This can also potentially allow your business to near-shore non-software development activities such as customer support, IT support and other admin functions where face-to-face contact with customers is not required regularly.
There are, however, risks associated with making this successful – but it is definitely possible with a high level of commitment and awareness. So, having set up off-shore teams many times in my own career, I’d like to share some guidance on the main challenges you’re likely to face and the measures you can take to reduce those risks.
Choosing a location
This is the first thing you’ll need to think about – and there’s a lot to consider here. Most important are the level of technical skills in the market and the overall standard of English. For an initial understanding of these, it’s worth finding out what the technical universities teach in that region.
You should also have a good grasp of the local IT market – for example, is there a talent pool big enough for you to recruit from? And are there big, attractive tech firms in the region, such as Google or Meta, who’ll be competing with you for talent?
Within the country, there may be different cities with various pros and cons. For example, people are likely to demand higher salaries in capitals, but the supply will be better; whereas a smaller city might suit your needs if the costs are lower and supply is sufficient. There may also be more of certain types of skills in some cities than others due to other companies based there.
You’ll also need to think about local laws and regulations, such as how difficult it is to set up a business in that country, and the ease with which you can transfer capital. Plus there’s the local political situation to take into account, in terms of how stable the country is and whether it encourages IT companies to set up there with favourable tax regimes and other incentives.
Additionally, it’s prudent to consider the perception that having an office in some countries may give to your investors and customers. For example, some nations may have more of a reputation for corruption than others.
Finally, you’ll need to consider the cultural differences between the UK and your potential location. Do people there tend to work in a way that is compatible with the culture you want to create? And is close collaboration between them and your UK employees likely to be successful?
Overall, when deciding on the right country, there’s no substitute for actually visiting the place – multiple times – to find the answers to these questions for yourself.
Understanding local cultural and working practices
Once you’ve decided on your location, even if you believe the local cultural and working practices are compatible with your own, you’ll need to build a good understanding of the differences, to ensure you don’t fall foul of any misunderstandings.
For example, in North Macedonia, where Damilah is based, salaries are based around net income, rather than gross payments as we’re used to in the UK. Therefore, if the government raises income taxes, you might find yourself having to increase salaries to maintain your employees’ level of income.
What’s more, in the emerging countries of Eastern Europe, there’s often strong competition for the best people, so it’s important to cover as many bases as possible to both attract and retain them. Therefore other benefits, as well as salaries, need to be competitive compared with what other companies are doing in the local market.
HR practices should be very good, too: in particular, ensuring all employees are given the training and support they need to help them reach their full potential. Training budgets are often the first to be cut back in mature western businesses. But for the enthusiastic, ambitious talent you want to hire, it’s crucial that you provide them with the tools to allow them to grow, or they will soon leave you to learn new skills elsewhere.
Overall, it’s vital to listen to your colleagues and be flexible if they make suggestions for activities, celebrations or training. For example, International Women’s Day is very important in North Macedonia and, with a 50-50 gender split at Damilah, colleagues expect the company to buy gifts for all the women and have a celebratory lunch.
In short, employees need to know they have a voice that is heard, and that you care about them.
Finally, if you’re comparing countries, it’s important to understand what on-costs there are in each location. This will give you an accurate picture of cost-to-company (CTC) and allow you to make a fair evaluation.
Hiring a team
This will, of course, be the most critical part of the project – and potentially the hardest.
You may well find yourself up against a tricky battle for talent. As a new player in the local market, you’ll be faced with the question of why anyone should choose to work for you – unless you’re prepared to pay salaries that are over the odds. This can be exacerbated in places where people are generally risk-averse when it comes to leaving their current employment – which tends to be prevalent in former communist countries where a culture of entrepreneurialism and risk-taking is less deeply embedded than the UK.
In such cases, it’s helpful to spend time building a brand for your company in the local market utilising social media. People are more likely to want to work for you if they know who you are and can see other people enjoying working for you.
You’ll also need to be sure that you’re hiring people who will fit into the kind of culture you want to create – and not employees who are simply in it for personal gain.
Therefore, the most important first hire you could make is a head of HR – someone you can really trust, who knows the local people and culture and can make sound judgements when it comes to recruiting the right team. A person like this can help to remove a large element of risk from the project, but they can also be hard to identify and attract to your business.
Choosing the right model
Rather than going it alone, and taking on the large risks highlighted above (and see our list of ‘gotchas’ below too), there is another way.
It’s always worth considering an alternative model. Closely partnering with a company that has in-depth local knowledge, plus a proven team with the right levels of experience, can allow you to maximise the undoubted benefits of near-shoring, while minimising the risks for your own organisation.
This is a model that we at Damilah like to call ‘partner-shoring’.
7 near-shoring ‘gotchas’
Here are some of the most common traps that, in my experience, organisations fall into when attempting to set up a near-shore team:
1. Mistakenly hiring people who are only in it for themselves and their friends
This often occurs when there’s a lack of understanding of the local culture and customs.
2. Failing to establish the right culture from the start
You might want a culture of transparency, honesty and close collaboration. The team you hire might have other ideas – and it may be hard to control that remotely.
3. Overpaying your people
If you don’t have an existing brand presence in the country, talent may not choose to work for you unless you’re prepared to pay over the odds – thus negating one of the key benefits of near-shoring.
