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The Software Outsourcing Show is on a mission to explain best practices for strategies, partner selection and ongoing management of outsourcing your software outsourcing development.
Episode 2 features the Chief Executive Officer of Accelerance, Steve Mezak and President of Accelerance, Andy Hilliard, discussing how software development outsourcing is the new standard for businesses. Once seen as just a cost effective venture, it is now about hiring talented workers around the world, with each region offering a particular skill set and expertise.
Bobby: Welcome to "The Software Outsourcing" show, brought to you by Accelerance, the global software outsourcing authority.
Bobby: Hello, everyone and welcome to the show. My name is Bobby Dewrell. I'm your host and joining me in the studio today, I have Steve Mezak and Andy Hilliard, both the founders of Accelerance, Inc. Steve, Andy, how are you doing today?
Andy: Great. Thanks.
Steve: Pretty good. Great.
Bobby: That's good. Hey, I was wondering if you guys, you know, on the show we talk a lot about software outsourcing and everything that, you know, those challenges, those opportunities that exist there, the kind of ‘got yous’ and we try to help people, you know, learn from some of the mistakes that we've made. And so, I thought, you know, it'd be kind of good to start a little bit with your background. Steve, how about, let's start with you. How did you get into software outsourcing? How long have you been doing this?
Steve: Oh, well, way back when I was a co-founder of a startup company and I was the first technical guy, and I thought, "Well, this is great. I'm gonna hire developers. We'll get t-shirts. We'll develop some great coat." And the very first day, the CEO...we'd been working on this idea for several months that we're gonna outsource. I'm like, "What?" I didn't know what he was talking about. This was 1991. And in fact, he had found a company, a small company here in the States that develop software similar to what we needed. And so, it made perfect sense to essentially outsource to them to get the job done for version 1.0.
And fast forward about seven, eight years, I started working with developers from India, from Russia. The internet of course, had come about in the meantime and it became very practical and very cost effective to use these really expert developers that were offshore. And so, that's why I started Accelerance to help American companies have much more confidence and reliable help in getting to these good developers out there.
Bobby: Okay. Awesome. Andy, how about you? What's a little bit of your story there?
Andy: Well, back in the late '80s, I was a Peace Corps volunteer in an international business major and coming back from the Peace Corps in Costa Rica, and going through graduate school, I sort of ran into the mid '90s when the internet and software took off. I remember AOL being sold in my dormitory. And so, I went into both international sales and marketing, and global software development through Cognizant. They were just a spinoff of Dun & Bradstreet, and 700 of the smartest Indian guys from IT.
And I was one of the first division managers being hired in the United States. So they quickly grew to 15,000 over 3 years. Today they're 250,000. And I left them after three years, went to Costa Rica and started a software services firm to deliver nearshore software development services. And after about a year, I ran into Steve and I loved his model, and what he was writing about a global software delivery. And fast forward about six years later, I sold my shares of my company and teamed up with Steve to create Accelerance to deliver global software to the small and mid-cap market.
Bobby: Okay. Wow. So, I mean, that's a lot of time in the software outsourcing space. What do you think about the state of software outsourcing today? Where do you think we are? I'll throw that out to either one of you.
Steve: Well, it's become I think the standard. I think so many... In the early days, many American executives outsourced purely to save money. I think in the Silicon Valley, startup software engineering world, it was never about that. It was always to get great talent, smart people, you know. It wasn't about driving cost down. It was just getting the job done and I think that has become more of the norm now. Yeah, there's still a lot of IT outsourcing and big companies select those big companies in order to drive down cost. But, you know, that's not what we're about and that's not what most software engineering and software development teams are about either.
Bobby: So it's really not a cost play. It's more about just getting the job done.
Steve: That's it. I think so, and it's so difficult to hire developers these days here in the States. And I think that's been a big change we've seen. It had its ups and downs over the years, but it's really a serious issue today.
Bobby: Gotcha. And so, Andy, how about you? Where do you think we are? Are we trending up toward outsourcing? Are we maybe leveling off? Where are we there?
