What to do when your client doesn’t pay

Many of the posts in my blog are written from clients’ / buyers’ standpoint, this one is different – I am switching sides to take a look at one of the most painful issues of working with small business clients (and sometimes large clients as well) – not being paid for your services. A few weeks ago I talked with an old friend of mine who is an owner of small software development firm based in Russia. He told me that his business would’ve been extremely profitable and vastly successful if he was always paid for his services. I was shocked to hear that typically he gets paid for not more than 70% of the services he delivers. Alex’s company sells to a variety of clients in Western Europe, United States, and locally in Russia. He told me that his local clients are the worst with government clients refusing to pay being a most common scenario.

Well, there is nothing I can offer in terms of advice in dealing with Russian government clients. But they are not the only ones, many “legitimate” businesses in Europe and the States follow the suit and are late or delinquent with payments to their vendors. One of the cases described by Alex involved a fairly large South Carolina based company, that used all kind of excuses to explain increase in past due balances, and then when unpaid amount was about to kill the vendor, the company switched the tune – accusing the vendor in all kind of issues ranging from late deliveries to stealing IP. This situation, a reputable US company playing dirty tricks, was somewhat new for Alex. It caught him off-guard and almost put him out of business.

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Wanted – Outsourcing Checklists

A few days ago I got my hands on a The Checklist Manifesto: How to Get Things Right by Atul Gawande.

Not knowing the author’s background I was expecting a book from some professional organizer, a guru of “getting things done”. Maybe one of those how-to self-improvement books that I typically pick up on my way to a transcontinental flight to deal with my inability to fall asleep while squeezed in a middle seat. The book was nothing of a kind and if anything it reminded me of Malcolm Gladwell’s masterpieces. To make text even more interesting a lot of the examples and ideas in the book came from the blood, sweat and tears of the author himself, not various people he interviewed. As I shortly realized even though Atul writes like a professional journalist the writing isn’t his day job, or at least not his only day job… In addition to being a best-selling author he is a MacArthur Fellow, a general surgeon at the Brigham and Women’s Hospital in Boston, a staff writer for The New Yorker, and an assistant professor at Harvard Medical School and the Harvard School of Public Health… Wow, how one can manage all that and also deal with three kids!?

Anyway, the main message of Checklist Manifesto is quite simple – in many activities the volume and complexity of knowledge required to perform them have exceeded any single individual’s ability to manage it consistently. The only way to deal with inevitable problems is to deploy tools that improve the outcomes and minimize errors without adding even more complexity to the task itself. That seems almost impossible unless we look at a simple, age old tool, that can help almost any professional – a common checklist. Of course, it’s not “just a checklist”, there is more to a good checklist than a set of nicely formatted boxes. The author illustrates it on multitude of examples with the most interesting being in the fields of aviation (where the work of creating checklist has reached the level of art and at the same time widely accepted as mainstream tool) and in his own domain – surgery and public health.

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“Outsource it!” is now in beta

A couple days ago my first full size book went into beta and is now available at the publisher website – http://pragprog.com/book/nkout/outsource-it. I feel very happy and relieved that the book is finally out, writing it was far more challenging than I’ve ever anticipated. At the same time I feel happy and proud, proud to be one of the authors of the pragmatic bookshelf, the group of technology writers that earned respect across very broad and demanding technical audience.

It will take a little while before the book hits the shelves of Amazon and other bookstores, but you don’t have to wait and get your e-copy of it today. While the book is in beta your comments and suggestions would be taken quite seriously and could result in changes and additions to the content, hopefully making the book even better. I am not sure how long the beta would take but hopefully much less than it took me to get here –

Roughly two and a half years ago I came up what seemed a great idea at the time – compile my blog material into an easy to read eBook. In a couple months I produced the first volume that was dedicated to making decisions on whether and how to outsource. In a short order I received substantial feedback that made it apparent that just recompiling the blog and doing surface level clean up won’t add too much value, and probably was not worth the effort. Continue reading

Saving Face

A couple days ago I was working on incorporating feedback from a second round of technical reviews into my (hopefully soon to come!) book on outsourcing. The topic that was keeping me awake was related to one of the most important dimensions of managing distributed teams – communication. Let me cover one of the aspects of this topic here since I am not planning on including it in the book. This aspect is in particular important for companies with little experience in cross-cultural communications and casual work environment.

It seems that it was not so long time ago even though more than a decade has passed from a great offsite meeting my company arranged for our large implementation team in Napa Valley. The meeting was a huge success with a bunch of engaging discussions, productive breakout sessions, and provoking brainstorming exercises. Needless to say the location promoted a fun celebratory activities as well. By 9 PM the soberest members of the team were rather tipsy, the rest of us were feeling no pain. That’s when one of my brightest tech leads run to me asking for help. Sanjiv was rather disturbed, confused and irritated. “Nick, Jennifer [[one of our company execs]] just offered me a blow job! I don’t know what to say, what to do… She is obviously an executive but I am married!” Having lived most of his life in India Sanjiv was quite accustomed to large parties, but not to the likes of that one. Nor did he know the name of a popular then cocktail which Jennifer so “innocently” offered to him. It took a little of explanation and forced laughter to get Sanjiv back to normal but I am afraid the damage was done – while there was no sexual harassment in sight, there was obviously a case of making someone look stupid in front of his friends and co-workers.

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Staying Healthy on the Road

A few weeks ago I run across a great quote – a short speech by Brian G. Dyson, the President and CEO, Coca-Cola Enterprises.

