Beware: Economic Growth

When economy is on the rise it’s good for everyone (or at least it seems like it). Beware. With developing countries entering global economy the annual growth rate is much higher than in US, in good times that is. Fast growth contributes to many factors you should take into account when managing an offshore engagement.

Let’s take a offshore software development provider and will call it OffSoft Inc for the sake of example. In the recent years OffSoft Inc has expanded its reach to customers in North America and Europe and fast growth in customers warranted 30% growth in workforce. With such a massive growth, company found itself with non-adequate structure and upper management decided to go through major reorganization to accommodate this growth rate. New units were created and new management levels were added. Now assume you have a team of 30 folks including a project manager, technical leads and senior engineers. Who will be first candidates for promotion that would take newly created management positions – they are…. So here you are facing situation where some of your most brilliant team members move on with their career, directly impacting your team’s productivity. Don’t get me wrong – I’m glad folks have great career opportunities, but nevertheless it’s a risk that has to be managed. One trend that related to fast growth and is specific to Russia and Eastern Europe - deficit of specialists on all levels from junior engineer to senior management. This is the opposite from India, where despite high growth rate you can see a surplus in engineers and deficit in senior management levels. (This is taken from HBR article I came across in fall 2008. Now, with economic downturn the picture might have been changed). With economic growth slowing down I believe these deficits will be eliminated.