We are often asked why we chose India to be the first country to enable global companies to build distributed teams. Weren't Canada or Mexico or even parts of Europe better choices? Our immediate answer lies in the biggest problem while building distributed teams: access to quality talent. Despite India's massive talent advantage across software development, data science, creative designers, or even customer care - the common challenges around timezone difference, quality and retention of talent, as well as general tax and compliance complications create enough of a resistance barrier for most global companies.

Introduction to India

I will not bore you with the typical country stats - you can find them here. What has fascinated me and what I'd like to highlight about India are its many contradictions - I have used this below image as an introduction to India in the past as well, both as a way of acknowledging popular stereotypes, as well as to present a fresh perspective on how rapidly the country has and is continuing to evolve:

The Advantages

Why are we even discussing ways to solve the challenges? Well, because the advantages are too hard to ignore! Let's stick to the factual or non-debatable ones:

  1. Demographic Advantage: India is the youngest country in the world with ~65% of its 1.3 billion population below the age of 35
  2. Talent Pool Size: Just on software development, India is home to ~5 million software developers of which ~3 million are in IT Outsourcing but the remaining ~2 million are working for either startups or for large development centers of companies like Lowe's, Walmart, Amazon, and Goldman Sachs among others. Additionally, ~250K fresh software graduates secure full-time jobs each year!
  3. Language and Culture: Most technical, business, and customer support talent is well versed with English and given the demographics, quite familiar and in-tune with western culture - popular shows on Netflix and the like have also helped bridge the gap further
  4. Cost of Living Index: As with any high growth country with relatively high inflation, this factor is evolving; but even today, salaries in India for like-for-like roles are about 25%-50% of the Western equivalents - this of course implies huge costs savings at scale
  5. Startup Ecosystem: Delhi and Bengaluru feature in the top 40 startup ecosystems in Startup Genome's latest report. More importantly, India is among top 5 countries with most unicorns.  A thriving startup ecosystem is a great barometer for the quality of talent

Addressing the Challenges

A lot of the context and solutions are based on my personal experience of building multiple distributed teams in India for global companies. Of course, a lot of these are true to building distributed teams successfully and sustainably anywhere in the world and are also not mutually exclusive of each other - but rather elements of an overall strategy and approach.

  1. Quality of Talent: The IT outsourcing revolution that started a few decades ago really put India on the world talent map, especially for software engineering. Partly a case of being a victim to your own success, there is an argument that Indian software developers (intentionally generalized) are good for non-core, non-product, maintenance-oriented type of work, exactly the kind that has made Indian IT outsourcing a multi-billion dollar industry.

    A lot of the tech-centric companies who had tried to access talent through an outsourcing (including ones that give this a spin for being curated platforms, team augmentation, and other such phrases) walk away not being overly impressed by the quality of work and engagement.

    Here's the kicker: ~2 million developers who do not work in outsourcing and an increasing percentage of the ~3 million who do work in outsourcing do not prefer the outsourcing model anymore - what used to be talent's preferred choice twenty years ago is now the last option - so if you are trying to access the best of Indian talent through the outsourcing model, you're on the wrong train!

    Solution: To attract the top talent, you have to create a direct model to access talent wherein folks are assured that there is no middle layer between your teams and them

  2. Retention of Talent: There is another perceptive challenge in retaining the really good folks given the salary increases (~20+%) Indian talent can earn when switching jobs - lap this up with the booming VC-backed startup ecosystem and its easy to understand the fight for top talent even in a place like India where the overall numbers are comparatively larger.

    The reality is that retaining good talent, especially in software and data, is a challenge globally - there is an overall demand-supply mismatch and while a lot of new-age education platforms are addressing this gap by upskilling and bringing more folks in the 'job-ready' net, the mismatch will sustain for the foreseeable future.

    Here's the kicker: Talent does not like switching jobs frequently. If they are grossly underpaid, especially if coming from outsourcing where salaries are depressed, the onus is on you to ensure the right pay level per their sheer talent instead of basing their compensation on how much they were making in their previous jobs. Once the salary level is normalized, its all about engagement - building remote teams anywhere in the world is tough, but more so in India where the timezones are also a challenge (will get to this in a bit). You need to ensure your teams in India feel connected with your larger mission and are inclusively integrated with the rest of your team.

    Solution: Pay salaries per talent and capability and engage folks the same way as you would integrate the rest of your global colleagues

  3. Motivations to build in a Low Cost Country: Given the historical tag of low cost and generally the move by larger companies including Fortune 500 to build massive centers in India to realize cost savings, in some cases, existing teams might suspect that building a team in India might reduce hiring or even put existing roles in the home country at risk. To make matters worse, some senior leaders keep the India expansion plan 'under the radar' or hush-hush so as to not flutter such concerns.