“Imagine life as a game in which you are juggling some five balls in the air. You name them – Work, Family, Health, Friends and Spirit and you’re keeping all of these in the air.

You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – Family, Health, Friends and Spirit – are made of glass. If you drop one of these; they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for it.

Work efficiently during office hours and leave on time. Give the required time to your family, friends and have proper rest. Value has a value only if its value is valued.”

It prompted some serious soul-searching and intensive thinking on my part. Maybe it will do the same for you, and it pushed me to think about seemingly banal topic – my health. If you are outsourcing, the chances are you are traveling (and if not maybe you should – meet with your offshore team, do a technical due diligence, or just enjoy the marvels of faraway places). And if you are traveling you may face a few issues that make paying attention to your health even more challenging. With that in mind let’s kick off a discussion of one of the most important topics – staying healthy while doing your job.

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Outsourcing Associations

Finding outsourcing vendors is not a trivial task sometimes because it’s just too many to chose from, sometimes because you just cannot find any that fit a particular criteria.  Over the years I found that generating a list of prospective vendors can often be done with a help of organization that unite offshore vendors in some manner.  As it turned out it’s not easy to find these organizations is not to easy as well, so I started a list that should be of help. So far the list is not to big and I was only able to find 20 some organizations, I hope that with your help the list will grow fast.

The list below includes top 5 associations based on Alexa Global rating.  Click here for the full list sorted by Name, here for the list sorted by Alexa Global, and here for the list sorted by Alexa US.   If you know of a site, directory or service with is worth including please comment on the page and I include in the list, feel free also email me at krym2000-po @ yahoo . com as well.

Name PR Alexa Global Alexa US Description
The International Association of Outsourcing Professionals (IAOP)
5 313,474 168,529 The International Association of Outsourcing Professionals (IAOP) is the global, standard-setting organization and advocate for the outsourcing profession. They claim to be the leading professional association for organizations and individuals involved in changing the world of business through outsourcing, offshoring, and shared services with a global community of more than 110,000 members and affiliates worldwide.
The Outsourcing Institute (IO)
5 423,525 246,289 Founded in 1993, the Outsourcing Institute (OI) claims to be the world’s biggest and most trafficked neutral professional association dedicated exclusively to outsourcing with a network of more than 70,000 professionals worldwide including qualified outsourcing buyers. Their specialties include: outsourcing, sourcing, thought leadership, state of the industry, marketing, promotions, RFP, vendor selection, relationship management and governance.
National Outsourcing Association (NOA)
5 893,216 27,276 Founded in 1987, the National Outsourcing Association (NOA) is the UK’s only nonprofit outsourcing trade association and claims to be the centre of excellence in outsourcing. Their services are focused on delivering education, excellence and collaboration and they are involved in all areas of outsourcing, including ITO, BPO and KPO.
Russian Software Developers Association (RUSSOFT)
5 902,435 55,451 Established in 1999, RUSSOFT Association is a nationwide association of the technically competent software developing companies from Russia and Belarus. It aims to represent Russian software development companies on the global market, to develop marketing and PR activities of its members, and to promote their interests in their countries’ governments.
Sourcing Interests Group (SIG)
4 1,010,363 271,503 Sourcing Interests Group (SIG) is a membership-driven organization comprised of sourcing and outsourcing professionals. They claim be acknowledged by many as a world leader in providing an ongoing forum and services to assist companies in strategy development, the improvement of goods and services sourcing, and the implementation and management of corporate services through outsourcing, offshoring, insourcing and shared services.

Top ten mistakes in selecting an outsourcing firm

A few days ago James McGovern, an Enterprise Architect from HP, asked a question on LinkedIn What are the top ten mistakes a CIO makes in selecting an outsourcing fir? Needless to say that this is not a new question and many people have answered it over the last decade (see for example “Outsourcing: 10 Crippling Mistakes IT Departments Make.” yet it set off a discussion with more than 30 people pitching in. There is no surprise here, outsourcing remains an integral part of most IT organization and many mistakes are made in every step and in every aspect of its utilization.

The thought of joining the discussion on LinkedIn naturally crossed my mind, but I realized that my contribution would be better if I put together a summary / highlight some of the most significant points brought in by others (and maybe add a few of my own) and do it here, in my blog, where this discussion naturally belongs. Also I noticed that many answers on LinkedIn went far beyond selecting the vendor and concentrated on mistakes people make when executing the contract /engagement. Great info, just not relevant to the question. Anyway, here is my list of top mistakes I’ve seen CIOs and other technology executives make when selecting an outsourcing vendor –

1) Outsourcing for the sake of outsourcing. The most significant mistake is using outsourcing to solve problems that could be addressed with other often more effective tools and measures. Outsourcing is a powerful tool, but it has its place and its drawbacks. Used without appropriate knowledge it can misfire and create a lot of collateral damage. Before you even consider selecting vendors you need to define goals and objectives you are trying to accomplish by outsourcing and only then turn to selecting companies that can support your objectives.

2) Ignoring basic rules. I covered these rules in an old post, take a look, and remember ignoring these rules is akin to ignoring gravity ;)

3) Inadequate process. Vendor selection can be a complex multi-step process or just a short project posting on a freelancing marketplace. Appropriate process must fit the task at hand, organizational culture, and available funds. Needless to say winging it or building a rocket launcher to kill a woodpecker will get you nowhere. Part of the process is defining selection criteria, see some ideas in this post.

