Outsourcing and Employee Retention

How the right software development partner can help to retain your in-house IT team

By Peter Vaihansky

Outsourcing companies are no strangers to criticism from business and IT media. Often, offshore success is portrayed as onshore failure. Critics assume that if a software development project has been outsourced to another company, particularly if that company is located outside of the United States, the move is precipitated by the organization's internal shortcomings. Was the company's IT team not up to the challenge? Or was the decision to outsource a top-down mandate to save money? Outsourcing providers and their clients face these difficult questions every day.

These questions reveal a deep-seated fear among IT professionals that outsourcing is a threat to their livelihood. However, in our experience, companies that choose to work with offshore development partners often find that they are able to grow and retain their internal IT departments. It may sound counterintuitive to some, but there is growing first-hand evidence that by selecting the right outsourcing partner, IT managers can keep their employees happy, productive, and on staff, for years to come.

If you are an IT decision maker wondering whether outsourcing is the right choice for a software development project -- and worrying about how to position it to the executive team -- take heart. Here are a few guidelines to ensure your offshore team can help your internal IT department grow and succeed.

Overcome Past Prejudices

Some IT professionals think they already know everything they need to know about outsourcing. Unfortunately, many have experienced outsourcing as the replacement of on-shore co-workers with mismanaged offshore teams, all in the name of saving money. When these IT executives explore outsourcing, they bring these past prejudices with them. It is important to leave the past behind and to evaluate prospective outsourcing vendors with fresh eyes. Those that assume their outsourcing experience will be negative from the outset pass on these fears to their IT team, making project failure more likely.

Take One Step at a Time

Not all outsourced software development providers force clients into "all or nothing" engagements. Many outsourcing companies offer flexible engagement models that allow clients to start with one to two contractors. The top offshore development providers are eager to demonstrate that their engineers can provide real benefits to the in-house IT team. This model allows IT managers to gradually incorporate more offshore workers -- or not -- as their needs mandate, reassuring executives who believe that outsourcing is a burdensome, long-term commitment not to be undertaken lightly. Finally, this model also demonstrates to internal IT employees your commitment to finding the right skill set and personalities to bring to your team.

Expect Innovation but Don't Feel Guilty Delegating the Tedious

The best outsourcing providers expect to be challenged. Their engineers do not see their role as confined to small, self-contained tasks. They bring an innate understanding about how their work contributes to the overall success of the current project. Expect your outsourcing provider to offer feedback and suggestions and raise problems as they occur. When your internal IT team has the opportunity to see your offshore team's innovative spirit in action, they are more likely to trust and respect their contribution to shared development initiatives.

Never be afraid to ask your outsourcing partner to tackle tedious work such as QA and troubleshooting. Although your offshore development team should have the skills to perform heads-down project development, offloading the "grunt work" makes the lives of your in-house IT team easier. Your onshore developers will have more time to focus on the aspects of their jobs that they enjoy and find fulfilling, boosting morale and employee retention.

Make Onboarding and Communication Top Priorities

Conduct weekly calls and make time for recurring in-person visits. It's especially important to begin the relationship with a face-to-face meeting, if possible. By bringing your offshore team into your corporate culture, your internal team is more likely to see the outsourced engineers as an extension of the IT department. Creating opportunities for your offshore developers to interact with your in-house employees helps to create a sense of collaboration, even when they find themselves on different continents.

Share Risks and Measure Success

Find an outsourcing partner willing to share project risks. If a project falls behind schedule and fails to meet its launch date, or does not meet your standards, your partner needs to accept responsibility for their role in the project's shortcomings. Start off on the right foot by conducting an honest conversation with a prospective software development partner regarding risk distribution, and openly address the stakes involved and the consequences of failure. Your internal IT team will respect the offshore engineers when they are aware that they will be measured against the same baseline.

Look for Engineers, Not "Yes-Men"

Although they tend to be the cheapest, steer clear of "yes-men." Outsourcing providers that focus solely on small, piecemeal tasks without giving thought to the project as a whole will cause problems for you in the long run. The right outsourcing partner understands that their work will serve as the foundation for future development. Look for an offshore partner whose team is comprised of highly skilled IT professionals with a true engineering mindset. Although they may be more expensive, the quality of the work they produce and the dynamic of the whole experience will be much more positive. IT staff are also more likely to relate to, and enjoy collaborating with, outsourced contractors that share their passion for their chosen career.


By using these guidelines to vet and engage with offshore development partners, IT executives can assure that their internal IT team members are likely to embrace their offshore colleagues. Your IT employees should understand that these outside contractors provide insight, accept mundane tasks, and help your IT department advance. When your outsourcing provider is able to make the lives of the internal team easier, your staff is more likely to remain motivated, focused and happy. As our personal experiences with our clients demonstrate, selecting the right offshore software development company actually has a positive effect on IT retention.

Peter Vaihansky is the vice president of marketing and business development at Luxoft, a high-end application outsourcing provider with clients including Deutsche Bank, Boeing, and IBM. You can contact the author at pvaihansky@luxoft.com