How to innovate in the age of IT skills shortage

In this episode of IT Leadership Insights, Michał Grela speaks to Jarosław Czaja about innovating in the age of IT skills shortage.

Jarosław discusses two options for organisations to address the dilemma of IT skills shortage – building competence in-house or finding an external partner. He explains why the in-house option may mean a ‘war on two fronts’ and talks about what buyers should consider to benefit from an IT outsourcing partner.

Our Guests:

Jarosław Czaja is a perceptive and forward-thinking entrepreneur, and a 2013 Ernst & Young Entrepreneur of the Year Award finalist who was featured in Forbes Poland, Outsource Magazine, Intelligent Sourcing and Information Age. He is the founder and CEO of Future Processing, having overseen the company’s growth from two individuals to the organisation employing around 900 people and collaborating with a vast range of international corporations, including Tenneco, Valeo and Parkeon. Jarosław plays an instrumental role in adapting the outsourcing industry to current demands and practices, where the service provider now assumes a role similar to that of a business partner, and who shares the responsibility of a specific product’s development with the client.

Michał Grela is Future Processing’s Relationship Manager, working within the marketing department to establish and nurture relationships with prospective customers and expand the company’s network of contacts. He strongly believes that business is about people and that, at the end of the day, it’s all about Human-to-Human rather than Business-to-Business.

The transcript of the episode

Michał Grela (MG): Hello and welcome to IT Leadership Insights by Future Processing. This programme is for CIOs and senior IT executives who struggle with IT challenges and are considering nearshoring as a solution. We talk with industries experts to gain their perspective and insights on how to do IT outsourcing right. Today, my guest is Jarosław Czaja, the founder and CEO of Future Processing.

MG: Jarosław, would you be so kind and tell us something more about yourself and your company?

Jarosław Czaja (JC): We established in the year 2000. So, it’s been 18 years so far. I’m the founder and I’m a software engineer. As a company, we’ve always been very much focused on the engineering side of the IT business. We’ve grown to almost 900 people and we’ve got clients in Western Europe, Scandinavia, in the US – so, quite a lot of export from the Polish perspective.

MG: Thank you. In this episode, we’re going to talk about innovating. How do you innovate if there is no talent in your company? How do you innovate if you have no necessary IT skills to do so? The IT talent shortage is a fact but do you know the scale of it, Europe-wise?

JC: It’s certainly growing and we’ve seen this for many, many years, so it’s not unexpected but yeah, if you look at the numbers, it’s quite dramatic, I would say. Some experts say in their reports from 2018, so quite recent reports, that by the year 2020, we’ll have 500,000 IT jobs to fill.

MG: Right, that’s a lot.

JC: So, that’s quite a big number.

MG: Okay. Thank you for this background. So, I think it’s fair to say that the need of innovation is being blocked by the lack of skilled IT workforce. So, how would you address this dilemma?

JC: I would say there are two strategies and different companies may employ different strategies. The first, the obvious one would be to build the competence in-house and the second is to find an external partner to outsource that work.

MG: So, let’s focus firstly on the, well in-house option. Could you say something more about that?

JC: It’s interesting, but also quite challenging. For a number of years, we’ve been thinking about this, because of the nature of the business we do and I would say that the biggest obstacle, the one that for me seems to be quite an important one to make a decision on, is whether you want to have a war on two fronts. One is on the HR side, to win the war for talent, which is getting tougher and tougher and the other one is winning the war for business. Normally, companies operate in very competitive markets and they have to make lot of effort to win in that market. So, that alone seems to be challenging enough and so, I think for many engaging in even more difficult war occasionally, which is the war for talents, could be a bit too much to take.

MG: Okay, so instead fighting two wars at the same time, I guess, here’s when outsourcing comes handy. And as far as the report say, it is a fairly popular option with almost a half of companies using outsourcing to some extent. However, the popular opinion is that outsourcing is not usually used to innovate, is it?

JC: Probably not. It does happen, we do have clients that do R&D projects with us. However, I think it takes some courage to go for such a service. I think it’s more typical to have an external partner to do more, the typical work, you know, maintenance of existing software packages.

MG: The basics.

JC: Whereas … yes, whereas innovation, this is something that requires a lot of trust. You don’t wanna give the work, which is supposed to give you some competitive advantage to just any supplier, to anyone. So, it’s certainly something which is not as easy and this is probably why it’s not done so often.

MG: So, is it possible to outsource innovation? How do you use IT outsourcing for innovation then?

JC: I think yes, you can do it. It’s not an easy one certainly, and you need to find the right partner. But, I would say that we are a good example of a company that has done projects in the past that were very innovative.

JC: To give you a few example, we’ve worked on a medical imaging project for a British company, for a number of years. Probably more than ten years now. We’ve worked on very clever software for, a so-called smart CCTV. So video analytics software that was even appreciated by the UK Home Office. That technology we developed won the test back in 2006, if I remember correctly. We are working with European Space Agency on a number of projects to analyse satellite images. We’ve worked with a German client on a start-up. So, there was a large corporation with a great idea to do car sharing in one of the German cities, however, the whole technological side was outsourced to us.

