Once the initial seed team is in place, there are the standard three ways of scaling up the team:
- Organically grow the team
- Hire a contracting company
- Acquire a company
We will focus on the first two here. Organically growing the team helps to create a strong team which identifies itself with the parent company and take pride in the products. However, this calls for a fair amount of time investment. Moreover, in the event of major changes w.r.t the technology/platform, we will have to painfully retrain the people (laying off decreases the morale and should be done only as a last resort).
One of the best-practices is to simultaneously engage with a contracting vendor while the India team is being hired and onboarded. Cost per engineer from the contracting company would be higher, but it helps in quickly getting a critical mass and have the center productive. As and when the India team ramps-up, the contacting engineers can be ramped-down completely.
Another model is to always have some percentage (say 10-25%) of the total India staff as contractors. This helps if there is a spike in headcount seasonally or if we want differently skilled people at different times in the year. With a large pool of trained engineers, contracting companies can absorb ups and downs of the headcount monthly. Finally, we could let go of the contractors during business downturns and use layoffs as last resort.
Key decisions for this part include:
- Whether or not to engage with contracting firms. If so, how many engineers and at what levels and skill sets.
- The nature of engagement – whether it should be done as resource augmentation or as outsourced product development (both have their pros and cons). Best practice is to go with resource augmentation mode and then possibly move to outsourced model.
- Type of privacy , confidentiality and security protocols that need to be put in place while engaging contracting companies
Good to know:
- There are several classes/tiers of contracting companies. At the very top are companies like Infosys, Wipro etc., who typically do multi-million dollar accounts and may be too big for start-ups to get management attention and good engineers. At the next level are small to medium sized boutique firms specializing in niche areas. Finally, there are several “me-too” type companies whose only business mode would be to “supply” engineers. Boutique companies charge the highest.
- There is also a possibility of entering into an agreement with the contacting companies to periodically transfer X engineers to the India entity. While this comes with a cost, the India entity will get trained engineers at a regular cadence and with certainty.
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