10 min read
“If you choose not to leverage global talent and economic benefits while your competitors do, you’re essentially steering your business towards obsolescence.”
adaptation of Lee Kuan Yew’s quote regarding outsourcing
Updated May 15, 2024:
I published this article in February 2024. Recently, a senior leader in my network sought help addressing concerns about his request for a “second shift”—working hours aligned with US time zones for talent located 7 to 9 hours ahead to shift talent in two of his department’s cross-functional delivery teams.
His broader organization informed this leader that finding talent in this region willing to work off-hour shifts to align with US hours is challenging. This leader’s goal is eventually to relocate the entire cross-functional teams to a more cost-effective region, which is also my recommendation. However, given current conditions, he shifted only specific roles from existing teams to the new region (specifically software developers). These team members will need to work off-hours that match US working hours. I do not recommend this approach and believe entire teams should be in locations that foster collaboration. Still, for his specific case, I revisited my article to create a response to his organization’s concerns.
Here is the message he sent me for help with his response. I changed his name and location to keep him anonymous.
Hi Mark,
Questions are coming up about why we need complete overlap between County/Region X and the United States instead of just a few hours. I’d like to explain why our development process differs from Organization Y (our parent organization). Please send us a justification to help get off-hours approved. Please get it to us by Monday.
What do you think about having a 2-hour overlap instead of the full 8 hours? Also, if we move one or two managers over there, can they operate independently on that country’s/region’s time? Please include this in the write-up as well.
I sent him the following response summarized from this article:
For teams not in the same location or close time zones, without delving deep into organizational design, we have two key structures impacting software delivery: functional teams, organized by specialized skills, and cross-functional teams. Our approach leverages the benefits of the cross-functional team structure.
These small, cross-functional units comprise the minimum roles required to design and deliver software with maximum autonomy, minimizing reliance on external teams or resources and reducing dependencies.
For a cross-functional team to succeed, team members must communicate well, collaborate effectively, and be available. Even though members work independently, teams in different locations should have at least three or four hours of overlap to create a successful working environment.
Team rituals that rely on real-time collaboration may suffer when impacted by time differences. Question and answer sessions during planning, grooming, design reviews, code assessments, or pair programming are crucial for maintaining high code standards and fostering knowledge exchange within agile teams. Substantial time variations to facilitate additional asynchronous collaboration can pose unique challenges:
- Delayed Code Review
- Slower Issue Resolution
- Planning meetings, Design Meetings, Reviews, and Retrospectives
- Mentoring, Pair Programming, and Swarming
Delays in collaboration and resolving issues can extend delivery times and lower team efficiency, especially for US-based team members collaborating across different time zones. Overlapping working hours can prevent longer delivery schedules and downtime for team members waiting on feedback or approvals, slowing the team’s response to customer needs and market changes.
Original article
This article assumes that your organization has transformed team delivery and design practices. Instead of functional teams based on skills, it focuses on small, cross-functional, and potentially long-lived teams. There are various variations of these team topologies.
Experience
During my 24-year career in software and technology, I’ve seen organizations try to achieve cost synergies by outsourcing and near-shoring. However, due to delays and project management issues, they often bring the talent back in-house, only to reconsider outsourcing in the future due to the higher costs associated with US-based software engineers.
Recently, I discussed dealing with similar pressures with someone in my network. The organization is pressured to achieve specific cost savings by replacing a set number of higher-cost team members with more cost-effective team members from different, more cost-effective locations.
In the changing global business world, larger entities’ acquisition of US-based software companies has made operational cost optimization a critical strategic planning focus. This emphasis on cost synergy actions and efficiency has prompted considerations of balancing global talent, aiming to take advantage of the financial benefits of staffing in more economically favorable locations. At first, the senior leadership suggested a basic concept: if teams in the US face attrition, they would replace the team members with more cost-effective members globally.
This article delves into the challenges of a strategy where your team structure shifts to small cross-functional teams. It suggests a nuanced approach focusing on relocating entire teams to uphold agile principles. The discussion extends to impacts on code review, collaboration, and delivery efficiency.
Reevaluating the Initial Strategy
The senior leadership’s proposal to fill vacancies left by US team members with individuals from cost-effective locations across significantly different time zones emphasizes the potential risks to team dynamics, collaboration, and delivery efficiencies. While cost-effectiveness is crucial, this approach neglects the importance of cohesive, immediate interaction and a shared sense of purpose that fuels agile teams. You risk losing the agility to adapt swiftly to changes in the ecosystem, priorities, or market dynamics, depriving yourself of the ability to be responsive and noble. This inherent delay contributes to increased costs and time constraints.
The Challenge of Integrating Global Talent
“The question is really about the bandwidth of human interactions.”
Brian Graham
The following applies to organizations with entities in more cost-favorable countries or organizations with an outsourcing model. More and more outsourcing service providers are offering entire agile teams.
The main concern in global talent rebalancing lies in something other than remote work, as both companies already have remote solid cultures. Instead, the potential disruption to team bonding, daily synchronous collaboration, and delivery efficiencies are paramount. Introducing team members from different time zones with an 8- to 12-hour difference can significantly impact these critical aspects of software development, especially for agile teams known for their cohesive collaboration and quick turnarounds.
Small cross-functional delivery team model examples:
Impact on Team Rituals and Collaboration
Team rituals that rely on real-time collaboration may suffer when impacted by time differences. Question and answer sessions during planning, grooming, design reviews, code assessments, or pair programming are crucial for maintaining high code standards and fostering knowledge exchange within agile teams. Nevertheless, overcoming the hurdles posed by substantial time variations to facilitate additional asynchronous collaboration can pose unique challenges:
- Delayed Code Reviews: Conducting reviews is crucial to uphold coding standards and ensure code quality. However, the asynchronous nature of these reviews across different time zones can result in longer lead times for pull requests, ultimately slowing down the development process.
