Outsourcing as a flexible solution
At Inflexion, we are committed to sharing best practice across our portfolio, meaning the companies we partner with can benefit from hearing about others’ experiences as well as draw on the resource from our Network of experienced professionals across the globe.
Uncertainty makes planning challenging, but remaining focused on growth is crucial. Outsourcing can be a cost-effective way to scale up and down efficiently, according to Mobica CEO Simon Wilkinson.
“Now is a good time to be planning, and then execution becomes a matter of timing,” says Simon Wilkinson, CEO of Mobica, a software development firm which received minority funding from Inflexion in 2015. He likens leading a business in today’s backdrop to driving a race car round a racetrack: “You need to brake when you go into the turn. But what is critical and what determines who ultimately wins is how you manage the bend.”
It is an apt and topical reminder of navigating uncertainty. “We don’t know how long this current bend is. We’ve done the braking, but now we need a plan of how to proceed. If you slow down too much, you’ll struggle to accelerate through the turn.”
This is what he can see happening to some tech firms at the moment. “Management of some of these companies have a racing drivers’ approach to the pandemic – a couple months ago we all looked at growth plans and were going full steam ahead. Then we hit March and we saw people start to brake at different speeds. What’s important is where we are now. We don’t know the apex of the turn and it’s too foggy to see too far ahead.”
The questions facing business owners now, Simon says, are how fast we should accelerate out of this figurative bend, and how to remain solid enough to be able to brake again if need be. This is likely to impact headcount as scaling necessitates more people, while applying the brakes may mean fewer staff.
This is tricky for multiple reasons, not least because it’s a difficult time to hire – in addition to the limitations on human interaction, there is the issue of onboarding once they join. It may also be that the need for staff is temporary to accommodate staff illness, especially during a pandemic. He therefore suggests outsourcing can provide an elegant solution to this.
Simon outlines six ways to use outsourcing to bolster resilience at this time:
Speed: There are winners and losers in every crisis. Customers (B2B and B2C) will spend less in a recession and so you need to ensure that you are front of mind for purchase decisions. A speedy return to business as usual and new feature delivery will be more important.
Development team augmentations: The development work that had been outlined for this year still needs doing and the technical backlog may be increasing but it may now be several months behind plan due to repurposing technical resources (working from home, transition priorities, the impact of possible furloughs).
Customer implementations support: The manageable customer implementation schedule outlined for H1 and aligned to development team capacity is now squeezed, with the potential need to carry out many implementations in parallel when conditions improve.
Optimising Cost - Fixed versus Variable cost spread: Nearshoring is typically cheaper than FTE heads. It is also effective to use outsourcing as a variable cost to address demand, rather than a fixed salary cost, enabling you to brake more easily should you need to for future pandemic waves, without monetary and reputational damage, and adjust towards a desired plan as situation risk decreases.
Mitigate for expected FTE illness: A key point as companies need to expect to have a significant number of people off for illness – there is an expectation that 20% of the workforce will be off ill at the same time in the coming period. Outsourcing can mitigate for the expected downtime and have FTE coverage.
Reduce logistical risks: Businesses have made enormous efforts to adapt to remote working. But when people are able to return to work, there will be a new set of challenges, for example maintaining social distancing by managing the number of people allowed in the office at once. Some logistical risks may be removed by outsourcing some responsibility to ensure business continuity. Outsourcing support from different countries may be helpful given future waves are likely to hit different geographical regions at different times.
“Starting a new way of working with an external outsourcing partner might seem impossible and an unnecessary risk in these times, however when approached pragmatically, it’s not that different to standard remote onboarding processes that nearshore/offshore providers would usually do.”
Finally, he points out that it is important to consider talent when planning to scale. What is the minimum viable team size you need, and how quickly do you need to scale? Is it a steady need or spiky demand (latter is good if you’re using to cover FTE sickness)? How will you measure their performance? Questions which are similar for FTEs. He concludes, “it’s actually the same challenge, but less risk than onboarding FTEs at the moment.”