4) Wrong focus. It’s all too often organizations take a myopic view on outsourcing and focus solely on the cost saving it can provide. Big mistake. First, outsourcing doesn’t guarantee savings, more so, it takes money to save money so chances are you will need to increase your burn rate before you can decrease it. In vendor selection excessive focus on $$$ is likely to drive you towards wrong vendor, proverbial “you get what you’ve paid for”.

5) Lack of commitment. Organizational commitment, executive sponsorship, team buy-in are key components of any initiative. Lack of commitment to selected vendor, or insufficient buy-in by stakeholders is a disaster waiting to happen. The worst case of lack of commitment is a “hands-off vendor selection” where is the team / person in charge of selection is merely involved in the process (see this for the difference between “involved” and “committed” :))

6) Technical (skills / experience / background) mismatch. The best cook on the planet is not necessarily the best pilot. Same goes for vendors – some companies are great for ERP implementations, some for iPhone development. So, back to the first point – match vendor technical capabilities to the task (objectives) at hand, and don’t expect one-fit-all providers to be the best (or any good) at the same time. And if you have complex initiative, consider multisourcing, supposedly not putting all eggs in one basket has its benefits

7) Personality mismatch. In the key to success of personal relationships is often a personality match. Same goes for vendor selection. This topic is complex and a voodoo of sorts, never the less it’s extremely important. In my book (due for publishing sometime late this year) I plan to cover this topic in more details. Fill out this form if interested, I will be happy to let you know when the book is ready.

8) Master / servant mindset. Selecting a vendor is selecting a partner, not a disposable pen. Whether it’s abusive RFP process or ruthless negotiations treating vendors poorly is likely to setup the relation for failure in the long run.

9) Lack of transparency. Many organizations hide their intentions from vendor, often to gain an upper hand in negotiations. Funny enough, this approach is unlikely to provide any advantages in the negotiations and instead is likely to mislead vendors and/or the vendor selection team. The more clarity is given to prospective vendors the higher the chances of find that illusive Mr. Right.

10) And last but not least, not talking with me. Just Kidding, at least partially. The point I decided to save for last is simple – read up, learn about vendor selection process, reach out to friends who’s done it, hire outsourcing advisor. Jumping into vendor selection process without appropriate knowledge / experience / background is the biggest mistake of it all.

List of Outsourcing Advisors

After my post on outsourcing governance I received a few emails raising the topic of outsourcing advisory. And that prompted me to do a bit of a deeper dive into the world of corporate matchmaking / marriage counseling – helping companies to find offshore vendors and later on help them with governance and management of the engagement.

This field remains huge and profitable and more so, seems to be growing in leaps and bounds. According to one of the leaders in outsourcing governance, KPMG, 70% of outsourcing users want better governance.  That’s not surprising since there many compelling reasons to engage advisors throughout the full lifecycle of outsourcing. The main being obvious – as I often say, outsourcing is a powerful tool but it a complex one and without proper knowledge using of it could be self- destructive; having someone with in-depth knowledge of the tool will spare you some injuries. If you are looking for me reasons consider taking a look at this article.

While doing my micro research I stumbled upon somewhat unexpected problem – I could not find a comprehensive source of companies that provide outsourcing advisory services. After googeling for a couple hours I figured out that a better tool here would be oDesk :) I pinged one of my VAs and she put together a list for me in just a couple days.

Please see below the top ten Outsourcing Advisors from the list based on Alexa rating (probably not the best way to rate them though), in addition you can find more comprehensive list sorted by Name, Alexa Global, and Alexa US.

Hopefully you find it helpful, as usual feel free to suggest new entries, or comment on existing ones.

Name PR Alexa Global Alexa US Description
IBM Global Services
8 446 608 IBM Global Services claims to be the world’s largest business and technology services provider. It has over 190,000 workers across more than 160 countries. IBM Global Services started in the spring of 1991, with the aim towards helping companies manage their IT operations and resources. Global Services has two major divisions: Global Business Services (GBS) and Global Technology Services (GTS). IBM Global Business Services (GBS) is the professional services arm of Global Services, including management consulting, systems integration, and application management services while IBM Global Technology Services (GTS) primarily reflects infrastructure services. It includes outsourcing services, Integrated Technology Services, and Maintenance.
Deloitte
8 6,851 4,965 “Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management and tax services to selected clients.
Gartner
7 8,659 5,056 Gartner, Inc. (NYSE: IT) claims to tbe world’s leading information technology research and advisory company. They deliver the technology-related insight necessary for their clients to make the right decisions, every day -from CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors.
PwC
8 10,816 8,629 PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. “PwC” is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.
Ernst & Young
8 13,374 8,634 Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, their 152,000 people are united by their shared values and an unwavering commitment to quality. They make a difference by helping their people, their clients and their wider communities achieve their potential.
Capgemini
7 16,622 4,942 A global leader in consulting, technology, outsourcing, and local professional services.
McKinsey & Company
7 17,418 15,185 McKinsey & Company, Inc. is a global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions.
KPMG
7 18,567 13,291 KPMG operates as an international network of member firms offering audit, tax and advisory services. We work closely with our clients, helping them to mitigate risks and grasp opportunities.
Boston Consultant Group (BCG)
7 37,830 23,291 BCG is a global management consulting firm and claims to be the world’s leading advisor on business strategy. They partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises.
Bain & Company
7 40,359 28,581 Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts. Bain is considered one of the most prestigious consulting firms in the world, with 47 offices in 30 countries and over 5,500 professionals on staff globally.

Outsourcing Governance

A couple days ago I received an email with a very interesting question –

Hello Nick,

I have come across your blog (http://pragmaticoutsourcing.com) while doing some secondary research.

