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Nearshoring / Software Outsourcing

Why Working With Your Nearshore Service Vendor is Critical to Minimize Team Attrition

Why Working With Your Nearshore Service Vendor Is Critical To Minimize Team Attrition

Many companies find it strategic to partner with an offshore software vendor to lower costs and increase their engineering bandwidth. They often are excited to begin work once they find an offshore vendor that offers both good value and technical skills. Yet, to their surprise, once work commences the initiative crashes and burns when the vendor’s team begins to churn dramatically. An attriting team offshore erases all economic gains in the relationship, as it has to be constantly re-trained and re-assembled.

Churn pains will not disappear when sending work abroad. In a market characterized by “migrationally inclined” millennials, where demand exceeds supply, churn is a global phenomena. Hence, expect churn at your foreign vendor to operate in much the same way it impacts you: priced resources will jump ship because they are offered a “better deal, all things considered” (i.e. better pay, a better quality of life, a more enticing technical challenge, a more exciting team to work with, etc.). So in much the same way you constantly work to mitigate churn in your own engineering teams, we invite you to join forces with your vendor to mitigate churn in your offshore teams. 

As an IT service vendor that has managed an industry leading low 6% yearly churn, we share the main tips we proactively orchestrate with our clients (and recommend to our prospective clients) to keep attrition low in an outsourcing relationship: 

  1. Make sure you choose a vendor that pays competitive market wages to its employees, and that promotes a proper company culture and work environment. Unless you vendor is working in a world-transforming technology that compensates with motivation what it lacks in economic incentive, not paying competitive wages will surely lead to churn. Worse still, if a vendor runs a company culture that in any way mistreats or exploits its employees (or fails to provide an adequate life balance), churn will be rampant. These are very basic factors in churn prevention, and there is little a client can do about them except choose its vendors wisely in the first place. However, erring on the basics can certainly be disastrous to team stability and offshore project success. 
  2. Try to set up vendor teams that reach a certain minimum size. In our experience, teams that are too small churn three times more than teams that achieve a “critical mass”. Why so? When a team is small there is less sense of comradery, of collective ownership: there is no reason to share a pizza late at night, and nobody to celebrate with when a key deadline is met. Furthermore, within small teams it becomes hard to offer developers opportunities to enhance their leadership skills (the team is so small that whom are they to lead?) or to make things more interesting by varying developers’ roles throughout the life of a project. In our company, the minimum team size we recommend for long-term initiatives is of 5 people. Now, there is a subtlety here: having a 5 person team where each member is working with a different area of the client and in a different project does not fulfill our recommendation. Rather, what we recommend is at a minimum having a 5 person team that interacts with each other and depends on each other to achieve a common goal. This create camaraderie, fosters opportunities for leadership and role changes, and consequently goes a long way in keeping team motivation high and churn low. 
  3. Allow the team to have an adequate level of autonomy in the project. We are presupposing you have chosen an offshore partner that hires talent that is technically solid and motivated. Such type of partner probably employs engineers that are at the top of their (local) game. As such, they are most probably eager to contribute in project decisions; they want to feel they are able to come up with ideas and solutions that are instrumental in creating good software. As happens within your own company, good engineers will not want to be treated as automata, simply being told exactly what to do and how to do it. Rather they want to participate in an intellectual joust with the rest of the client team; they want to feel they can be creative, as well as be allowed to manage their part of the project with an autonomy that is proportional to their skill. Only when people feel they are responsible for helping determine the course of the project, will they develop a sense of ownership and loyalty to the initiative –this precisely, is the psychological “glue” that will keep them in the team for the long-run, and prevent churn. 
  4. Treat your offshore teams as if they were truly an extension of your own. Creating a sense of belonging in a group requires constant communication and interaction. Very much in line with agile development principles, experience has shown us that the most stable groups communicate via daily scrums, and continue to communicate throughout the day whenever a question arises that requires the client’s input. Distant time zones make this difficult, as communication tends to become impersonal and document-heavy. We acknowledge there are certain time zone limitations that can make this recommendation tricky. For this reason, we suggest that when searching for an IT vendor you look for those that lie in a similar time-zone. Generating a sense of collective ownership between the client and the offshore vendor goes a long way in preventing team attrition. 
  5. Present to the offshore team the big picture, not only their specific tasks. When a team is able to grasp the purpose of the project at the macro level, they become emotionally engaged and will see the impact their work will generate in the long run. This will help to motivate them in pushing through difficult challenges and focused on seeing the project through while keeping morale high. 

As a nearshore vendor located in Latin America, it surprises us to see how clients often think that by hiring a foreign vendor they have “outsourced away” the problem of churn. As emphasized above, the reality is quite the contrary. Foreign IT service firms face pressures and challenges that, although locally nuanced, are very similar to attrition pressures the client faces. Engineers at home or abroad want to be compensated fairly, want to work in exciting projects, want to feel they have autonomy in achieving common goals and want to thrive in an environment of teamanship and mutual cooperation. To this end, the vendor and the client have to work together to provide an environment that keeps people happy, taking churn to a natural minimum and producing a successful, productive, long term relationship.

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