Andy: I think we're definitely trending up with outsourcing, assuming that countries are still willing and able to trade internationally now with, you know, open borders and the ability to leverage teams and individuals and skill sets around the world. You know, I think almost 20 years ago, Thomas Friedman wrote the world is flat. And to Steve's point, that accentuates the point that there are great developers and great development teams and companies elsewhere. Yes, they can be had for typically less money than the developed countries, but realistically it's all about getting the work done and finding, you know, great teams with the right culture and the right skill sets and capabilities to deliver what you're trying to accomplish.
Bobby: And how is, you know, technology, some of the new technologies that we have out there with video chat, internet calling, those things? How is that kind of impacted the software outsourcing? It seems like it's made the world smaller, but has that worked in outsourcing as well? Has that improved, giving us some gains?
Andy: It's made it better and it hasn't solved all the problems. But clearly being able to communicate real-time and use Face Time, and not Face Time product necessarily but just, you know, real-time video collaboration and it bridges the cultural gaps and allows people to understand better across languages and across cultures by leveraging body language and clarifying terms with people in real-time. And I think also just the nature of media that continues to share cultures and languages across borders allows people to start to understand each other better. Again, it doesn't solve all the problems because you're still located in a different country and you grow up with different norms. So you still have to work on that, but I think it has definitely accelerated and improved the operation.
Steve: In terms of specific tools, we've been using Zoom video call for video calls a lot and Skype on occasion as well. But I think just to build on what Andy said, software development is a creative human activity and that really shows that these developers are not strangers in another country in a strange land. They're real people, you know, with families and whatnot. They're really great at doing software development. There are smart people everywhere. So being able to make that connection more easily has been great. However, it's not a replacement for actually visiting and physically getting together. In business critical application development, that's still highly recommended at least quarterly in those scenarios.
Bobby: Right. You still have to have those times to get together and break bread, right?
Steve: Right. Exactly.
Bobby: There's just something about that. So let me tell you, let's talk a little bit about some of the challenges that we see in the market place right now that maybe impacts or drives to software outsourcing. What do you think some of those challenges are there out there?
Steve: Yeah. I think a lot of American executives, software executives, have done outsourcing or they're doing it now and they've had some ups and downs. And some of them are hesitant to do it again because it's the kind of thing, "We tried that 10 years ago and it didn't quite work." And the challenges that if you're a small company, mid-size company, you need a team of 5, between 5 and 50 developers, maybe a little smaller to start, maybe a little bit bigger. Ultimately, it's still not big enough for the big name brand outsourcing companies who obviously advertised, you know, for them to care to deal with.
So now you're left searching online, asking your brother-in-law, "Do you know somebody?" It takes a lot of time to find those good companies, you know, months of time and even when you find one, you may think you know everything about software development, but like I said, it's a complex human activity and it really requires some extra help. So those are the challenges, exactly the challenges that a [inaudible 00:09:00] is looking to address.
Andy: I would add to that, Steve. Also that in interacting with prospects and clients, they keep on telling us that for every 17 OpenRex they have for software developers, they can only find one good candidate. There's just an over demand and a lack of supply. And the other thing typically we run into is that companies, especially brick and mortar, but even even like ISVs and software companies, you know, their core competency is not the engineering of software, it's the envisioning of intellectual property and the evolution of the intellectual property.
And then the promotion, and marketing, and selling of that to an end audience. But not necessarily that, you know, engineering part of the software itself. Yes, you want leadership and ownership of IP, and you want a certain level of technical leadership, but it's that whole engineering process. That it's just not a core competency of any particular company.
Bobby: Yeah. And is it, I mean, you know, let's talk about all the different technologies out there, too, today. Right? I mean, it seems like every day I wake up and I'm reading about something out. So although I think everyone in the world is doing blockchain right now based on...
Steve: That's right. Yeah. Blockchain with IoT and deep learning.
Bobby: Right. So, I mean, do we find that there's segments or pockets of the world, if you will, that are up on different types of technology maybe that we're not up on, or is it just a matter of being able to spread your virtual wings and embrace more technology, or...?
Andy: Well, every company, you know, has a need to be lean and to be smart. And the only you can be lean and smart is to focus on what you're really good at. And because technologies are changing and capabilities and requirements change for every company, you know, they need to go out and find it without actually owning it because owning it is a whole nother business line. And that requires infrastructure and cost and processes to own that business line. And is that your real business? So with things changing like that, you need to have models.