I have been quite impressed after reading your blog, and hence writing to you to seek your pro bono help :)

As you have such a good depth and breadth of outsourcing experience, I would like to seek your opinion on this:

– Many Companies who Offshore their IT/Product Development to Russia, India, China, etc. face many challenges during the projects execution phase. They spend significant management overhead in managing their vendors. They may need to make multiple trips to the outsourced location to resolve issues. So there are significant costs/pains involved
– Would such Companies like to hire third-party consultants, who work as their agents and be physically present with the suppliers, does the Program Management function (tracking of projects, timelines of deliveres, identifying and sharing potential issues/challenges, metrics reporting etc.) and help reduce the costs/pains of managing the outsourcing vendor?
– Would such Third-Party Consulting services be attractive to Companies who Offshore?
– If No, Why?
– If Yes, Why? Do you know of any company providing such Consulting Service?

Your opinion would be highly valuable to me. I am eagerly waiting to hear from you.

Thanks,
Sujay

Yes, Sujay many companies can take advantage of these kind of services and providing them could present a very interesting and lucrative opportunity. As a matter of fact many companies are already in this business and offer large portfolio of services related to managing the full cycle of outsourcing (not necessarily only offshore) engagements.

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Trip to blogosphere

Outsourcing is a very broad topic with plenty of controversial topics, inevitably there plenty of people who have something to say about it. Chances are if you are interested in this subject you run across articles and posts by Outsourcing Institute or Horses for Sources. A couple years ago I put a few references in my blogroll and started a blogosphere directory. Thanks to the law of reciprocity that generated a few back-links and traffic to my blog. Over time the blogroll become stale pointing the blogs that become dormant or completely disappeared. I did not notice it till just recently, as I was doing some cleanup of the blog.

Similar to my freelancing directory the blog roll needed to be refreshed. In addition to cleaning it up I decided to create an outsourcing blog “directory” as well. And with no hesitation I went on blog hunting with a help of my fearless VA Yesha, looking for blogs that cover outsourcing. Very soon we had a list with more than 100 entries, unfortunately, many of them covered topics that I am not too familiar with and/or not too interested in such as Law Process Outsourcing or blogs solely focused on BPO. So we went back pruning the list getting it to less than 50 entries. Some of the blogs that got the ax were fairly active in outsourcing blogosphere, and I may include rejected entries in the list later on after I get a chance to check a few posts and see whether they are worth considering. Of course what’s one man trash is another man’s treasure, so “worth considering” is a very subjective term. Plus in any blog the posts are typically hit-or-miss, and even loosely related sources can put some interesting article once in a while. Well, I cannot create full directory, even with help of a couple dozen of Vas, that’s why we have omnipotent Google.

Anyway, please see the list sorted by URL of the blog on this page. To make the list a bit more helpful I added PR and Alexa ratings in the same manner as in my freelancing marketplace directory and created two additional versions of the list, one sorted Alexa Global and another by Alexa US. As usual, feel free to comment and suggest new entries. I am planning to update the list in ~12 months from now.

Finding freelancers simplified

How to find a freelancer? Where can I find a web developer? Is there a place where I can find graphical artists? Finding the answers to these questions is getting increasingly easier and more complex at the same time. It seems not so long ago the main channels for finding freelancers were the same as for finding new employees – job ads and networking – not any more. The main channels for reaching out to vast freelancing community are now online freelancing directories or freelancing marketplaces. Great sites like odesk.com, elance.com, guru.com and many others taking over from monster.com and indeed.com.

Many of the directories enjoy a large community of freelancers and vendors of varies sizes, an impressive number of customers, and a huge volume of transactions. As a matter of fact the transaction volume for many of the marketplaces has been growing at exponential rate.  The stats are truly amazing. Needless to say such a lucrative business attract many players and inevitably creates a new challenge for both customers and providers – which marketplace to use? Which directory is better for finding freelance writers, which one is for graphical artists and where to find those illusive RoR developers?

A few years ago I created a list of 25 best places to find a freelancer, fairly soon the list grew to 50 some entries, and become notably less helpful. To make it a bit more useful I added Alexa rating and it worked for a while. However recently I got a few comments on quality of the list – it was missing some good sites, Alexa rating was dated, and so on. That called for updating the list and that what I just did with help of my virtual assistant Yesha from Cagyan de Oro City, Philippines. She did an outstanding job cleaning up the list verifying links and rating in just a few days. BTW, I found Yesha on oDesk, she was one 40+ people who bid on my project within a couple hours after I posted it.

Anyway, the list is now updated with new entries and ratings. I also formatted it slightly different – you will now see a list with “the best 25 places” that links to three other list—full list of sites sorted by the Site Name, the same list sorted by Alexa and the same list sorted by Alexa US ratings.

As usual, feel free to comment and suggest new entries. I will update the list in ~12 months from now.

down-to-earth guide to offshore outsourcing

About a year and a half ago I came up with a crazy idea – to approach a couple publishers with a proposal for a book on outsourcing. Not too original or novice idea, there are plenty books out there, yet, I thought I could put together

something better. The first publisher I approached was The Pragmatic Programmers an agile publishing and training company started by Andrew Hunt and David Thomas, the authors of famous The Pragmatic Programmer: From Journeyman to Master. Needless to say the name of my blog had something to do with the choice of publisher. To my astonishment they accepted my proposal and awarded me with a contract for a full size book. I was told that getting a book contract from the first proposal is akin to winning a lottery, so I was honored, excited and… apparently clueless.

