There are various business reasons why our customers need engineers on contract instead of on their payroll.
Our customer’s requirements may be short or medium term, and it may be procedurally simpler to build a team on contract than increase the full-time employee (FTE) head-count.
A non-IT organisation in India today finds it extremely difficult to retain bright young engineers on their payroll — all programmers seem to wish for careers with IT companies. At that time, building a team on contract reduces employee retention headaches.
Organisations have strict strategic controls on head-counts which restrict adding FTE but may have the budget to build a team of engineers on contract.
Organisations have need of engineers with specialised knowledge and processes which are unfamiliar to their own in-house employees. Such officers are easiest appointed on contract from specialist organisations like Merce which have those skills and processes.
Large multi-national organisations have huge corporate overheads on each FTE and a division’s P&L statement may not permit adding FTE. These overheads are not applicable for recurring expenses, including payment of fees for engineers on contract. This helps the division’s P&L.
We have seen all these reasons at various points in our relationships. Whatever be the reasons applicable to you, we will be keen to discuss your requirements.
We would like to believe that it’s simply the brilliant genius of our engineers and the rock-bottom billing rates we offer which makes our customers come back to us. While that may indeed be the case (cough, cough), there are other more prosaic reasons too.
The Indian software industry has been supply-side limited for at least a decade. This means that recruitment of good professionals is a bigger challenge than selling our offerings to customers. We have learnt how to recruit well.
It is as difficult to have good in-house training processes as it is to have recruitment and team retention processes.
The truth is that most of our recurring customers believe in doing business with us because we deploy our top resources from outside our customer’s team when needed at times of crises, sometimes even on a non-billable basis, just to ensure that the customer’s work never stops. It is this “burstable headroom” of raw technical depth which makes our customers depend on us.
Software services companies provide engineers on contract at low rates by cutting employee benefits, cutting corners on statutory compliance, etc to remain competitive. We do not compete for the least expensive rates, but we ensure that we provide all employee benefits. This gets us employee loyalty and respect.
Outsourced teams is the basic bread-and-butter of software services, and we have a 360-degree commitment to make it work.
We work in two models of engagement for our outsourced teams. Both these models involve billing our customer per person-hour of engineer time, but there are important differences in roles and responsibilities.
T&M teams are engagements where the customer interacts with our team at the level of task lists. Our team has senior tech leads or project managers who manage
- task assignment to individual team members
- tracking task list and status of each task
- managing availability of officers, sanctioning leave, temporary replacements, etc
- technical challenges in the tasks, e.g. how to get XYZ module to work in PQR environment
In this model of engagement, the customer holds us responsible for completion of tasks as per pre-decided priorities. Some of our T&M customers also apply SLA for work quality and timeliness of task delivery, etc. In this model, if one of our engineers wants leave, he contacts our manager and in some cases we arrange a replacement engineer to fill in. This model works better with customers who have their own mature processes for software task management and delivery.
Staff augmentation teams involve more intimate management of our team by the customer’s managers. In this model, the customer keeps track of task lists, assigning of specific tasks to specific engineers, tracking progress of each task, etc. In this model, our engineers work more closely like employees of our customer organisation. In this model, if one of our engineers wants leave, he first applies to the customer’s manager and if leave is sanctioned, he informs our HR for our book-keeping purposes. This model works better with more unstructured work environments, where the customer does not have the opportunity to drive his work through task lists.
In this model of engagement, the customer sometimes explicitly states that they do not require any management or team-lead resources from our side; they only require executives at various levels.
We use the term outsourced teams to refer to both models of engagement.