Just like, you know, companies are deciding not to own a lot of infrastructure or real estate. Is that really quarter their company? Can they be distributed? Can they be leaner and focus that savings around being better or more competitive? The same with software development. It's like, don't own something that's just gonna change and you shouldn't be owning it in the first place. You kind of find it somewhere else and have someone who's a real expert, who's just has a center of excellence around that and they are gonna be a better solution than you could ever be yourself.
Steve: I think the other angle to your question, Bobby, is about are there certain regions of the world that are more known for certain technologies than others and we have seen this a little bit. I think in general, Asian companies are great at the scripting languages and some of the more common technology, certainly, .NET and PHP, and things like that. When you start to get into more sophisticated user interfaces, though, user experience design, and whatnot, culturally it's too different for them to design an interface that appeals to a western or an American, North American audience.
However, the Latin American companies, countries, and their culture is very...is much closer to ours and European culture. So they have a better sense of North American culture in the user interfaces that would appeal to the market and then finally, Eastern Europe has a very strong legacy of universities and engineering and math education at the universities. The former Soviet republics in Russia itself now that more the advance technologies, that's where we're seeing more blockchain expertise and machine learning, the more sophisticated algorithms are generally, that's the place to go. Not to say you can't find it in the other places, but it's more common there.
Bobby: Okay. Well, and, you know, Steve, that's a great...leading kinda to the next question I was thinking about and that's really, you know, what is it about Accelerance that's unique within the software outsourcing space? I mean...
Steve: Well, I think it's certainly having this global focus. It's not about just outsourcing to any one country. We have independent companies. We call our partners in over 30 countries around the world. We have a good sense for what happens, where to go, and what the rates are. So we can take any of the requirements for either business or technical requirements from a client and help direct them very quickly to the partners that best serve their needs. That's the first thing on top of my head. Andy, you wanna jump in?
Andy: Sure. And also, the fact that we send teams around the world and do assessments and certifications on site. Steve just mentioned business in technical, but a lot of it is do they have the cultural attributes that align well with the expectations of English speaking clients in the U.S. or Western Europe. And that's a lot of...and that reaches beyond just English competency, but also, you know, are they hiring people that are bilingual, bicultural, travel a lot? Do they have leadership that either has been educated or lived in the U.S., worked in the U. S., so that they are creating an environment that is optimized culturally to deliver services to the U.S.
And that I think is it's not about, you know, having the greatest technical resumes. It's like Steve said the very beginning of this podcast is people working with people and understanding one another and being able to collaborate, and get what the other person is saying without a lot of rework or, you know...
Steve: Misunderstandings, yeah. And it's not a one-way street either. So it's not, like, "Hey, we only find partners that are just like us, Americans." It's we coach American, our American clients as well to say, "Hey, my most popular blog post over the years has been the seven ways an Indian programmer says no." And I got a lot of flak for this and, you know, "You bigot. You're picking on Indian programmers." I said, "No. I'm telling Americans, 'Look, they're saying, you know, when they say that will be difficult, pretty much means no and you just have to tune your ears to hear it.'"
But of speaking of coaching, that's the other thing that's unique. What we found over the years, we found these great partners, we make the introduction, and that for the longest time that was our business. Now, in the last year or so, we have this really important consulting services to help clients adjust and adopt the right processes to work with these partners effectively. So that's been a huge benefit to our clients as well.
Bobby: Right. Because, you know, the thing that we keep coming back to and talking about is really understanding the culture and the people working together, right? The technical skills are the technical skills, but if you don't understand what it means, you know, I think of one client that we dealt with that had a Russian developer and they were talking about having to do tipping, right? And so, you know, they didn't understand tipping. They thought, "Oh, that's a bribe." You know, so...
Bobby: "Wait, wait. You give people extra money just to bring you food? Well, huh?"
Steve: Or we had a client in Denver, there's usually of our partners in India and the QA manager scheduled a meeting at 1 in the afternoon Denver time. And it's, like, "It's 3 in the morning in India. I can't..." You know, she just didn't have a sense for the...even the times in difference, you know. So that's an obvious one that can easily be fixed, but anyway.
