Non-hire Trap

One of the first steps in most of offshore engagements, often even before you decide on the vendor is signing non-disclosure and non-solicitation agreements. NDAs and NSAs have become so common that often they are signed without understanding a potential penalties they may lead to. Below are a few fairly common tricky situations related to non-hire clause:

  • I had several situations when a developer brought to me by my offshore vendor for an on-site assignment approached me for a full time position. In every case that was a highly respected developer with in-depth knowledge of our products, etc. close to the end of their on-site assignment. In every case the developer had alternative offers and was not planning on going back to his original employer.
  • I’ve seen some tricky situations when top-notch employees of companies who did not make through selection project came to us looking for full time employment when the deal did not happen.
  • A few times I had to deal with the situation when a new vendor brings me resumes of the employees from the vendor that has been replaced.

There are many other scenarios with the common issue – you are interested in hiring an employee but can not do it without breaking NSA.

In many cases the non-hire situation can be addressed to both parties contentment. The typical approach I would suggest is considering hiring employee as if you were working with a recruiter. 15-30% of employee annual salary could be amount which would keep the vendor happy under certain circumstances. That has to be handled with great caution and respect to the vendor. Some companies put substantial investment in the resources on all fronts – from acquisition to training and benefits, for them 30% may not represent a sufficient amount. I find the wording non-hire clause as a great indicator. Here is for example an extract from NSA with one of very employee-focused organization:

During the term of this Agreement and for a period of two (2) years after the later of the date of this Agreement or the completion of any SOW under this Agreement, each party agrees not to, directly or indirectly, initiate employment discussions with, hire or use in any way the services of an employee or contractor of the other Party. The parties specifically agree that a material, uncured breach of this provision will entitle the non-breaching Party to agreed upon liquidated damages in the amount of two hundred thousand dollars $200,000 per occurrence with a maximum aggregate limitation of $3,000,000. Subject to the time limitation set forth in the first sentence of this paragraph 11, this provision applies to employees and contractors who are no longer employed by the Vendor or by the Client but were so employed at any time during the term of this Agreement.

You may consider he figures to be over the top, I did. However, the truth of the matter is that this particular company wants to do whatever it takes to prevent brain drain whether it’s instigated by the company or by the employee. And that’s deserves some respect and twice as much serious attention.

However, most of the time you do not find the NSA / NS clause worded with such might. Vendors understand well that in many cases they can’t do much about losing a particular employee, and losing him/her to a customer may play in very positive manner towards improving customer satisfaction / retaining the customer, etc.

Here are just a few obvious tips on dealing with non-hire trap:

  • Deal with NSA with consideration that you might be facing it’s bitter end.
  • Stay legal – do not solicit vendor’s employees, even they seem a prefect match, do not even give any clues or signs. If the associate comes to you that will put you in the best negotiation position with the vendor and with associate.
  • When facing the “situation” stay legal in all aspects and consider the hierarchy of importance: yourself, the vendor, the associate.
  • There is almost always a way to negotiate the situation with your vendor in a win-win manner. Consider “win-win or no deal” approach.
  • You may not always get what you want, in particular there will be situations that you just won’t be able to get a particular employee. Let it be.

Mumbai terrorist attacks

Never during my visits to Mumbai I had a chance to stay in Taj Mahal; it was always booked solid. I am sure I won’t be staying in that symbol of luxury any time soon. As a matter of fact, I am not sure it will be as high in demand as it was for some time now. Terror atrocities are not new to India, as but till now they were mainly off the radar for many of US execs. Last couple days will change the landscape for a long time. As a matter of fact for many IT execs of my generation the word “Kashmir” has stronger association with Led Zeppelin than with ongoing unrest and terror. Of course there will be changes in hotel security and city security altogether, there will be strong government actions, and so on. Of course people will eventually forget victims and the horror inflicted on the city by well organized militias, yet traveling to Mumbai won’t be the same for a long time. The difference with emotional impact of slams and extreme destitution you see on the way from airport to a beautiful downtown and physical clear and present danger is huge. Today National Outsourcing Association (NoA) tells us not to travel to India unless we have to or at least think twice even though Nasscom said the country’s software and services companies remain fully operational. Tomorrow safety of your resources stationed in India or your business travel might become an ongoing concern. I have seen companies bow out of outsourcing engagements on less violent news.