JC: So, I think it is doable. Not an easy one, but you can do it, it’s possible.

MG: Okay.

JC: It’s more than just that the supplier can switch to and switch to another one easily. You have to have someone for a longer period of time and that’s not gonna happen overnight and you can build this partnership on a number of levels. When you do so, I think, as a benefit, you are getting some better understanding of the current technological trends. You’re going to have a better partner when it comes to winning more business. So, let’s think about it as someone who’s gonna help you with innovation, to make you more successful.

JC: To give an example, on a technical level, it’s great to think about the engineers on the supplier side as almost part of your team. So, you can discuss openly-

MG: An extension.

JC: Yeah. You can discuss openly the architecture of the solution. You can take advice from them, so it’s not just, you know, workforce to give you more man-days, man-hours in a month. It’s more than that. These are people that are normally quite clever, quite competent so, it’s good to be able to talk to them openly about your challenges. So, what they give you in return, is their advice on how to best tackle the problems, the technical problems you’re having.

JC: On the business side, wouldn’t it be great to have a partner you can go with to your clients to give you some more credibility? If you are a startup, maybe having a large IT organisation behind you gives you scalability-

MG: The scale.

JC: -give you scale. If you are a large corporation, maybe having a partner like this, may fill some niche, some specialistic skills that you are not having internally, so whatever the situation, I think having someone you trust, who can help you in a business context, is quite valuable. And then I think it’s important to have some sort of partnership on the organisational level.

MG: Okay.

JC: So, the way you work together, the process you follow. The way you communicate. It’s good if you can almost look at it as an extension to your team and to treat those people in a similar way.

MG: So, you’ve mentioned three factors that one should take into consideration, when choosing an IT partner. You’ve mentioned the business side, the technical side and then, say the organisational side. But, what about the culture?

JC: That’s a difficult one. Certainly, with the culture, it’s not so easy to measure it. It’s not so easy to tell, “Oh, this company’s better than the other.”;

MG: No.

JC: I think it’s very subjective and this so-called gut feeling, this is something which may help. I personally believe that this is very, very important. If you want to build long-lasting relationship with people, with businesses, you shouldn’t forget that factor.

JC: When people share similar values, they’ll believe in similar things-

MG: They are aligned, yeah.

JC: It makes it so much easier and I think in this type of relationship, when you want to have a trusted advisor, you shouldn’t forget about the cultural alignment. If you don’t have the cultural alignment, you don’t have the foundation to build upon and the end result may be that you will not be able to do it long-term.

MG: Okay.

JC: A long-lasting relationship.

MG: And what about the location? I know that’s also a very important factor to some. Is it also one we should take into consideration?

JC: From our experience, it makes it easier if you have a partner which is relatively close. The majority of our clients, I’d say, within two hours flight from our offices. So, what it means, it’s easier for us to communicate face to face, to have meetings and this is something which helps. It makes you more productive. It speeds up certain processes. If there’s a problem, it’s always quicker to solve it when you sit in the one office. So, I would say, there are many reasons why proximity is a benefit. And also, I think it somehow interacts with the other benefits we mentioned, which is cultural proximity.

JC: Normally, people from one continent, they should find it easier to align cultures than people from totally different parts of the world. So-

MG: Well, not to mention the tax and legal aspects of being, let’s say-

JC: That’s another-

MG: -within the European Union.

JC: Yeah, that’s another thing. That’s specifically important when it comes to R&D. The IP, which is the outcome of the R&D project, this is something that potentially is very valuable. So, yeah, people obviously want to make sure that they’re not gonna lose the IP. There won’t be an IP leakage as a result of the project. So, from that perspective, I think if you are legally covered, within the same jurisdiction, I think makes it easier.

MG: Excellent. So, let’s assume we already, know how to find the right outsourcing partner to actually outsource the innovation, but how would you approach the process of actually choosing the right company?

JC: I think that’s a very typical process thing. You should have so sort of objectives you’re gonna measure the outcome against. So, yeah, it’s good to know what you want. Why you want to use this partner, what kind of work package is gonna be given, what would you consider to be a success? So, define what you expect. With those expectations, I think it’s good to go through a formal process of selecting a partner – a shortlist.

MG: You mean RFIs, RFPs.

JC: Exactly. So, at least you’ve got some evidence that the chosen partner, or a maybe a subset of partners you would like to try, they’re not random, this is something which has been carefully looked at and, at the end, I think it increases the chances of success. And then the final one, the final criteria I would use is this trust factor, which is just-

MG: Again, the gut feeling.

JC: Yeah, after some time, I think you should be able to tell. This is something which is not so easy to verify in a hard way, so I think there’s no way you can put a number against it and say okay, five is better than three and we choose company A over company B.