What I did not know is that the prize in the lottery is a package of hard labor, countless hours, and ongoing frustration. Even though so much material was already in place I found myself in writing and re-writing for days, weeks and months. This “hobby” on a top of full time job became a considerable burden, nevertheless after 9 months or so I produced ~450 pages of what I thought was great material. Nope, not great and far too much of it, I was told by my reviewers. From that point on my writing changed to a code-test-refactor dance with my editor doing the testing. And that was far more complex than producing the original pile. Hopefully the results would be worth the effort.

So far I am happy with much more concise content, roughly 250 pages, that reads far better than original, is better structured, and caters to the audience I always had in mind, not just to an exact replica of myself. Alas, I’m still far from seeing the light in the end of the tunnel – there are more reviews coming up and some of them may require a significant reshuffle of content / structure and dramatic changes in wording. When I complained to my editor about time it’s taking to get the book out and how profound the last change request were she said that one of the authors has been through 3 technical reviews, three managing editor reviews, two publishing editor reviews, and the book is still WIP… Basically, brace yourself, we are just starting :)

Yep, writing is not blogging and is not for the faint of heart, nevertheless I am already thinking about the day the book will be out. More so I decided to create an email sign up list for those interest in the book. I used wufoo forms to create it – pretty nifty SaaS from the same crew that created surveymonkey. I used their free offering and was quite impressed with what it had to offer. Anyway, the book is going to be a down-to-earth guide to offshore outsourcing based on my experiences and those of my friends and colleagues, and information from books, industry publications, and outsourcing blogosphere. Chances are if you like my blog you will enjoy the book as well, and more so find it easier to read, navigate and chockfull of information. So go ahead and put your name / email in this form. I will be happy to let you know when the book is ready for your eyes. BTW, you also can apply for a role of “technical reviewer”. My publisher is looking for ~10 people to do the next round of reviews. The reviewers will need to read the book, reply to a simple survey, and provide any feedback they might have, in return reviewers get a free copy when the book is published.

Knowledge Crowdsourcing

I get a lot of spam on my email account I publicize in this blog and yet I prefer to keep it since once in a while something interesting comes in. Earlier this morning I deleted a couple dozens of emails suggesting link exchange and other “wonderful” ideas on improving my blog, for some reason one email caught my eye, and boy I’m glad I did. It was an advertizing of service that I have not heard of. Clearly spam yet unusually so it was worth looking at. The company Mancx turned out to be an outsourcing marketplace with a very interesting model – it offers knowledge crowdsourcing. Think about LinkedIn answers but with a price tag attached to it. Ask your question, put a $$ amount you are prepared to pay for it, and maybe someone in a crowd will answer it. Of course you can be one of many who answer the questions at the same time.

I browsed through the site and instantly found a few things that were wrong with it. I guess the team needs a good product manager and usability expert. Yet I loved the idea. How many times I found myself desperately looking for the answers to questions to no avail? I am sure that many of you did as well. And at the same time the chances are the answers are out there, someone knows exactly what I am looking for, it’s on the tip of their tongue, on the top of their mind… You can do ad hoc knowledge outsourcing. I think it’s one more step towards making the world flat since the person who answers your question could be sitting in a cubicle near you or just about 15,000 miles away.

One thing is interesting though, the business model and software behind the site seems to be so easy to replicate. In particular it could be implemented almost instantly by LinkedIn or Facebook, so hopefully guys Mancx have some tools to protect themselves.

i need a team

I guess I have to start with a profound apology. It’s been incredibly busy few months for me. I left my job with PDR in May and has been consulting to several startups and looking for new opportunities since. At some point I found myself being a part-time CTO for three companies, while still working on my book, running regular home chores and trying to invest time in personal health/fitness at the same time… Needless to say my blog had to take a backseat to high priority tasks and activities. While I am still as busy as I’ve been for months things are stabilizing and once in a while I can now put a few hours to share my thoughts on new challenges and ideas related to IT outsourcing – something that many of us see on daily basis.

Today I’d like to touch upon a topic which is dear and close to many of us working for small companies. An ability to attract resources. And I am not talking about challenges akin to finding RoR developers to work in Palo Alto. That’s a generic problem that everyone in the Silicon Valley, even big guys like Groupon is facing today. Economy may not be showing it but the market for good developers is hot, habanero chili hot. What I’d like to do it to talk about finding decent offshore developers, and apparently market for them is hot as well…

Let me clarify my point – I am looking for decent developers – not “mediocrity in bulk” that large offshore providers would be happy to ship my way. Just a few weeks ago I was looking for a team of 5 Java developers for one of my startups. The team had to come with one senior-, 2 mid-, and 2 junior-level developers. No special, hard-to-find skills required, plain server side Java. I went to three of my long-time offshore connections just to learn that lead time to build such a team is 2 to 3 months! Well, these were very small boutique companies who offer reasonable rates and good contract terms.

So I had to amp up the intensity and go for 2nd / 3rd tier vendors. High price, more restrictive, but surely they can put the team I need in a couple weeks. Nope… Well, they told me they can, and after two rounds on interviews with proposed teams I realized that finding my Java team would be almost as difficult as with my smaller providers. Isn’t it amazing that tons of good people can’t find a decent job and at the same so many companies can’t find decent resources, and offshore takes it to the whole new perspective.

