Onsite Obsession vs. Enhanced Distributed Teams
The shortage of skilled developers in Finland has shown the limitations of the dominant onsite consulting business model. Could a more distributed way of building software provide better results?
Since IWA's founding ten years ago, the seemingly best way to grow custom software development businesses profitably in Finland has been to provide teams of on-site resources for clients with the so-called body shopping model.
For a long time, this has been the standard way to buy development according to large organizations who have hosted dozens, sometimes hundreds, of onsite consultants from the well-known IT consulting companies in Finland.
For clients, this has provided practical visibility that IT consulting companies do the work hours clients are paying for, an easily understandable business model based on hourly billing and a sense of having a semi-internal development force in place, which provides obvious communication benefits among team-members and can trendily be called an "agile team" in company reports and public presentations.
For IT consulting companies, the prevailing model has provided relatively risk-free client engagements and, especially in the early days, excellent profit margins.
Based on the countless times we have heard from clients and vendors that the body shopping mode is the best way to go, I have started to call this dogma the "Onsite Obsession."
Lately, the positive aspects of the onsite consulting model have in some cases been overshadowed by the following negative consequences:
- Not enough Finnish-speaking talent: Many clients want their onsite developers to be fluent in the Finnish language, and as the need for resources has grown, we now have an acute deficit of suitable Finnish-speaking developers in Finland. Some estimates have stated that 10,000 software developers could be hired immediately in Finland.
- Diminishing quality: As the established IT-vendors have already assigned most of their senior developers for their most lucrative onsite cases for the top Finnish organizations, they have started to use inexperienced junior developers in other client cases with often poor results. One SME in Southern Finland recently selected a well-known IT vendor for building a new version of their legacy software. After a few months, the client contacted us to ask for help as the previously selected established company had assigned such low-quality developers for the case.
- Elitism: Some high-ranking people from Finland's most prominent companies have in one-to-one discussions expressed their frustration on how some of the large IT consultancy vendors "demand private rooms at our offices, bring their sofas and espresso machines to this room and give us champagne bottles to make us feel good when actually they should just get more work done with more reasonable prices."
I feel that the reasons above are starting to move the Finnish software business at increasing speed towards a better way of developing digital solutions for the companies and public sector organizations in our country.
We founded IWA with the idea that we can provide more value for our clients with our Enhanced Distributed Team (EDT) model:
- Team Project Owner: This means that one or more of our key experts work closely with our clients, sometimes even at the client's offices, and are in daily contact with the client, turn client ideas into actionable development plans, keep the project on track and act as the primary center-point of communication between the client and the development team.
- Distributed Team: Our case-specific project teams typically consist of an international and multicultural group of designers and developers who work with a plan developed by the IWA’s Project Owner in close cooperation with Client’s Project Owner. The Distributed Team organizes its work in the best possible way to ensure excellent results for the client while making sure that each developer stays in the "flow zone" of doing tasks that are challenging enough to be exciting but not too difficult or too tedious at least for a long time. At IWA the Team Project Owners and the Distributed Teams define the best practices together and take responsibility for the project's success together.
This model allows us to build large scale solutions for our clients with exceptional results while giving our team the feeling of working inside our culture that celebrates the combination of great freedom and great responsibility.
I firmly believe that we need the EDT model alongside the currently dominant body shopping onsite model for the software industry in Finland. Lately the benefits of the EDT model have become more and more apparent:
- More extensive resource pools: EDT allows IT-vendors to tap into various resource pools around the world so that the IT vendor can always meet the client's resource needs.
- Facetime and visibility: In the EDT model, the IWA Project Manager makes sure that the client is constantly aware of the project's status and is always available to address any client concerns. In some cases IWA Project Manager works at client’s offices permanently or semi-permanently, which provides constant face-to-face contact among project stakeholders. EDT is the total antithesis of the dreaded "trial and horror" offshore development model where the client sends the specifications to a faraway team, and then in 6-12 months it often turns out that most of the code developed is unusable.
- More progress hours per day: In the EDT model the teams usually cover multiple time zones, which gives more hours per day to make progress in the project: In our case, we have 12-13 hours of active work time per day while our team members work regular work hours 7.5h per day. If we one day open an office in the Americas, we can cover almost 24h of progress hours per day.
We believed in the EDT model when we started IWA with four guys in 2009, when we built our first international offices and when we became a 60 person strong team with nine nationalities with offices in four countries in 2019.
More and more companies are starting to switch to the EDT model. If your organization is suffering from the negative symptoms of the Onsite Obsession, for example having difficulties in finding suitable developers, then take the leap and try the EDT model in a small trial case.
Based on our recent success in implementing this model in places where it was earlier unthinkable, I think there is a good chance that you will be positively surprised. If you became interested in the EDT model, please contact me at any time to discuss if this way of working could work for your organization.