JC: However, I think if you put some effort and energy into building the relationship, at some point you can tell whether this is someone you trust, this is a company you trust and people within that organisation, or not so. And I would strongly recommend to go for a relationship with someone you can trust.

MG: It sounds, well, easy; however, we all know that the reality is, well not that easy in fact. So, what are the most common mistakes to avoid when choosing an IT partner?

JC: It’s a difficult one. I can think of a few. Sometimes, it’s not a good idea to select someone who’s very, very big in comparison to your size.

MG: Size. Mm-hmm (affirmative).

JC: I think the reason is that you might get lost in a number of different accounts the company is serving and I think it’s very hard to build a deep relationship and really deeply understand the client needs, if this is just one of many. So, I would say, someone who’s big enough to give you some flexibility, some scale; however, not necessarily a huge organisation, because in this situation, you might become a very marginal client and I think it’s not good.

JC: The cultural misalignment, we mentioned that before. Not an easy one to measure, but I would strongly recommend to go for someone you think you may work with for a longer period of time. So, this gut feeling, this is something which I think should be be taken into account. If you ignore it, andI think sometimes, the temptation may be to ignore things that we cannot precisely measure, I think that would be a mistake.

MG: Okay.

JC: It’s better not to do it.

MG: And what about the approach this company has in terms of HR and the attrition rate. Because you want the partner that will also be stable enough.

JC: That’s another one which is, I think, very important. That’s similar to the culture, sometimes may be easy to ignore the HR side of things and if you just purely focus on technology on the engineering side, you may overlook that behind that organisation that’s always a war for talent going on and you better choose a partner that is winning in that war. So, a company that is very strong when it comes to recruiting people, to keeping them loyal, to developing people, so, all those things which mean a loyal team, which is continuously developing itself and that’s better at the latest technologies for instance.

JC: A company with strong HR, that is winning in the war for talent, this is something which should be taken into consideration. If it’s ignored, then you are risking that you’ll partner with someone who is not that good at getting and keeping good people, good engineers. And why would you need a partner like that?

MG: So, let’s say, what we have found, the company we want to enter a partnership with; however, how do we actually check whether they will actually provide this innovation we want to find. Not just, well, we don’t just code providers. We don’t simply developers. We want something more. We want to actually outsource innovation. How to check the … what should be taken into consideration? Will it be engagement? Or …

JC: I think that’s … yes, the company should be really committed, should really engage in the project and this is something that is reflected in the way the team behaves. So, I think you should expect to have 100% honesty and transparency.

JC: Maybe sometimes hearing bad news is not necessarily the best thing in the day.

MG: Okay, you want a challenging partner?

JC: Yes, but this is something which longer term should work for you really, so, if you think about the success of the project, I think it’s better to hear the bad news early on, so you can address them and to have a partner who will help you to go through those challenges.

MG: Not saying yes to everything?

JC: Yes, than to have someone who’s just happy and maybe at the end, there are big problems, we’re just … you’ve not been aware of them for the duration of the project. So, I think having a challenging partner you can be honest with and the partner who’s giving you transparency to the work, this is really important. At the end, some sort of ownership on the other side. So, them just-

MG: Okay, responsibility.

JC: -on your project and yes, the client just supplying people to go through this. It’s more than that. It’s about joint ownership, joint responsibility and at the end, looking at it as a joint success. So, if the client is successful, the partner, the supplier should also be successful, because we’ve got a happy client with hopefully a successful venture. So, the work may even grow and the amount of money spent with the partner may even grow. So, I think, having that joint responsibility and looking for a joint success, this is something which gives you a clue whether this is the right partner.

MG: So, what are your three best pieces of advice you would give to a company that would like to outsource … that would like to innovate, but are struggling with the lack of resources?

JC: I would say, try to think about another option than just in house, because that could be really, really difficult and when you’re in a company that’s involved in the business and winning the business and then maybe growing the business, then maybe you don’t want another challenge on the talent side. So, I think, think about it as an alternative.

MG: Mm-hmm (affirmative).

JC: Try it, go through the process of selecting the right partner, making sure you tick all the boxes and, at the end, build some trust. Let’s try to be for it long enough to make your mind and to make up your mind and to think whether this is someone you can work with for a longer period of time. And if you do open yourself to the idea of a partnership and joint innovation, I think you might be quite surprised. With the right partner, you might find yourself in a quite nice position to be in, which is, you focus on your business and if there are some challenges when it comes to IT, you’ve got someone you can work with to address those challenges and I think this is quite an interesting scenario.

MG: Okay, thank you Jarosław for this conversation. It was very interesting and truly informative. And thank you, our viewers, for watching this episode of our programme, the IT Leadership Insights by Future Processing. If you have found it useful, please do not hesitate to share it, like it, via … share it via LinkedIn, via Twitter to any social media and also do drop us a line if you would like to have a topic covered in one of the future episodes. This was IT Leadership Insights by Future Processing. Thank you.