So what can we do? What is the path towards building your team in today’s hot market? Here are just a few ideas that I am testing as we speak –

  • Settle for less. Wow, you may say – that’s a loser’s talk! We only recruit the best of the best!… in this case good luck to you, and you will need it, and even more so you will need a lot of patience, as cream of the crop is hard to find. In meanwhile I will be looking for bright and not necessarily so experience guys. I will put more emphasis on personality match and not necessarily on tech skills as I am prepared to help them grow.
  • Be swift. Hold your horses, you might say. We put every developer, offshore or hire, through 10 rounds of interviews, before we bring them on board. Of course that’s great, and by the end of 10th interview you could be still wrong (happens to the best of us) and so many months behind… Carpe Diem… You snooze you lose. That’s particular true with offshore, and what makes this strategy very forgiving in offshore world that if the hire doesn’t work out it’s easy to let them go, no HR to deal with.
  • Trust your vendor. Well, Nick now it’s way too much, what a nonsense! Well, if you do not trust your vendor why are you still doing business with them? Of course trust mean to delegate not abdicate your responsibilities. It’s the team you putting for yourself, and nobody can help you better with your task, your vendor just need to be managed so they can help you in a meaningful way. Ask your vendor to help, trust them, and help your vendor to help you…

OK, it’s high time to run to the airport, back to San Francisco, I miss it so much.

Communication Failures in Outsourcing

It was Malcolm Gladwell who introduced me to Geert Hofstede’s concept of the Power Distance Index (PDI). After I read the chapter seven of Outliers I had to stop to catch the breath, it was just too exciting. Implication of PDI on cross-cultural communications is immense and it has direct relevance to outsourcing, and I’ve observed over the years. It’s something that you most likely dealt with as well. I did a bit of research and realized that I am far not the first to discover PDI’s impact on outsourcing, for example, this post offers great insights on PDI implications in the world of software development.

The idea behind PDI is quite simple, a perceived “distance” between a boss and an employee varies dramatically based on culture, biases, heritage, etc. The “distance” is defined as measure of how a person would generally react / respect / deal with a person of authority. The PDI is a measurement of that “distance”; it ranges from 1 to 120, the bigger the number the bigger the distance separating a boss and an employee. Small distance puts both boss and employee on very much the same floor of a corporate pyramid. As the distance grows the boss moves in a corner office or on the top floor, becomes master and commander, royalty and at some point a divine authority. While in cultures with small PDI an entry level employee can have a chat with CEO in a cafeteria, even just a single step in a corporate ladder can create master / slave relationship in cultures with high PDI.

In cultures with low PDI communications between a boss and an employee are quite different from countries with a high PDI. If you, an employee, are very much at the same level as your boss in terms of cultural hierarchy, you do not perceive any significant distance or differences with your boss and you tend to collaborate. A straight forward question gets a straight forward answer. If your boss is wrong you tend to have no qualms about pointing it out. And your boss expects you to. There are of course variations based on company settings and individual preference, someone might say to the boss “I respectfully disagree” and someone might use much less politically correct language. Moving up in PDI would convert collaboration into discussion akin to a military style of orders. Going higher in PDI changes a conversation into a dialog that for most of people from the Western world would be impossible to decipher as instead of a straight forward answer a response comes in a form of hints surrounded by layers of polite blabber, well, at least that is how people from low PDI cultures see it.

Interestingly enough high PDI doesn’t create too many communication issues between people from the same country. The traditions and unwritten rules of communications are well understood and do not present obstacles. Not always though, see some examples in Outliers, they are stunning and illustrate how high DPI drives catastrophic outcomes. And situation gets substantially worse when it comes to cross cultural communications, that’s where miscommunications and mutual frustration proliferate.

When we consider a typical IT outsourcing initiative in this country we face significant differences between buyer (boss) and supplier (service provider) – USA (40) vs. India (77) or China (80). It is not surprising that communication issues in all forms and shape plague the vast majority of outsourcing engagements. Even though I do not necessary agree with conclusions of The Real Reason Outsourcing Continues To Fail, blaming it all on PDI is an unjustified simplification, I believe PDI-related issues contribute a great deal to many of outsourcing engagements failures.

To minimize the damage that PDI difference can inflict on your engagement you need to deal with it on several levels:

  • Educating your staff, in particular local low-PDI employees.
  • Developing communication vehicles that inhibit PDI-related miscommunications.
  • Adjusting SDLC to minimize potential damage and inserting elements minimizing the impact.

That might be easier said than done, but there is no way around it. Left to themselves things tend to go from bad to worse.

Mid-term sales call

I looked at my previous post and felt rather embarrassed, it’s been over four months since I wrote anything. That gets me thinking of a line from Leonard Cohen “I’ve been running through these promises to you | That I made and I could not keep” Am I running out of things to say? Am I too busy for even a few lines? Is outsourcing is no longer an interesting topic? Well, none of that is true, I guess it’s just a combination of little and big distractions amplified by work pressure and self-inflicted pains of writing… yep, I’ve been cheating on the blog with some other creative work – writing a book based in a large degree on this blog. I’ll talk about a book later, for now just a few thoughts triggered by my latest meeting with an offshore provider we use at PDRN.

A few weeks ago the president of my company requested updates from our technology offshore providers. Not being sure what were his specific needs and objectives, I turned to my vendors asking them to present their companies as if they were selling their services. Of course update need to include to-date achievements and other relevant topics. For me the sales pitch was most interesting though. The first vendor already had their 60 minute of fame and frankly I was quite pleased with what I saw.

