This is the second Q&A blog post on Ekipa. Our trusted community of software teams will be featured on this blog regularly. To give some more background on the teams we have on Ekipa, we do short interviews in written format.
Our interviewee is Branislav Gjorcevski, the CEO of IT Labs. Branislav is a serial Entrepreneur and Consultant with 15+ years experience. He’s leading development teams, supervising project & product managers for various companies in different verticals and has recently started a techcelerator. IT Labs is a software company, offering a hybrid offshoring model. They have delivery in the US and a development team in Macedonia.
You have been running an offshoring business for the past 10 years. Your development office is in Macedonia and most of your customers are in the US. Please tell us a bit more about your operation?
Being a native Macedonian (born and raised) and living in the States, it was fairly easy for me to start the business. But in order to be successful we had to overcome few obstacles. We had to hire only people that fit the culture of our customers and speak fluent English. We also had to design an amazing process that would allow us to seamlessly merge with our client’s existing process given the time difference. The most significant challenge was tweaking the process to accommodate the time zones for the process to work. In the states, the time zones could differ anywhere from 6 to 9 hours from Macedonia. Ironically, most of our clients are in the furthest time zones. In any event, the process had to work effortlessly.
To overcome those potential challenges and communicate flawlessly, IT Labs LLC deployed a hybrid approach. It became an on-shore/off-shore company, dividing the process in half: onshore account and project management, while the development and execution remained offshore. At the same time, the off-shore communication and management is positioned to have a very close cultural fit with the market.
Macedonia is not a well-known outsourcing destination. What made you choose Macedonia as an offshore location? What are the pros and cons?
It was even less known when we were starting. There were only a handful of companies doing typical offshore outsourcing.
Pros: Macedonia has a very interesting business climate nowadays. Education is free, so most people graduate from a university, and a lot of them undertake an MBA right after they graduate. Given that education is free, and travel is minimal, most students find it unnecessary to work during their higher education. This allows them to focus on developing skills, self-education and innovation. Macedonia is not part of the EU yet, so the cost of living is still one of the lowest in the EU which makes the rates very competitive. We don’t know how long this climate will last since Macedonia is still a small country, but for the foreseeable future, it’s a very nice tech oasis in the Balkans.
Cons: The time difference with the pacific can be a setback for a lot of clients that haven’t yet started working with us. Travel is not affordable for clients/team members. The visa process to the US can be ambiguous, but it’s not an issue for the EU. Macedonia is land-locked, so clients can’t enjoy the Mediterranean Sea when they visit
You mentioned that you focus mainly on startups and you even invest as a technical partner in some. How does that work?
Our company does both: service for established companies and product-oriented development for startups. Most tech startups need more help than just the coding, and certainly in more technological areas than what they originally envisioned. Within the last 10 years, IT Labs has developed a few products for tech-oriented startups. We have existing platforms and frameworks that allow a startup to go to market within 3 to 6 months, and with very little coding. We invest in startups by providing them with a combination of existing technology, discounted rates, and free ongoing strategy consultancy. This allows them to stay on the right track and utilize the appropriate technology for their business. IT Labs is currently formalizing a process for startups by creating a “Techcelerator” called Innovaworks. Innovaworks will provide startups with all the support they need, putting our full infrastructure at their disposal, from technology and business development, marketing, legal, financial, as well as relationships with financial resources.
What are the benefits of a startup choosing an offshore technical partner instead of hiring its own local team?
There are quite a few benefits to working with an offshore company like IT Labs. The general benefits of hiring any offshore company are cost, scalability, affordable support, and being located in an opposite time zone (work gets done while you sleep). But when working with IT Labs specifically, clients benefit from our product development expertise and laser focus on the fast to-market/agile development. Most startups can’t afford to hire an in-house team until they reach the post-revenue stage, so partnering with someone like IT Labs allows them to go to market in a very short period of time, get the technology they need for a fraction of the cost, and form a long-term technology partner that helps grow their business.
What attracts you to the offshoring business?
The ability to tap into a large pool of talent with a wide range of skills that can contribute to global markets for a fraction of the cost and in a country close to my origin.
Could you share the top 3 pitfalls in offshoring and ways to avoid them?
The first and most important thing to mention is that offshoring is not for every type of project or for every stage of the process. There are projects where ongoing management/development collaboration and innovation are the key factors to its success. In that case, the creatives/innovators will be present on both sides, or the collaboration/innovation process will take place on one side, preferably the side with most experience or the one that is more integrated with the target market. Joint workshops where both teams meet and collaborate/innovate has happened, as well – this can been successful but isn’t ideal as a long term solution.
Some of the pitfalls are:
– Time difference. You need to establish a process that caters perfectly to the time difference while keeping the client’s existing process intact, or improving upon it. Planning, meetings, deliveries, reviews, milestones, etc. need to be in line with the time difference in mind.
– Mindset. Locate talent that has a global and open mindset. They win in every territory. There’s nothing like broken cultural communication, even when talking about the weather.
– Language. Hire employees that speak the client’s language, both culturally and linguistically. That way the client feels like the team is next door, not on the next continent, no matter what the time difference.
Being able to identify the needs vs. pros/cons of outsourcing and being able to act in the appropriate manner at the precise time is the key to success in any outsourcing environment. Clients aren’t always are aware of this, so someone needs to be there to steer the process in the right direction.
How will the offshoring industry look in 10 years?
Same as now but smarter. Pitfalls are being overcome by smarter production processes, smarter approaches to off-shoring and smarter filtering processes.
Clients are given trustworthy teams to handle their projects and that is priceless. I also see more hybrid companies appearing in the market. Being hybrid allows you to overcome obstacles and build client trust faster. Trust is the #1 obstacle in the offshore business. Every company should build trust prior to contracting with an offshore partner, it’s just a smart way to do business.
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