I was the CTO of a software subsidiary of a large investment bank during the stock market crash of 2007-2008. Before that time, the company had been using a small number of outsourced and offshore technical resources to augment the software development staff. The parent company had established an offshore technology center in Hangzhou, China and I had done preliminary reconnaissance for obtaining staff from there. We also used resources from a second tier Indian outsourcing company to support software testing. Up until the market crash, our use of outsourced and offshore resources was targeted and fairly modest. The market crash changed all that.
Market forces changed the focus to cost cutting which included staff reductions at all levels. A mandate from on-high regarding new staff requests followed the reductions. The new staffing request policy required an explicit justification for the hiring of onshore staff. The message was clear: If we wanted to hire new technical staff, getting them via offshore or outsourced means was the path of least resistance. The theory was that offshore/outsourced staff was 30-50% as expensive as similar onshore staff and that costs had to be reduced. Management viewed some technical roles as fungible commodities that could be easily replaced with cheaper staff in lower-cost locales. Debating the wisdom and economics of this argument is beyond the scope of this article. Suffice it to say that I was a good lieutenant and knew how to pick my battles. After five years time, over 70% of the software development shop was split between China and India.
Throughout that period, I had to ascertain which roles needed to be kept in-house and which roles were commodities that could be externally sourced. Employees continually expressed concerned that their jobs might be moved offshore and were looking for career advice on how to avoid being displaced. The answer was fairly simple. We could not risk offshoring/outsourcing key roles that added unique value to the business, and I frequently advised the staff on this point. Those roles fell into a few buckets as follows:
We had a small group of technologists who did exceedingly well at facing off with customers. They could both evangelize our technical solutions to customers and communicate customer technology needs back to the business. In my experience, this is a rare skill for a technologist and is a key differentiator in supporting the sales organization. Further, the industry had changed over the preceding ten years to a point where the technologists representing the customer had an almost equal say at the negotiating table to those representing that customer’s business needs. Having our technologists facing off with the customer had become critical to the success of the deal.
Solution and Product Architecture
As a financial software company, our products and solutions were the “secret sauce” to ensuring future business success. Offshoring/outsourcing any role supporting the formulation and evangelism of either solution (products + services) or product (technical) architecture represented a risk to the business. People in these roles required a deep understanding of the business domain, knowledge of the capabilities of the company, and the skills to synthesize that knowledge and understanding into value-added solutions and product features. These skills take a long time to cultivate, and we needed to keep these roles close to home if the business was to thrive.
Managing complex projects is a skill requiring attention to detail, a focus on the goals, and the ability to collaborate with a diverse set of personalities. Globally distributed resources created by the increased use of offshore/outsourced staff added a new layer of complexity to this job. We prized people who could manage projects in this environment. The best of these folks understood our corporate strategy and goals. They also understood the dynamics of the organization knowing where the pools of expertise existed and how to maneuver inevitable political and cultural obstacles. In short, they knew how to exert organizational influence to align project resources with execution to achieve corporate objectives. It was imperative that these people remained in-house and that we retained them.
The years surrounding the stock market crash of 2007-2008 were challenging. We made a lot of tough decisions that displaced good people. The times forced us to take a cold, hard look at the many roles that made up a successful software development business and make choices. In the end, the remaining technology staff positioned themselves and the business for success by gaining a new understanding of what constituted value to the business. While the lessons were hard, I think many technologists emerged with a new appreciation of their role within the business and what was needed to achieve superior results while avoiding becoming commodities.