IT Outsourcing ’09 Predictions

Hip hip hooray, the crystal ball is unveiled, and early predictions for offhshoring are out – IT Offshore Outsourcing: Early Predictions for 2009. Looks like there will be more business coming to the offshore vendors despite all the economic turmoil. I bet the jury is still out, as a matter of fact, the survey of 230 CIOs must have taken some time to process and summarize. The figures we are seeing today (DOW at 7500) are based on the data which probably goes back at least a few months (when DOW was let’s say at 12000).

My predictions are on a negative side, nowadays more than before, I expect notable deflation of offshoring business that will hit hard small suppliers in particular. I am sure we’ll see a wave of unpaid invoices, team buy-backs, and price wars.

Finding local employees may become easier as well, and that’s has been one of strong offshore drivers. Especially considering that things are getting quite gloom  and doom even in the IT employment heaven: California’s unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years, just as a state fund that pays unemployment benefits was about to run out of money…

The Myth of the Onsite Coordinator

One of the proven methods to improve quality of communications with the offshore team is to have a dedicated person to coordinate and oversee its activities from your site. This person should ensure the communication flow, act as liaison between the teams, and often interpret information from local to offshore language. Even if the both sides speak English fluently (e.g. outsourcing to India) there is lot of subtle differences in business lingo that need translation. More so the person could be charged with business analyst activities interpreting domain specifics to technical language of the development team. On my book offshore manager should have very solid PM/PMO skills, in-depth understanding of the processes such as SDLC, strong knowledge of the domain, and of course understanding of the offshore. The job description for the person quickly adds up to a very tall order. Add to it logistic challenges – this person typically ends up working long odd hours – and you realize that it’s not an easy task to find some who can do it.

Of course I am not the one who invented dedicated offshore managers, as a matter of fact even for a fairly small engagement your vendors would strongly recommend that you put a full time onsite coordinator on your team. The vendor is likely to have long list of Pros for adding the person to the team, not surprising it’s a very common add-on sold pretty much with every contract.

There are a few serious caveats here, if not to say traps. Something I have observed on multiple engagements:

  • Onsite coordinator could be just a slightly disguised sales executive with primary objectives that have nothing to do with real objectives of offshore manager.
  • Onsite coordinator could be grossly unqualified for the job but given it due to some internal reasons – for example as a holding position between assignments.
  • Most often the onsite coordinator is just that – a mere coordinator – far less than you need for the position.

Each of the scenarios above is guaranteed not to deliver on the objectives of an offshore manager and to prevent engagement failure you’ll need to invest in the manager as well, in that case why do you need coordinator?

More so, one of the biggest issues with offshore onsite coordinator is the mind set, is s/he going to have your interests at heart or interests of the company which pays him salary? When inevitable problems come up on what side s/he will be? Let’s say that problems are severe and you have to take your vendor to court, can you really count on onsite coordinator to be unbiased?

I can not tell you how many times I had this discussion with offshore vendors who continue to push for the “best practice”. Well, if that’s so helpful for you to deliver on the engagement objectives why don’t you do it on your own expense? That question typically falls on deaf ears.

When you consider expense, typically either offshore rate + per diem / hotel / car / etc. or onsite rate of ~$80 an hour you realize that it’s might cost effective to find offshore manager locally. Good offshore managers are not easy to find and they are not cheap but believe me, they are worth every penny.

Offshore Interviews: Personality Aspect

There are several common misconceptions about interviewing for “personality” with the offshore resources:

  • It’s irrelevant. These are not employees I am hiring, why would I care about their personality?
  • It’s the same as with local resources: what’s good for the home team is good for the offshore.
  • I let my gut decide or I am good at reading people and I do not need any help here.

Let me start with debunking those myths:

The first one is the easiest. Of course it’s relevant; just think about how much damage a QA engineer without attention to details can do, or how much “value” a Project Manager with no appreciation for authority and processes would bring to a project.

Why isn’t it the same in that case? In some aspects it is, for example for your staff QA engineer you would be interested in someone who has great attention to details, eye for imperfections, appreciates structure and processes, doesn’t mind repetitive work, etc. All these personality traits would be great assets for your offshore QA engineer as well. The difference comes with dynamics of the employment arrangement.

Generally you can not count on keeping offshore resources on your project over two years, after that they are likely to move on; as a matter of fact for the purposes of personality casting you would be looking for just one year in offshore case; hopefully you have a better longevity with local resources, let’s say 3 years. Over that period of time some personality traits will play a role that are not as important when it comes to one year. For example you are looking at résumé of someone who changed his job once a year; that might be a showstopper for staff position but could OK for offshore resources. What about their ambitions, desire to learn new technologies, track record of continuing education, etc. Many aspects of personality become irrelevant when you are looking for offshore resources or turn to opposite.