Bobby: Well, let me just ask you kinda in wrap up just one question for fun because I know you guys...both of you have been all over the world in doing this. So if you can think of, you know, one of your biggest surprises over the years just in software outsourcing or travels, if, you know, just a short, you know, kind of what's one of the biggest things that you've learned over the years in doing this?
Steve: Wow. Well, I guess on the humorous side, we were in Bolivia visiting a partner down there and QA manager. We had a little get together, and the QA manager had a red t-shirt on and it said, "Bazinga." And I said, "Does that mean something in Spanish?" And she says, "No. That's what Sheldon Cooper says on 'The Big Bang Theory.'" I was, like, "Oh, duh." You know, it's just the wrong context. There's, like, it must be a Spanish word. So that's more of a humorous side.
I think, but more seriously, it's the tremendous competency of these developers that we run into, the education that they get. You know, not everybody can develop software. It's just not... It takes a certain aptitude, certain skill, certain mindset. But it's not unique to Americans. It's spread generally, uniformly throughout the human population I would say. And so, you know, but going into what you think, "Oh, you know, all the developers, you know are here, so they must then know when all the good ones must already be here and that's..."
Bobby: Right, right.
Andy: So Bobby, I would also chime in by saying that our biggest challenge still is trying to convince companies to take the steps to create a true extension to our relationship. Because I still see companies, and maybe that's because they default to this cheaper labor elsewhere in the world, throw stuff over the wall mindset. And it's difficult for them to grasp and to buy into, and to get approval from people like CFOs to understand that the cost of bringing people in and sharing your culture, going over to the partner like Steve says, "What's a quarter?" And sharing that culture is a very small cost, which leads to a unleashing a lot of potential and diminishing a lot of the risk.
But it's hard to get that approval because people say, like, "Oh, no, it's all about contracts and low pricing and transaction of commodity." But if they get on board with that, what Steve and I, and Accelerance recommends is when you go over, or you break bread, you create an extension of your team, you treat the contractors or your partner, we don't use the word vendor, like, an extension of your organization. And you spend a considerable time looking for not just professional fulfillment through this extension but personal fulfillment.
Go over and visit. You know, when we went to Vietnam, for example, you know, we went out on the Delta and took, you know, boat rides and motorcycle rides. And it allows you to spend time with your partners in nonprofessional circumstances getting to know one another and getting to know their families, and then working for each other to make each other successful as opposed to, you know, making ourselves successful at the cost of the other party.
Bobby: Right. So it's just like you would do with your colleagues at work when you go out for happy hour or you go out for somebody's birthday.
Bobby: It's that exact same concept, right?
Steve: There's still a concept... I think they have been lessening now with this concept of purchasing department, purchasing process. You know, it's if you're gonna... Would you ever purchase an employee? It's kind of the same thing and instead of a contract, I mean, yes, there's a legal agreement. But think of it more as a covenant rather than a contract. I think that's a better way to think of a better word for what guides the relationship
Bobby: Sure. Well, hey, guys, I see we're about to run out of time and I, you know, I just, I wanted to thank you both for joining me today. I enjoyed it. Hopefully, you'll come back on our future episode. We'll dive into a couple of more these topics a little more. You think you're up for that?
Andy: Yeah. Oh, great.
Bobby: Okay. Well, great. Well, with that we'll wrap up today's show and as always, you can find our latest podcast episodes on the softwareoutsourcingshow.com. Feel free to send any questions or comments, or suggestions for future topics to email@example.com. And, you know, spread the word and tell a friend to listen. But until next time, Steve, Andy, thanks for joining.
Steve: Thanks a lot, Bobby.
Andy: Thanks, Bobby.
Steve: Take care.
Bobby: Thank you for listening to "The Software Outsourcing" show, brought to you by Accelerance, the global software outsourcing authority. You have a topic you'd like covered in a future show? Then send us an e-mail at firstname.lastname@example.org, email@example.com. Show notes, links, and materials discussed on today's show may be found on our website at softwareoutsourcingshow.com. That's softwareoutsourcingshow.com.