4. Failing to comply with local laws and regulations
Without a deep local understanding, it’s easy to fall foul of, for example, different tax and accountancy practices. Things can get messy very quickly.
5. Your team quitting en masse before you’re big enough to cope with the loss
This could happen, for example, if a big player like Google comes to town with a more attractive offering for talent than you are able to give.
6. Failing to keep head office under control
For example, your HQ may want to enforce working practices, hiring practices or pay rises that are not appropriate for the location in which you’re operating.
7. Not listening to your employees
Employees in a near-shore location are as important as any others employed in your business. You need to listen to them and have the flexibility to adapt to local cultural needs and expectations.
Want to avoid these and many other pitfalls? To find out more about reaping the benefits of near-shoring without suffering the pain, get in touch now to discuss our range of services.
Iain Bishop, founder and CEO, Damilah
1. What goes up, may come down again
Scaling down a team is one of the toughest tasks a CTO may face, as the process is not just about numbers, it involves people whose skills, careers and personal lives are impacted. Losing valued colleagues creates uncertainty and can strain workplace relationships, undermining team morale and trust.
When the opportunity comes to scale up your core team, it’s a good idea to remember that things may cause this to reverse in the future and so taking a more blended approach to resourcing should be considered, rather than hiring to maximum capacity in your core team.
2. Damilah’s Three-Pronged Strategy
Iain Bishop outlined a proven approach for managing scalability through three interconnected team structures:
- Onshore Core Team: The bedrock of your operations, with deep industry expertise and long-term commitment.
- Partner Nearshore Team: A scalable, third-party resource that provides flexibility without the burden of hiring or layoffs.
- Your Own Nearshore Team: A directly managed team, offering greater control and access to diverse skill sets while being adaptable to shifting demands.
This strategy enables you to adjust resources efficiently, supporting both growth and contraction without disrupting core functions.
3. Cultivating a Unified Culture
Maintaining a consistent company culture across both onshore and nearshore teams is critical. A culture built on transparency and collaboration ensures that even as your team evolves, everyone stays aligned with your organisation’s values and objectives. This alignment is key to sustaining high productivity and morale through transitions.
4. Balancing Autonomy with Alignment
Empowering teams to work autonomously can drive innovation, but alignment with the company’s overall goals is essential. Effective communication, regular interactions, and shared goals help keep all teams, regardless of their location, moving in the same direction. This balance ensures that autonomy doesn’t come at the cost of cohesion.
5. Cost Optimisation Without Compromise
Reducing costs while maintaining the quality of your workforce is one of the biggest challenges during downsizing. The three-pronged approach allows you to trim expenses through flexible resources, such as partner-shoring, while safeguarding your core team’s expertise. This method helps you manage financial pressures without sacrificing the talent that drives your business.
Additional Resources
- For a deeper dive into these strategies, read the full article by Iain Bishop.
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Microservices have been a buzzword in tech blogs for almost a decade now. Introduced by James Lewis and Martin Fowler as a logical evolution of Service-Oriented architecture, microservices offer IT organizations the opportunity to stay relevant and evolve their products constantly in an ever-changing software market. While many successful organizations still rely on legacy solutions built using monolithic architectures, the advantages offered by microservices far surpass the associated risks.
Moving to microservices can bring many positive changes to IT organizations. Microservices allow scalability, flexibility, resilience, improved development speed, and maintainability. These benefits give IT organizations an edge over their competition, making it essential to consider a move towards microservices:
Scalability: Microservices can be scaled independently, allowing organizations to handle changes in demand without having to scale the entire application.
Flexibility: With microservices, organizations can make changes to individual services without impacting the entire application. This enables faster iteration and deployment.
Resilience: If one service fails, it does not affect the entire application. Other services can continue to function, providing better availability and resiliency.
Improved development speed: With smaller, independent services, development teams can work on separate services concurrently, increasing the development speed and reducing time-to-market.
Maintainability: As services are separated and decoupled, it is easier to maintain and update them. This reduces the risk of introducing bugs or errors when making changes.
However, migrating from legacy monolithic solution to microservices is not an easy task. Failed attempts to migrate or to do microservices right on a green field solution can put many IT organizations at risk of losing their market advantage. Careful planning and analysis are required to avoid costly mistakes.
The migration process requires a thorough analysis of the existing monolithic solution, including identifying the different components of the platform, their dependencies, and data flows. Migration impact on existing workflows and business processes should also be considered. The outcome of this analysis will fit into the strategic plan for migration, including breaking down the monolith into smaller services and determining appropriate boundaries between them.
To minimize disruption to the existing platform, a phased migration approach is recommended. This involves migrating one component at a time, starting with the least critical components and gradually moving towards the more critical ones. Ensuring quality along the way by setting the right testing practices is also important.
The execution of the strategic plan may impact the organization’s structure as well, making it essential to have the right people in the right place. Experienced consultants can make a real difference between success and failure in this process. At Damilah we have the experteese in the process of migrating from monolithic solutions to cloud-native SAAS solutions using microservices architectures.
In conclusion, while microservices are not the silver bullet, they offer numerous benefits that can make a significant impact on an organization’s success. Careful planning and execution with the help of experienced consultants can help organizations migrate from legacy monolithic solutions to microservices architectures with minimal disruption and maximum success.