Another important aspect of personality interviews is the team diversity. I am not talking about race, religion, etc. instead it’s a diversity of the team. I believe in diversity of personality and when building local teams I prefer to have a well balanced but diverse team. For example you need people with “big picture” view as well as “detail” view; you need process fanatics and “break all the rules” mentality. When properly cast and well balanced diverse teams perform much better than homogeneous organizations. Of course casting is a key here, e.g. you do not need a social butterfly to work nightshift processing firewall logs. When it comes to offshore team diversity could mean unnecessary complexity and unpredictability.

One more important consideration in that regard is the fact that careers of offshore resources are not in your hands. In that light again many aspects of personality become irrelevant when you are looking for offshore resources or turn to opposite.

Now, on “I let my gut decide” topic. That’s a common approach to personality interviewing not only in offshore but for staff position all across the industry. I know that some managers are just darn good at reading people and even they make mistakes. I consider myself above average in that skill, mainly because I invested great deal of effort and education in it, and yet I make mistakes, sometimes serious ones. If your gut (intuition) can pinpoint attention to details, ability to strive under pressure, appreciation for processes, impeccable integrity… or an another side dishonesty, habitual irresponsibility, lack of work ethics… well, you probably are working as FBI profiler or psychic reader :) Intuition is important and you should listen to it, no doubts about it. You just should not rely on it or just only on it when selecting members of the team, especially when working remotely, over a phone, and across the cultural differences.

Now, a really hard question: how to define personality match while interviewing offshore developers? Personality interviews are tough to begin with, offshore exacerbate the complexity of the task. The approach I typically use includes several steps:

  • Simplify an ideal personality profile. For example for Black Box Tester I’d be looking only for several personality traits absence of which would be a show stopper: attention to detail, ability to handle stress, and respect for the structure / process.
  • Communicate the desired profile to my vendor with a hope that the screening catches at least obvious mismatch cases.
  • Prepare a few open-ended questions that cater to discovery of those specific traits. For example, “Based on your prior experience please describe a situation when you ability to handle stress helped deliver on engagement objectives”.
  • Take the answers for the face value. If the candidate can fake the answer hopefully they can fake the personality trait till the time the move on to a different project.
  • I usually have a few questions ready but do not necessary ask them all. Sometimes the candidate would fail a few ones just because those are unusual questions, not something they have been condition to hear. But if they can’t learn the drill after I’ve asked them a few questions, it’s not the person I’m interest in hiring anyway.

Interviewing Offshore Resources

The first set of interviews is typically performed during vendor selection stage. The goal of this interview process is not to pick members for the team; instead it is to form your opinion of the vendor capability to build a team. I typically use a speed-dating style interviewing with individual interviews limited to 20 minutes covering ~20 people a day. It is important to have at least two people involved in the interview process working together, one of the main reason for that is a continues feedback and support they can provide to each other to stay on the top of the process and increase quality of discovery.

During this speed-interviewing marathon I am not particular interested in individual performance of the team members. I do make a note of people I really like, in case if the vendor is selected these people would make good prospects for the team.

In order to prepare for the interview and perform it with decent productivity you need to go through the following steps:

  • Define make up of the group you’d like to interview and communicate it to the vendor. For example:

5 Project Managers
5 Tech Leads
5 Business Analysts
10 Java Developers
5 QA Leads
5 QA Black Box Testers
5 QA Automation Engineers

For each of the position you would need to outline rough requirement s, for example Tech Lead may mean 7+ years in SW Development, 5+ years in Java, 5+ years in managing a team for 5+, etc. That list should keep you busy for a couple of days.

  • Communicate to the vendor interview process, goals and objectives
  • Create list of questions for each position. There are a plenty of websites offering tech interview questions and answers. I recommend creating cheat sheets with Q & A and printing them for the interview sessions.
  • Keep track of interview progress with a simple spreadsheet. Below is an example of table. I use 1 – 10 rating.
  • Name / Skill Role Exp, Yrs PM Lead QA BB QA A SQL Oracle MS SQL Java Hbrn Spring J2EE
    Ravi Krishnamurthy TL 8/6 6 7 8 6 8 9 5 0 6
    Srini Randhawa JD 8/6 6 3 5 5 0 0 3
    Lala Caitul QAL 5 8 8 10 6
    Rajiv Shah QA 3 6 4
  • Sharing the results with me vendor is a good idea, especially if the vendor is one of the winners of the race. Chances are that would be a humbling experience for the vendor.