  • The first thumbs up goes for bringing big guns – flying several senior folks from different cities. That’s quite common for sales calls, and treating customer to some brass in an engagement midterm is a good idea.
  • The presentation articulated well a few “key differences” mildly spiced with competition slander. If that was my first offshore presentation I would probably believe most of them. Well, even with understanding marginality of the differences it was impressive.
  • The capabilities of the vendor were communicated well and that transformed into risk mitigation in minds of the audience.
  • The relevance of the vendor’s capabilities to my company needs was well position and generated a few requests that might result in some business down the road. I guess that’s the area which could used a review with me prior to the meeting. Would probably generated more interest, and so on.
  • Also, what was interesting even though it was cut short by the brutal clock is a quick presentation on technology trends. That got me even somewhat jealous – those guys have the time to stay current with the trends and ideas brewing in the market! According to the slides the technologies that are still only on my horizon are already obsolete, boy, I’m driving a slow car nowadays.

Expending a bit on the last bullet, can be your offshore provider be also your technology guiding light? Can you entrust an offshore company with forming your technology vision? Of course the answer is as always – “it depends” :) It depends on capabilities of the vendor, on their focus and MO, and on many other factors. And yes, if you are interested in outsourcing technology vision it is quite possible. There are a few important point to consider

  • Your partner should have people capable of doing the task, high caliber true technologists, not just the gadget geeks and trend chasers.
  • Your provider should not have a conflict of interest. If the vendor has a bunch of .NET developers on the bench chances are the “next big thing” would be .NET.
  • You should be able to define SMART goals and objectives for the “technology research” deliverables.
  • Make sure that you request some interim and collateral deliverables that will allow you to understand the background behind the findings.
  • Consider multi-sourcing the vision or at least getting second opinion, as R&D tasks could be heavily biased by guru’s opinion and personal preferences.

Well, I think that qualifies for a “come up for air” post and I should dive back into my day job chores now :)

5 Rules of Luck with your Potluck

The month of October is almost over and I have not written a single post. Well, I do need a day job and it’s been incredibly demanding over past few months. A number of projects that kept roughly 50 people working over a half a year are in the finishing stage. Multiple systems that have been developed over that period have to integrate and start talking to each other in production in just a few days.  No surprise it keeps me away from blogging, yet I’ve committed to at least one post a month and there is no way around it. By the way, talking about distributed projects, why are they so… insane?

Have you ever tried to setup a potluck with say 10-15 families? Everyone needs to come in at approximately the same time, bring the food they committed to making, warm it up, set up table, and party on. Pretty simple task isn’t it? So let’s throw in some complications, typical in IT world. The families have to fly in from  different parts of the world. Some of the families never met each other. Some of them do not like each other. Some speak different languages. You have disagreements on menu, confused about dietary restrictions, and the place of meeting is in flux. Your – the organizer – have to deal with your own waterfall of issues – mortgage refi, kids school troubles, broken plumbing, in-laws arriving unexpectedly, less than encouraging results from the last physical, and a recent escalation of tension with your boss… And there are only a couple days to the party. OK. Now I think we have a good metaphor for what my team have to accomplish.

As a matter of fact that is a good metaphor for many complex SI projects I’ve been through. Are there any recipes for avoiding a disaster? Any medicines to take? Well, there is no panacea or silver bullet. Maybe just a few basic guidelines:

  • ‘Too many cooks spoil the broth, and half-a-dozen gentlemen aboard one ship are as bad as two kings of Brentford.’ [1855 C. Kingsley Westward Ho! II. vii.] There are more quotes and proverbs stating the same point that I can possible number. And the guidance in this case is very simple; it was clearly stated in ’86 movie Highlander – “There can be only one”. There can be only one head of the engagement with authority across all troops involved.
  • Collaborate or die. That’s almost a truism when it comes to distributed engagements. Yet, I am still looking for a team, an engagement, or at least a project on which all stakeholders agree that they have no communication issues and nothing can be possibly improved. So do you best and of course when it comes to communicating use common standards, common language, common tools – or should I just say “Remember the Babylon!” ;)
  • Eliminate the waste. When it comes to final stages of engagement the troops are tired, the deadlines are tighter, pressures are higher, and inevitably, the team’s ability to employ common sense deteriorates. I have seen unnecessary testing cycles, stupid mistakes, round about ways to address the issues, “group grope” meetings and other wasteful activities proliferate at astounding rate as engagements get closer to the end. A JavaScript error triggers call to a DBA who engages in hours of troubleshooting at database level. Configuration change pushes QA Manager to request a full round of regression testing. A tag naming discussion turns into 2 hr long all-hands. And so on. Stay on look out and eliminate the waste with the vengeance.
  • Don’t change horses in midstream. Adjusting your methodology, changing processes and procedures are better left to discussion on full stomach, when all the potluck meals have been served and consumed. Implementing even most brilliant SDLC improvements does not belong to the final stage of engagement.
  • Watch the clock. I am not talking about counting the minutes left till the launch press conference, no, I am talking about hours your best performers put on the project. There are limits to what even the strongest members can continuously put in without deterioration in productivity. A minor mistake by a release manager who has been working 70 hrs a week for past two months will throw you back completely destroying the gains built to date by all that overtime.

Boy, I’m looking at the list above and I see that we broke all these rules… no wonder the only time I have to write this post is 4 AM ;(

PO Trip Adviser: China

And now a brief list of travel tips for one of my favorite destinations – China, the country that changes with amazing speed right before our eyes.

If there is anything that I regret about traveling to China it is not spending enough time there, not meeting enough people, and not seeing enough places.

I remember sitting on the Great Wall looking at the hills that look exactly like those on ancient paintings and thinking that for many Americans visiting China could be experience equal to visiting a different world, another planet… Well, that’s also changing rapidly.

