Cloud Staffing and IT Outsourcing Evolution

Cloud staffing and IT outsourcing evolutionToday there are many talks about cloud computing. Supposedly it can give a new effective way to satisfy needs in hardware and software products and IT services. But what about IT personnel? Can the cloud model be expanded to… cloud staffing? If yes, what about such notions as “nearshore/offshore dedicated team” or “outsourcing software development” – are they obsolete? The term cloud staffing is reasonable because IT outsourcing constantly evolves. And new notions reflect a new level of its maturity and hands-on experience gained both by customers and providers, as well as indicate possible ways of the IT outsourcing further growth.

IT Outsourcing – Steps to Clouds

About 20 years ago outsourcing was a tool with the help of which multinational companies tried to reduce overhead costs. It was time of mega-deals with long-lasting contracts and India as a main offshore location. It was a thing for “large dogs” only.

IT Outsourcing - Steps to Clouds

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However, even for the multinationals there were some problems managing offshore projects. Remoteness, lack of openness and transparency in relations between a customer and service provider, cultural barriers could bring to nothing all potential savings and benefits. No wonder that there gradually appeared:

  • Captive centers built by US and European companies in outsourcing destinations
  • Western companies-intermediaries that cooperated with a bunch of proven outsourcing providers – as a result, end customers have no deal with offshore personnel
  • Representatives of offshore companies (Do you remember all those ads and letters like “A BBB-based software development company requires reps in the USA”?)

A step to make IT outsourcing affordable for small businesses and even individuals were online freelancer auctions and talent marketplaces. Among employers there can be met both blue chip companies that try to find “fresh blood” for their providers pool, and students who need assistance in their homework. However virtual worker marketplaces has their own pitfalls too: sometimes it is difficult to resize the project team, etc. In order to decrease outsourcing risks companies tried out a number of different cooperation and managerial models:

  • Multisourcing – Its motto was “Do not put all eggs in one basket”. The idea of multisourcing was to mitigate outsourcing risks distributing different parts of projects among several providers: e.g., one of them develops software, another one provides independent testing. As a side effect, multisourcing has stimulated interest to nearshoring and such outsourcing locations as Latin America and Eastern Europe (Romania, Poland, Ukraine, etc.).
  • Acquisition or establishment of companies in the USA or EU by outsourcing firms, hiring both local and offshore/nearshore staff. Their aims are: to be closer to customers, to eliminate the cultural barriers, to transfer and use the best managerial and production practices.
  • Dedicated developer teams – A remote (nearshore or offshore) developers team entirely dipped and strictly following customer’s project philosophy. It can be especially efficient when utilizing the Agile software development methodology (see also the article “Agile dedicated teams, or How to make outsourcing software development more reliable“).And now a new wave -
  • Cloud staffing – Its motto is “Flexibility, Scalability, and Effectiveness”. It is a synergy of the best outsourcing practices and software development methodologies along with the power of the up-to-date Web-based communication and collaborative work technologies.

Features of Cloud Staffing

Cloud computing reduces hardware/software to a thin client on a web-connected laptop (or even smartphone) against mainframe computers, data centers and complex applications hidden in the cloud.

Cloud Staffing

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1. Cloud staffing means thin HR

- Pure manpower for clients, all the troubles about personnel hiring, retention, and firing are inside the staff cloud.

2. Cloud staffing means no administrative fuss for customers

- Vacations, taxes, and so forth – this all is in the cloud and maintained by the service provider.

3. Staff clouds are scalable

- Human resources can be scaled up and down rapidly.

4. Staff clouds are transparent

- All people are selected and interviewed by clients. The clients can choose best-of-breed IT specialists: programmers, testers, etc. They will be managed by the customer, share their development methodology and collaborative work tools (project management, development, testing, telecommunication channels and tools).

5. Clouds are acceptable

- Not only for large businesses but rather for SME, start-ups, and even individuals.

6. Clouds are firm

- They have reliable legal background: flexible contract documents, guarantees of IP right protection, money back guarantees and other rights.

7. Cloud staffing is a new but mature form of IT outsourcing

- Behind the clouds there is a new generation of managers and developers who know countries they work with, understand their cultural and business specificity, and have a hands-on experience in working in remote teams. Cloud computing is a sound solution in our tough competitive world when deals should be made quickly and without excessive red-tape retards. Comparing with conventional IT outsourcing, a more mature approach of cloud staffing allows customers

  • To avoid time and expense on building infrastructure, thereby increasing business responsiveness and faster time to market
  • To acquire more sophisticated business processes or services, thereby rearranging capital investments to allocate to another business areas
  • To scale up and down a team, thereby staying flexible and vibrant to the market situation by growing business efficiency without giving away the control over the business.

About the Author

Dmitriy Kharchenko

is the CEO at Acceptic Ltd, a Ukrainian software development company. Acceptic provides custom Web application development, .NET programming, as well as dedicated development teams for companies from the USA, Europe, and Australia.

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