All eyes on value — ‘Value Delivery Pyramid’ of offshore 3.0

Among many other inspiring after-work discussions and arguments, I recently had a great conversation with my colleagues Anu and Thuru about value delivery in offshore software engagements.

The arguments went continually back and forth about what kind of value we could deliver today, or in the near future, compared to what we delivered yesterday.

Is it really possible for an offshore software service company to deliver anything more than working software code?

Or,

Is there additional added-value and skill hidden in offshore service companies which customers can use at the higher levels of their product delivery value chain, given that such offshore companies have matured over the years by engaging with various challenging projects across various markets.

Is this what offshoring 3.0 can enable in the industry?

While discussing, we drew the following diagram which we called “Value Delivery Pyramid” of offshore 3.0

Continuous delivery of production-ready software
This is the based level of value delivery in offshore 3.0. Various good practices in engineering, learned in offshore 2.0, are used here by remote development teams to continuously deliver software of the right quality to the production. Software craftsmanship is extremely important to assure the correct quality of the deliverables, in terms of FR and NFR backlogs. Engineering skills and tools, location transparency, sufficient collaboration among geographically-dispersed software development teams, and adequate documentation are key enablers of value delivery at this level.

Product discovery, roadmaps, architecture guidance and UXD
Engineering teams that are well-experienced with various different aspects of product engineering for different markets have amassed very useful knowledge; customers can capitalise on it by having their product discovery workshops guided by such teams. By collocating with customer for few weeks, offshore teams can facilitate product discovery workshops with their customers, providing crucial inputs at various stages: deriving the product vision, high-level features vs value to the market, providing value through UX thinking and branding, designing the technical architecture of the product, and also guiding the customer with release mapping based on possible transaction costs, opportunity enablement and/or risk reduction scenarios.

If the engagement is to take over some prewritten software products, experienced teams can provide the following high-values deliveries at this level: assisting the customer (the IP owner) in planning transition strategies, enabling a smooth flow of work, identifying critical business risks from such transactions, providing suggestions based on their previous experiences, and making a fair assessment of whether the current code base and architecture are fit for purpose in terms of current and near future business needs.

Strategic thinking in product engineering and previous experience in such contexts, plus very good communication skills and the ability to collocate on a short term basis, are the key requirements to deliver value at this level.

Governing scaling models and delivery process
When software IP owners scale-up their product development due to various business needs (through, for example: multiple product development, platform development teams, customer delivery teams, teams handling various integrations, etc.), they often end up with multiple, geographically-dispersed teams collaborating across various time zones, different cultures and differing skill levels. Managing diversity and assuring the right speed, quality and value is pretty challenging in such contexts, unless you have proper models and knowledge in place. Over the years offshore teams have already experienced these models and challenges, learned from complexities, failures and successes. Such experience and knowledge can help to innovate new process models to guide the customer organisation, to implement new scaling models for their software deliveries in multi-team environments, and to establish good practices to design new governing models for such project management engagements.

Process maturity, experience and thinking in this context are vital factors to help IP owners come up with delivery governance and scaling models for their organisations.

Technology innovation for products
2017 is all about technology innovation. Whether it’s IOT, AI or VR technologies, today all products are in need of such innovation to bring valuable new experiences to their users. Researching these new technologies and discovering with new use cases to apply them in different products adds immense value for competitive product-offerings by IP owners. Offshore development companies with research units geared to such new technologies can create these business cases for customers across their project portfolio, and provide guidance on how best to use cutting-edge technologies to enable innovation in the customers’ product domains.

Technical input to business vision and strategy
In offshore 3.0, the customer’s business is no longer others’ business. Today we see that most customers have identified the need for their technology partners to be part of the team that builds the technical vision and strategy for their businesses. Whether the discussions are about strategically planning their data and API economies, working with new compliances such as GDPR, or even about introducing a totally new, innovative product for the company, customers expect the value of “collective genius”, which means collaboration with their trusted technology partners, irrespective of whether such partners are onshore or offshore companies.

Adding value at this level of the value delivery pyramid requires visionary and strategic thinking, plus a good level of knowledge about the customer’s business and competitive markets, the latest technology trends and future directions. Such high-value delivery can be enabled only with the right skills and exposure of high level consultancy resources of offshore companies. Their understanding of various markets across the globe can add value when discussing various strategies and user behaviours in new market initiatives. As an example, if a company in Europe is strategically formulating its initial offerings for Asian markets, and lacks crucial knowledge about business and technology needs in those markets, an offshore technology partner in Asia may fill the vacuum.

As the technology partner of the customer, this level of engagement is valuable for the offshore software company, aligning them with the customer vision, goals and strategies at every level of the value pyramid.

Our Conclusion:
What we understand today is that the offshore software industry will not survive by offering cheap hourly rates and pushing some software coding onto their customers. The industry has matured, and offshore companies have gained massive experience and exposure by being in the game for years. It’s high time these companies find their hidden avenues that can be capitalised to deliver high value to their customers through vastly improved financial models. At the same time, it’s time for onshore customers to understand how to play across various levels of the value pyramid to tap into the valuable experiences and knowledge gained by their offshore technology partners over the years. This is no longer a business model for giant international consultancy companies alone.