“It takes two flints to make a fire.”
– Louisa May Alcott
Organizations looking to ignite their growth are increasingly turning to software development companies to help speed up delivery, increase scalability and create new revenue streams. But while the benefits of outsourcing software development to an external team are easy to see, pitfalls still exist that can turn a dream partnership into a nightmare scenario. Read on to learn why teaming up with a team that has a similar culture to yours is just as important as technical skills and experience.
Choose missionaries over mercenaries
Nowadays finding the right talents to ideate and engineer software that creates an impact is paramount. It is also one of the biggest challenges companies across sectors face, as the global IT shortage means that the competition to find, attract,. and retain qualified experts is fierce. Korn Ferry, the management consulting company, reports that by 2030 there could be more than 85 million unfilled jobs due to a lack of skilled professionals, which could result in $8.5 trillion USD in lost revenue.
Additionally, even if a company can find the right talent they need, the cost is significant. Glassdoor estimates that the average US employer spends $4,000 USD and 24 days to hire a new employee. Waiting almost a month to get the talent you need to get your software to market ahead of your competition could be disastrous. For positions with rare skillsets, the hiring time can be as long as 6 months.
But accessing the right talent and expertise is just part of the solution. Partners who are not fully engaged in an endeavor are unlikely to deliver the results, which is why teaming up with an outsourcing partner who is not only passionate about crafting software, but who understands your business and shares your goals, is so important.
Engagement is key, as research shows that 71% of executives say that employee engagement is critical to their company’s success, and companies with high employee engagement are 21% more profitable. Forbes reports that companies with highly engaged employees outperform their competitors by 147%. Having similar values is a good indication that the cooperation between your in-house staff and external development teams will be smooth and productive.
Gallop estimates that employee disengagement costs the US economy as much as $350 billion USD per year. Add to that the cost of missed opportunities, slow releases and reputational harm that results from software that disappoints and it’s easy to see why turning to missionaries who truly love what they do and believe in your mission is a worthwhile investment.
Communication should be transparent, direct and often
Research shows what industry participants regard as the major challenges in software development and include continuous performance management (17.7%), finding and hiring the right developers (13.1%), understanding user requirements (8.9%) and integrating different systems and technologies (6.5%). However, the biggest challenge, according to 53.8% of survey respondents, is adapting to changing client requirements. This illustrates why communication is so critical.
But pay attention to what is being communicated! The IT outsourcing market in the United States was valued at $342.9 billion USD in 2020 and is projected to reach $410.2 billion USD by 2027, with a compound annual growth rate (CAGR) of 2.6%. Even more impressive, IDC research indicates direct digital transformation investment, currently growing at a CAGR of 15.5%, is expected to reach $6.8 trillion USD by 2023. Given the money to be made and increased competition, it is understandable that some software outsourcing companies will make promises they can’t keep, just to sign a deal.
A bit part of establishing confidence comes from working openly and honestly. Transparency and trust go hand in hand, which makes sense since research shows that 63% of business leaders believe that trust must be earned. The best way to build trust is to be transparent – hiding information and creating data silos is ineffective and leads to distrust and resentment. Regardless of your line of work, setbacks can occur. Being transparent about challenges enables swift reactions and pivots in strategies. This agility is essential for forward-thinking digital accelerations.
The costs of teaming up with a partner who is not a cultural fit
Gartner research indicates that investment in new application development is 17% of total IT spend. While a sizeable portion of a company’s budget, to be sure, this amount can increase astronomically if your outsourcing partner is ill-suited to your needs and unable to work autonomously. Why? Because if a company needs to babysit an outsourcer through every stage of the software development life cycle, it is not doing the things it needs to drive its business.
This is why ‘hands-off development’ is increasingly becoming the preferred option. Working with an outsourcer that is not a culture fit means a company will have to be heavily involved in the daily management of a team. Beyond being a waste of resources, this type of cooperation is ineffective. Software development outsourcing should increase a company’s operational efficiency, not detract from it. While your team concentrates on your core business, your software partner can drive product engineering that meets current needs and anticipates future goals.
Along with the risks that come from babysitting an outsourcing partner, CTOs should also be wary of working with an outsourcer that embraces a ‘yes culture’. An outsourcing partner that questions assumptions, points out errors and raises concerns based on detailed analysis of the business context, market and target group is far more useful than an outsourcer that tells a company what it wants to hear. A partner should challenge the status quo and pursue continuous improvement while embracing mutual accountability.
As mentioned before, engagement cannot be underestimated, and a dedicated development team that smoothly fits into your company’s culture is far more likely to embrace your mission, support your vision and align with your company’s values. As opposed to acting as a sub-contractor, your software partner will understand what’s at stake and strive to contribute to your success.
If a development team has ‘skin in the game’ and feels responsible for the software and the results it will produce, its members will invest more in the endeavor. This active participation is essential to the success of a project and a company’s bottom line, as research indicates that 77% of employees say that a strongly engaged culture makes them do their best work and companies with highly engaged employees are 22% more profitable.
Learn more about finding a software partner that fits your culture
As a trusted global software partner for start-ups, scale-ups and enterprise-level organizations across industries, Software Mind has been building cross-functional teams of software experts for companies since 1999. Our culture and values inspire our work and enable us to help our clients scale to their growth while developing evolutive software that creates an impact. The experience we’ve gained, lessons we’ve learned and insights we’ve discovered can be found in our latest white paper, Culture Will Make or Break Your Software Partnership: The Importance of Culture in Software Outsourcing.
You can get your free copy of the full report here.
About the authorGrzegorz Młynarczyk
CEO of Software Mind
Co-founder and CEO of Software Mind, Grzegorz has spent the last quarter of a century building and investing in companies that develop cutting-edge software solutions for game changers around the world. Though he long ago transitioned from an engineering role to a managerial one, software development is still in his DNA, and he retains a passion for emerging technologies, tools and methods. An advocate for a tech-driven, people-centered approach, Grzegorz has led Software Mind’s ambitious growth plan, which has seen the acquisitions of ValueLogic, Code Factory, Chmurowisko and Virtualmind.