situations where the engineer has no relationship with senior colleagues 10,000 miles away – and especially if a them-and-us culture exists – the engineer may not have the confidence to raise the query at all, or if they do, may not get an answer and productivity is lost.

I’ve seen companies attempt to build remote teams in places like Ukraine where the language barrier has been the main driver of issues, though there are also risks in setting up in countries with political uncertainty.

Cultural differences can also derail a project. In India, language is not a barrier as their English is often excellent, but engineering teams have a tendency to agree rather than challenge, which can cause huge problems.

Nine times out of 10, outsourcing is done because of price but unless you consider these barriers and weight up the many factors, it can proves to be a false economy that dooms your project to failure.


Weighing up the benefits

Speed to market, quality and cost all play into the decision to outsource some or all of your engineering capability. On the one hand, an outsourcing solution may take more time but be delivered more cost effectively, whereas internal teams will get you there quicker but at greater cost.

Sometimes, offshore teams are seen as the solution to situations where UK teams are under pressure to deliver and extra resource is needed to avoid technical debt. There’s a perception that many hands make light work, but the experience of many of our clients over the years shows that rarely happens.

Flexibility is another attractive feature of outsourcing your technology, as it enables you to quickly upscale resource in your team. You can triple your engineering capacity almost immediately, and downsize it too. If you’re working towards a major product release or need resource for a specific project, outsourcing can support the delivery and avoid redundancies afterwards.

If you’re attracted by these and other upsides to outsourcing, just bear in mind there will still be an upfront investment of your time and energy to transfer knowledge and expertise across to the remote team.


How can outsourcing be done right?

Fortunately, there is rarely a question mark over ability, as engineers in locations like India or Africa will be every bit as good as engineers in Europe.

The success stories we hear from clients all share common themes, where risks are mitigated by leadership and guidance.

Instead of outsourcing to a third-party, the most effective models involve embedding a company’s own people into an outsourced office, where they can develop relationships, train and mentor the new team.

Some of our clients have set up a new office, sent their leadership and welcomed the offshore team’s senior staff back to the UK to fully share knowledge and integrate the teams.

A software company I know are a great example of a company that has chosen outsourcing and supported it with a great strategy.  They chose to create an engineering hub in Poland, but made it their engineering headquarters and moved their CTO and many of the senior engineers there.

It’s also next to a technical university which they sponsor, ensuring they get the best graduates as they leave. For the graduates, the company is an attractive proposition as they can learn from internationally-minded engineers and sector leaders and benefit from a proper training and development infrastructure.

Engineers are treated the same wherever they are in the business, and viewed more as rock stars than a rock bottom cost solution. That model, making use of access to talent, is very different to most peoples’ assumptions on outsourcing, yet it’s a fantastic example where everyone wins.

If however you still really want to outsource your entire operation to a third-party, then look for subject matter experts who have greater experience than you. This kind of model is effective for founders who have an idea, see an opportunity, but lack the technical knowledge, but it relies completely on expertise and trust.

There are always arguments in favour working with remote teams, and always risks that must be considered. What’s important is that your strategy fits your business and products, and that once you’ve made your decision, you fully commit. For tech-first businesses with teams in multiple countries, the engineers must have the same capability and get the same respect if you the relationship is to succeed.


If you’d like to discuss the pros and cons of outsourcing your development team, then get in touch with us.

Introducing our new interview series, 5 Minutes With, where we sit down with the Tech industry’s leaders to discuss the evolving world of tech and share their insights for the future. To kick off, Dan Sullivan, Team Leader, sat down with Aaron Hammond, CTO of leading European cryptocurrency exchange, BitPanda Pro. Aaron shares more about his role as CTO and his insights into the volatile, exciting cryptocurrency space. 


Can you share a bit about yourself and what you do? 

I’m currently the CTO at Bitpanda pro, I’m in charge of the technical teams on the exchange side of the business. I’ve worked at a lot of growth phase startups early in my career and then switched to running a consultancy focused on helping large scale cloud based platforms in the latter years prior to joining Bitpanda pro. 


Tell us more about Bitpanda Pro  

Bitpanda pro is a cryptocurrency exchange licensed in Europe. We offer sophisticated trading solutions suitable to both retail and institutional customers. Primarily, we deal with complex types of trading like automated algorithmic trading via API’s and trading that is considerably price sensitive. 


What challenges have you faced while building and scaling the platform and how have you overcome them? 

When I first joined Bitpanda Pro, I joined an existing team that had been working together for a long time, they were arranged by competency, with a front end and a backend team that covered the whole domain problem. My main objective was to scale the team to tackle an increase in the number of work streams that we were looking to add.  

In order to not overload the team cognitively, we went about breaking the system down into its domain boundaries and then slowly building out those teams to capacity. Although this is a people problem first, it was intended with the idea was that Conway’s law would take over and we would end up with a well architected platform that could serve the needs of the business as it scaled.  

The main drawback to this was shifting everyone out of their comfort zone into a new way of working, it forces people to be uncomfortable. Despite this, the team really backed the idea and now we have the foundations of something that’s scalable and well architected for growth as a result.  

The other main challenges come from the things you can’t control, crypto markets, economic situations, bad actors, you have to be constantly adjusting the business to account for things that a week ago would have been unthinkable.  

My theory here is that if we set the people up right and give them a foundational platform that is hard wired to the non-changing elements, i.e. the domain, then we can somewhat incubate them from the external factors we can’t control and just empower them to react when necessary.  


What new advancements in blockchain technology and cryptocurrency are you keeping an eye on? 

I think there is a lot of discourse around the subject both negative and positive. I like to focus on some of the problem solving around the known technical limitations.  

We know scaling and throughput has been an issue in the past so solutions like ZK-rollups are interesting to think about. Whereas, transfer between networks is a problem that projects like Polkadot are solving in interesting ways. 

A lot of people seem to believe that the environmental impact is generally negative, the switch to proof of stake on the Ethereum mainnet has been one way to counter this issue but for what you gain in the reduction in environmental cost you’re paying for in what we’ve seen with the loss of decentralisation. 

I think the most interesting thing is all of the ways in which people are trying to use the blockchain. We’re going through a period of rapid growth in the area and the charge is being led in the UK for sure. Some of it’s useful and some of it isn’t but it’s interesting to see it evolve. Where the problem is a transparent movement of value then the blockchain can help. 


How do you plan to continue to innovate and improve your platform in the future? 

Given some of the points around the environmental impact of the blockchain I’m currently pushing the tech team to think about a serverless first approach to projects, not having servers running 24/7 and utilising on demand compute power can go some of the way to offsetting the impact that people think our industry is having.  

We’re also looking to build out some new trading instruments that should really offer our customers something special in the next 6 months. 


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