  • A Visa is easy to get, but it may take a few weeks so allocate sufficient time. Also make sure that you have the travel plan worked out before you apply for Visa as you may need several entry authorizations as cities such as Shenzhen require special handling.
  • The most difficult aspect of traveling to China is language, very few people speak any English and you won’t find too many signs in English either. As a result public transportation even inner country air travel becomes challenging.
  • China is a reasonably safe country, and when it comes to main outsourcing destinations within country is very safe.
  • With petty crime on a raise you should be aware of environment and follow common sense practices such as not carrying large amount of money, protect your passport and valuables, etc.
  • The police in China are generally very friendly, though they speak very little English except in Beijing, Shanghai or Shenzhen, where some police can generally speak simple fluent English. If you are lost then ask for directions as they will usually be happy to help.
  • Stay in 4-5 star hotels remains relatively affordable. That will also ensure English speaking staff, access to tours, restaurants, etc.
  • Driving in China is somewhat strange experience – on one hand I was surprised with how closely some laws are followed, e.g. the speed limit – most of the cars travel ~5 mph below it. On the other hand I saw a lot of erratic moves and turns that were not aggressive just plain dangerous.
  • Sightseeing in China can be easily arranged with the help of the vendor or hotel staff. Keep in mind that most of professional tour guides are in cohorts with retailers specializing with ripping off tourists selling you “traditional” china, tea, souvenirs, etc. at 3-5 times the price you can get them elsewhere.
  • Eat only in good restaurants or at your hotel. Avoid eating buffet meals, even in high-end places. Not only drink bottled water, but also brush your teeth with it. Most of hotels provide bottled water for free. In restaurants I recommend boiled water / hot tea.

PO Trip Adviser: India

Continuing with a line of travel guides I turn to the most common outsourcing destination – India. There are a plenty of outstanding travel guides for India, so if you are planning to combine business and pleasure, and see places such as the Agra, Rajasthan, and Kerala make sure you study them before you depart.  Keep in mind though that most of the most interesting places will take dedicated and possibly considerable time, for example while Taj Mahal is fairly close to Delhi / Noida the trip there is going to take you at least a day.

For those of us who are limited to strictly business, here are a few tips to consider:

  • A Visa is easy to get, but it may take a few weeks so allocate sufficient time.
  • Safety of travel in India is not what it used to be just a few years ago, yet large outsourcing cities remain quite safe for majority of business travelers.
  • Shop around for tickets and ask frequent India travelers for advice. Chances are you can find something 30% less than standard internet rates using Indian travel consolidators.
  • Chances are you will arrive in India around midnight. I typically go straight to a hotel right near the airport and start my business day the next morning.
  • Stay in nice hotels, 4-5 stars. They are relatively affordable and the high quality service will help you to retain the energy you most certainly need.
  • Ask the vendor to arrange all your travel and have a car with a chauffer. Don’t even think about driving in India. The traffic and road system is not for the faint of heart plus they drive on the wrong side of the road!
  • Petty corruption is widespread in India, from expediting you through airport customs to dealing with government agencies and employees can involve bribing or “tipping” as it is often referred to. My advice it to stay away from it.
  • Make sure you have your personal belongings partitioned among suite cases and carry on. Lost luggage is a fairly common event. Use solid suitcases as mishandling is also common at airports.
  • Don’t wander off the beaten track, don’t encourage beggars, don’t visit shady places, don’t leave your valuables unattended, don’t put your wallet in your back pocket, use licensed guides in sightseeing – basically use common sense!
  • Eat only in good restaurants or at your hotel. Avoid eating buffet meals, even in high-end places. Not only drink bottled water, but also brush your teeth with it.

PO Trip Adviser: Russia

While working on a outsourcing destinations chapter for my book I realized that tips for travel in many countries could be helpful to those not accustomed to traveling to third world countries and other outsourcing destinations.  Of course there are plenty of books, websites and forums covering travel to any place in the world.  I am not planning on competing with them in any way, my goal is create a simple list of items to keep in mind when visiting a vendor far away from your home becomes necessary.   I am planning to put a couple posts covering few countries that I have a fortune to spend time in and let me start with the one that I lived in for 30 years…

So, here we go – a few tips on traveling to Russia – one of the top Eastern European outsourcing destinations:

  • Visas are required and getting one can be a tricky process. Make sure you allocate at least one month for processing the paperwork.
  • Unfortunately terrorism and street crime are a part of daily lives in many parts of the Russia. Still, on a relative scale, Russia, and especially the tier-one cities, are safe and great places to visit.
  • Shop around for tickets. If you know any Russians who stay connected to their motherland, ask them for help. There are many Russian travel agencies that can find great deals on tickets.
  • Staying in nice hotels can be price prohibitive, particularly in tier-one cities. Ask your vendor for help with travel arrangements.
  • You can rent a car and drive in Russia. Be prepared for a manual stick shift and very aggressive driving styles. You may face very serious traffic and won’t see any signs in English, so finding your way can be a challenge.
  • Ask your vendor to arrange sightseeing for you. Due to large distances and complexities in city navigation, you would be much better off on a guided tour. And I assure you Russian cities and their suburbs have a lot to offer a curious visitor such as architecture, landscape and even shopping.
  • Ask your vendor for recommendation when it comes to restaurants. Nowadays, especially the big cities, offer a great variety of styles and cuisines but the cost can be astronomical. Just like many other destinations, not only drink bottled water but also brush your teeth with it.
  • Prices are generally quoted in rubles. Currency can be freely converted at banks, hotels or kiosks specifically for tourists.

If you have any suggestions, ideas or tips on travel to Russia please comment or email me, I’ll be happy to update the list.