When it comes to interviewing people for specific roles on the team during team ramp up or when replacing the team members speed-dating style is not going to produce the results you are looking for. You will need more close and personal interviewing style with substantially higher investment on both sides.
For each of the positions you will need a position description, very similar to the one you would use for captive resources, consider the following sections for the document:

  • Position challenges & rewards
  • Typical Duties and Responsibilities
  • Required Skills, Experience and Background
  • Desired Skills, Experience and Background
  • Desired Personal Qualities

The document should cater to several audiences: internal, vendor and potentially the candidate. The better is the document the higher the chances of finding the right match; share as much of the details with the vendor as you can possibly gather at the point of recruitment.

Next step involves securing and organizing Interview Squad – the team that will be involved in the process of resource selection. Make sure to clearly define roles and responsibilities of the team members, communicate job requirements, outline the process, and agree on techniques.

Prepare interview questions and tests. Your materials will save you from waste of time so often common for ad hoc interviewing and will keep your team focused and productive. The questions / tests should cover the following objectives:

  • Validate Skills
  • Discover Talents
  • Validate Experience
  • Asses Personality
  • Asses Abilities

During interview you will need to accomplish three basic tasks: gather information, provide information and radiate good will. It’s a common misconception that last two items apply only to full time / captive resources. In reality they are possibly even more important in offshore scenario as resources come from the same pool. If you fall short on radiating good will it is likely to backfire in later stage of the project, a mistake I made a few times and paid for dearly.

In every interview I typically highlight three components whether these are internal or external / offshore interviews:

  • Set the Stage

o Courtesy questions / break the ice
o Introduce the process / agenda
o Establish expectations
o Sale on the company
o Sale on the position

  • Perform

o Questions & Answers
o Tests
o Discussions

  • Clean Up / Closure

o Discussion / Q & A
o Sale reinforcement
o Next steps / expectations

Questions, test and interviewing techniques are similar to those you’d use in a regular interviewing process; I won’t go in details on those here. There are a few factors that you need to keep in mind while performing the interview / evaluating results related to the offshore nature of the resources:

  • Your candidates have two masters to please. That affects everything in the way they present themselves from speech patterns to content of the answers.
  • Time differences / lack of clarity / procedural hurdles will work against the candidate as well.
  • Remote nature of the interview work against both parties.

So the likelihood is the candidate won’t do their best and you need to account for it when evaluating results. You also should consider mitigating risk of incorrect assessment by some simple steps:

  • Go there and interview your candidates face to face; if that’s cost prohibitive consider solid conferencing tools, at least webcam on both sides.
  • Invest diligently in the interviewing process and ensure that your vendor buys into it.
  • Make sure that the vendor does good job in sourcing the candidates and communicating the job requirements as well as promoting the good will.
  • Make sure that vendor representatives are involved in the interview process and not only at administrative level. As you select team members get them involved in following interviewing activities.
  • After each interview run a quick retrospective concentrating on process and candidate quality improvement.

Of course this is just a superficial overview of the subject. Interviewing in general is a very complex task, requires lifetime learning, and is one of the most important factors in managing successful offshore engagements. The good part about it is we get a plenty of chances to learn it.

IT outsourcing is exaggerated

Just red IT offshoring is exaggerated and the IT labor shortage is real by Jason Hiner, a very interesting perspective that should both appease local IT professionals and offshore providers: “…new evidence shows that the IT offshoring trend is greatly exaggerated. The Society of Information Management’s 2008 IT Trends Survey shows that IT leaders are planning to increase offshore outsourcing in 2009, after two straight years of declines. Nevertheless, even with the increase, offshore outsourcing only represents five percent of projected 2009 budgets, and CIOs say they are still having trouble finding enough domestic IT workers with the right mix of skills to fill the open positions that they are keeping at home.” The article of course spawned a bunch of negative comments as any realistic, positive or pragmatic view on offshore would. I find it very insightful and very much in line with my observations of the market.

This discussion is bound to continue for a while, here is another interesting article / reaction to Hiner’s article: Offshore Threat to IT Jobs: Overblown or on the Money?