- Slower Issue Resolution: The ability to quickly address and rectify discovered issues is compromised, extending the feedback loop and potentially allowing defects to persist longer than necessary.
- Planning meetings, Design Meetings, Reviews, and Retrospectives: Team members need to have overlapping working hours to ensure they get all the benefits of real-time planning discussions, design meetings, and retrospectives. While some of these can be handled asynchronously using tools like Slack or a wiki page, the collaboration could be more effective, and there may be delays in responses.
- Mentoring, Pair Programming, and Swarming: The option to engage in pair programming or swarming to address intricate problems or explore new tasks may no longer be available.
Implications for Delivery Time and Team Efficiency
Delays in collaboration and issue resolution can lead to extended delivery timelines and reduced team efficiency, especially for United States-based team members working with counterparts in different time zones. Misaligned working hours may result in prolonged delivery schedules and downtime for team members awaiting feedback or approvals, hampering the team’s responsiveness to customer needs and market dynamics.
Considering the Argument for Lower Labor Costs
Cost synergies are highly prized in an offshore model for several reasons. The underlying belief is that they have the potential to result in equivalent delivery performance and reduced perceived costs compared to anticipated costs. When considering employees versus outsourcing to a service provider, managing balance sheets using contractors is often simpler due to the perception of them as variable costs. Contractors may appear more advantageous when examining the fully burdened cost associated with employees. However, a common mistake is expecting contractors or service providers to work as fast and effectively as employees, which is usually different based on my experience and several others in my network. Furthermore, costs can come up due to time-sliced individuals, such as team leads serving as a go-between between you and the delivery teams.
Emotional issues and cultural nuances can have a profound impact on team unity. At DHL, I gained invaluable insights into the power of globally diverse teams working in similar time zones, specifically the Integration and EDI teams operating during US hours.
I shared this article draft for feedback with Bob Langan, a former senior leader at DHL between 2003 and 2014, now retired, and a trusted mentor who offered feedback on the challenges posed by the “follow the sun” model and subsequent offshore/onshore approaches. Despite the higher costs of US employees’ salaries, we often worked far more than the standard 40-hour workweek. We also had fewer national/state holidays and fewer annual vacation days. In contrast, European and Asian colleagues tended to work fewer hours weekly as a general practice, taking longer to achieve the same results as the US teams. DHL Delivery teams charged the commercial business units for their time on a daily rate defined by resource (annual salary / potential person-days). Through analysis, Bob discovered that US teams were frequently as, if not more, cost-effective in terms of cost of delivery due to fewer person-days being consumed and many more potential person-days to work. While this perspective may be different from your current considerations, it was crucial in advocating for maintaining a US team in the initial phases.
The discussion of reduced expenses is beyond the scope of this article. Times have changed. Please feel free to do your research on the current data trends.1,2
Emphasizing a Cohesive Relocation Strategy
Key point: Make a strategic shift to maintain team unity and increase flexibility. Instead of spreading out team members across different time zones, moving entire teams to more cost-effective locations can be a better solution. This approach emphasizes anticipated financial savings while maintaining important team dynamics for agile success.
I’ve seen the benefits of having teams in different time zones at DHL and my current company. In one team, a member adjusts to a 12-hour time difference, following US hours for years. Dedication is vital when working opposite hours from your usual life. Another agile team has developers in Eastern Europe with overlapping work hours of 3 to 4 US hours. Providing support and proper management for these teams is crucial. Organizations may consider team relocations to align with services or products globally.
Strategic Recommendations
The following strategic recommendations address this nuanced understanding of talent rebalancing, with a renewed focus on:
- Prioritizing Team Unity Over Individual Replacement: The strategy now focuses on relocating entire teams instead of individually back-filling positions. This approach aligns with cost-saving goals and the need to maintain effective teamwork within agile frameworks.
- Maintaining Agile Integrity Through Cohesion: Effective work schedules, improved collaboration (both asynchronous and synchronous), and strengthened team integration efforts are essential to uphold the core values of agile methodologies and efficient value delivery even in geographical changes.
Conclusion: Reframing the Approach to Global Talent Rebalancing
My primary focus is understanding how distributing team members across different time zones affects team dynamics and effectiveness. This article discussed the cost-saving debate in labor across various global geographic locations, where labor costs and talent frequently shape global redistribution strategies.
The initial idea proposed by senior leadership to replace departing US team members through attrition with more cost-effective global talent highlights the delicate balance between financial efficiency and preserving essential team dynamics for agile success.
As a technology leader in the US and a former software engineer, I prefer something other than outsourcing these positions to other countries. However, in my role and a globally competitive market, it’s important to endorse this approach. It’s a challenge I’ve faced, managed, and supported at times for over two decades.
If you or your organization is facing these demands, I suggest a comprehensive approach to talent rebalancing. This approach focuses on relocating and rebalancing agile cross-functional delivery teams based on geography and overlapping time zones rather than individuals. By prioritizing team cohesion and geographical consolidation, organizations can meet the financial demands of global business while sustaining innovation, efficiency, and competitive advantage in software development. This balanced approach ensures operational cost optimizations without compromising the dynamic interplay and shared commitment that drives high-performing agile teams, preserving their collaborative essence and productivity.
References:
- Pete Grieve; Americans Work Hundreds of Hours More a Year Than Europeans: Report, https://money.com/americans-work-hours-vs-europe-china/, Money, January 06, 2023.
- Charlie Giattino, Esteban Ortiz-Ospina, and Max Roser; Working Hours, https://ourworldindata.org/working-hours, Our Wold in Data, revision December 2020.
Poking Holes
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