3 Outsourcing Trends to Consider When Building Your Team

Note from the editor: This article is the second in a two-part series focused on assisting procurement professionals and IT leaders avoid the hidden costs often associated with outsourcing. Read Part 1 here.

According to independent sources such as Gartner and NASSCOM, since 2015 the growth of dedicated GIC or Global Insource Centers has outpaced service providers in India primarily due to the India engineers wanting to provide direct value to US organizations instead of billable hours or margin to their India service provider.  

What does this mean? The talent wants to be measured and make an impact!

As remote and hybrid work environments are making it more difficult for employers to recruit and attain high-quality digital talent, we asked SVP of Global Services and Co-Founder of SMC Squared Steven Stephan to share his thoughts on how to rethink the approach to scaling global teams while minimizing additional hidden costs.

1. Scale and optimize your talent ratios and retention.  There’s a built-in employee maturity timeline in the India IT culture that leverages mentoring.  Also, it’s important to understand the entry-level training and bonding which is much different than in the US.   The highest level of attrition is at the 3-year mark when the bond expires.  Unknown to most, this is why US companies that leverage traditional IT service providers see abnormally high attrition compared to what is quoted.

    

2. Traditional India IT service providers rely heavily on < 3-year experienced resources.    They have extensive college hiring and training programs, “freshers,” where they can bond for 3 years as they gain their first project experience and deeper technical training.   Known to US companies as “shadow” resources, they are waiting for attrition to become billable.A common IT Services company ratio is 1:2:10 (leader:mentor:doer or architect:tech lead:developer).  This puts a heavy burden on the leads and is optimized for margin, not results to the client.
3. Foster Employee Development. SMC Squared and GICs (dedicated company resources) typically leverage a 1:4:8 ratio, where it inherently has a 1:2 mentor to doer ratio.   These building blocks of 3 FTEs with the right architect as necessary make up the core resource mapping to scale and deliver optimal results.  Retention is much better in this model as there’s significantly less dependency on the bonded, under 3-year resource (if any) and a more realistic mentor load on the leads.  Plus it fosters internal employee development and career paths.

Build a team of fully engaged global employees who can more effectively tackle your business’ demands. To learn more about how we can help your company avoid hidden costs and accelerate digital capabilities click here. 

• To learn more about SMC Squared’s approach to building an employee-centric team, click here.
• Read more about how SMC Squared partners with clients to save an average of 42% on IT talent as they turn to our innovative Global Insourcing Centers.
• Want to go inside a GIC? Click here.