Why does outsourced engineering fail? (And how do you make it better?)

Serengeti

Business

02.07.2019.

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It's hard to hire a team of great engineers -- and it's also often costly. As a result, more and more companies have turned to outsourcing that aspect of the business. That's a good play, and a good start.

The problem is that a lot of outsourced engineering fails. The projects are over-budget, take too long, don't come back with the right specs, etc. Why does this happen, and how do you make it better?

The first issue: Pricing

Many outsourced arrangements operate on a fixed price cooperation model. This model can work, but for it to work, the client and the outsourced team need to have worked together for a good amount of time. It almost never can work well in the initial parts of an engagement.

Why? Because there's too much that the outsourced team doesn't yet know about the specifications, the apps, and how the client team likes to work. You cannot do fixed price without a good understanding of the hours (capacity) that different projects will take. You can get to that understanding after you've worked together for a good amount of time, but it doesn't work well in the beginning.

The second issue: Management methodology

In staff augmentation model you will often see:

  • High customer management overhead
  • Manager in one country
  • Engineers in another country
  • Client in a third country

This gets too confusing with too much overhead. Where possible, you need the team of engineers all together with the manager. You need the outsourced team as an extension of your team.

With too much overhead and too many locations, communication also increasingly is a problem. Without proper communication, timelines are never met.

How you fix these issues

We call what we have developed "The Team Extension Model."

In the Team Extension Model, Serengeti is a supplier responsible for maintaining a stable offsite development team that seamlessly integrates with the customer's internal engineering team.

The supplier is responsible for managing the remote team and delivering according to the customer's roadmap, product requirements, and timeline. We maintain a dedicated core team that emulates an engineering center owned by the customer as closely as possible. Its advantages are scalability and flexibility in team size, composition and skill set, as well as the added focus of a management team experienced in similar engagements.

There are also less distractions around internal politics (because we are providing an off-site team, not one that needs to be in meetings all day or anything like that), and the sheer number of engineers we have means that we have expertise in virtually every technology and language. While you are paying for a specific project, you are also getting consulting capability built in.

Learning more

If you'd like to know more about how we avoid issues and complications with the fixed price and staff augmentation model, contact us today. If you're looking to scale your tech stack quickly and effectively, definitely reach out and contact us.

While you are here, you can download the Checklist - Choosing the right nearshore partner for your software product development:

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