Software Sweatshop

I recently met an MIS manager at a large Fortune 100 firm and he chuckled at the SoftwareSweatshop button I was wearing on my suit jacket. We started talk and he mentioned he's currently working with 2 offshore vendors. One is a large, established player, the other is a smaller, agile, sharper team. Guess which one he likes working with better? He finds himself giving more complex projects to the smaller team because of the expertise and attention they give him.

There's a lot of concern about the growing attrition at offshoring destinations like India. It's probably one of the biggest contributors to offshore project failures. With classic "lift and shift" of IT services to low cost countries, it's little wonder that offshore teams atrophy so quickly. Afterall, most talented developers don't want to do grunt work. Experienced developers either jump ship for companies where they can make the greatest impact, or start their own firms.

I spoke to another guy that owned a small 60 man operation in Chennai. They specialized in healthcare and insurance, but turnover was so bad that it was impossible to keep employees for longer than 6 months. They left as soon as they were trained. This tells me that there are 2 kinds of attrition:

Job Hoppers: These are usually younger employees who are looking for better opportunities. They're not always the most experienced or the most highly skilled, but given the talent crunch in places like India, they are still marketable. Most robust economies have this type of employee. They are the natural byproduct of a healthy, growing economy. The problem is their job hopping causes a major headache for employers under constant pressure to meet deadlines and produce high quality deliverables. It's important to know that most of the attrition in large companies takes place at the entry level, as employees seek to move up in their career.

Top Performers: Top performers are the guys who run the show. They get more done than 80% of their colleagues, and are the "go to" guys when there's a problem. When they leave, everyone gets worried. Top performers usually leave because they feel they aren't challenged or appreciated. They are quite seasoned and usually don't leave a job to gain more experience. If they leave it's because something is wrong. This is true for most professions, top athletes, doctors, salespeople, and programmers have matured past job hopping. They demonstrate responsibility and a willingness to do what others won't. If they don't go to a company, this kind of employee typically starts his own firm.

So if you're working with an offshore vendor, how do you minimize the sting of attrition? Here are some thoughts:

1). Hire small firms that are amazing at what they do. They will attract a certain type of developer, typically experienced professionals that have seen the problems you're dealing with. Smaller firms also look for leaders, but know that not everyone can be one. For example, my friend with the two offshore vendors feels much more confident in the abilities of his small, agile team than the bigger one. What's worse is that he sees the really good talent leaving the larger vendor in favor ofniche firms... or starting their own businesses.

2). Don't look for mere technical skill, look for commitment and a willingness to figure things out. Most vendors are the same in terms of technical expertise. You don't need rocket scientists, but you do need people that understand what you're trying to do and will bend over backwards to help you. Their corporate culture, hiring process, and business philosophy is a good indicator of the kind of vendor they will be.

3). Ask the same question in different ways. How much attrition have they had? What retention strategies are in place? What do they look for in candidates? What attracts employees to the firm? Why employees choose them over others? How do they engage employees?