    Here's the kicker: This is one situation where collaborative decision making can help - include your mid-level leaders and engineers in the discussion, openly talk about their concerns including quality of talent, timezone and all other fears. Build confidence that you are building a distributed team to empower the existing folks to accelerate access and onboarding of talent to therefore increase the overall probability of success as a team and not merely to save costs! I would go as far as anointing the most cynical team members to the interview panel for the initial hires - if they are convinced on the talent bar and how this move can help the Company achieve its overall objectives, the rest of the team will follow suit rapidly

    Solution:  Involve your existing colleagues in the decision-making and execution steps, especially interviewing and hiring decisions to ensure they don't perceive cost savings as your primary motivation

  4. Timezone: This obviously is a big one - more so if your teams are based in the US - the extreme is the west coast of course. There is no one-step easy way to solve this: asking folks in India to work through the night to give your teams 100% overlap is not sustainable, even if you pay a lot; carving out mutually exclusive work for the teams so overlap is mitigated can work initially but can create a sense of work disparity over time.

    The most important step towards solving for timezone difference is accepting it - this may sound simple but its been amazing for me to see how treating the timezone as a reality (as opposed to an obstacle) can help your teams adapt and make some changes as well - like having daily sprints at 9am EST instead of 2 pm EST so its easier for your colleagues in India to join. The faster you build trust and rapport, the easier it will become to adapt to the timezone differences.

    If you have a relatively large team to build, the squad lead or site lead is a great idea as your first hire - this person not only serves as the translator of work and as bridge for building trust, but also buffers your local India team from too many late night calls.

    Here's the kicker: If both sides show clear intent and actions to make the timezone work, trust is built faster in the initial months and in steady-state, the model effectively drives better efficiency since your global team is working round-the-clock so to speak and relays in-between teammates get smoother with time.  

    Solution: Onboard a site lead or squad lead as one of the first few hires to serve as the translator of work and take steps on both sides to demonstrate clear intent towards making the model work - this will instill confidence in your India team and build trust faster
     
  5. Travel Distance: Like timezone, this is another one that's just a fact - India is ~16 hours away, even if flying direct from US. When you build teams, you do want the ability to travel and spend time with them periodically and the travel distance with the jet lag makes it a daunting proposition. Plus, referring back to the image with stereotypes and perceptions I shared earlier, I have also met enough folks who are terrified by the idea of traveling to India.

    Here's the kicker: I must also admit to have witnessed folks who were initially apprehensive absolutely love their experience after the first visit, leading to a lot more subsequent trips. India is generally a very warm host and the culture and festivals are great levers to make the work travel a bit more fun and enriching. Who knows when travel will anyways come back to normal levels in the post-COVID world, so there will be a need to find ways to substitute on-ground time together anyways.

    Solution: Assuming travel is back to pre-COVID levels (in the near future:)), encourage your colleagues to travel to India, especially if it will be their first time - you won't have to push them for subsequent visits!

  6. Compliance/ Legal / Tax: India's current political dispensation is quite progressive and things are getting better but the reality is that India is a complex country vis-a-vis tax and compliance and with all the other challenges of building a remote or distribute team, you ideally should be spending the least amount of your time trying to solve or navigate through this mesh.

    Here's the kicker: There are various options to employ folks in India from establishing your own legal entity and hiring teams to manage periodic compliance to also engaging folks as independent contractors. However, its very easy to get distracted and have this aspect suck away a disproportionate share of your energy. Here is a video that outlines the options and also gives you a sense for what we are trying to solve at kaamwork

    Solution: Look at platforms like kaamwork to help you focus on the right elements of building your teams and not be distracted by the Compliance/ Tax/ Legal aspects of building your team

In summary, the advantages are too strong to let the challenges hinder from building teams in talent-rich India. Quick recap of the solutions, which can also form a subset of your overall blueprint:

  1. To attract the top talent, you have to create a direct model to access talent wherein folks are assured that there is no middle layer between your teams and them
  2. Pay salaries per talent and capability and engage folks the same way as you would integrate rest of your global colleagues
  3. Involve your existing colleagues in the decision-making and execution steps, especially interviewing and hiring decisions to ensure they don't perceive cost savings as your primary motivation
  4. Onboard a site lead or squad lead as one of the first few hires to serve as the translator of work and take steps on both sides to demonstrate clear intent towards making the model work - this will instill confidence in your India team and build trust faster
  5. Assuming travel is back to pre-COVID levels (in the near future:)), encourage your colleagues to travel to India, especially if it will be their first time - you won't have to push them for subsequent visits!
  6. Look at platforms like kaamwork to help you focus on the right elements of building your teams and not be distracted by the Compliance/Tax/Legal aspects of building your team

Building a distributed team is hard work but the long-term benefits outweigh the initial setup friction and challenges. I personally also believe that the diversity of perspectives on the team helps enhance the overall quality of work. It all boils down to the talent - from sourcing and interviewing right to engaging and integrating for success!