The Human Factor in Nearshore Engagements

Bernd Wandt, CEO ServiceFactum                                    Calin Vaduva, CEO Fortech

Due to skill shortages in software development, Nearshoring is without alternative for German companies. In Eastern European countries, especially in Romania as an IT-hotspot within the EU, we find high academic standards and outstanding skills in software development.

ServiceFactum is deeply involved in Romania with 3 locations and has established long-term cooperations on site. As prime contractor, we are committed to offering our customers the best location and the most suitable specialists from our network of suppliers for their projects and extended teams.


Bernd: Dear Calin, you are the CEO of one of our long-term Bestshore Centers. We are pleased to talk with you about the Human Factor in Nearshore Engagements, which is a key success factor for effective and efficient results in nearshore software development.

To qualify as a Bestshore Center for ServiceFactum, the corporate philosophy and human values are important criteria.

What is the corporate/business philosophy of your company in a few words?

Calin: Our philosophy is simple. We aim to provide mastery in software engineering. This means we have always pursued to build a cohesive and productive organization, well- equipped to handle a variety of project requests, to incorporate trending technologies, to understand the client’s business and display a proactive attitude, commitment and excellence when interacting with clients. To achieve this, we strive to provide our employees with context and exposure for learning, autonomy and meaningful projects. Following this philosophy, helped us to move on an ascending growth path, reaching today over 650 employees.

Bernd: We expect a customer-oriented attitude from our selected team members and software developers. The customer should be virtually present in their minds.

Can you please tell us in a few words what the human values of Fortech are and how these are actively put into practice by your employees and teams?

Calin: We built Fortech with a client-centric approach in mind from the very beginning. Reliability, continuous improvement, orientation towards long-term collaborations and the quality of both service delivery and relationship dynamics with the client are the core values that preoccupy us the most. These influenced strongly the way we defined our business model as well as our internal practices and organizational culture. Also, it required us to periodically reflect on our growth cycles and rethink our structure, processes and practices to sustain new cycles of growth.

Bernd: How do you respond to our Bestshore requirements, to score points in the competition for “the best of the best” software developers? What efforts do you make to ensure available qualified resources in a consistent way, and do you have measurable quality concepts to increase skill levels?

Calin: Currently, Fortech enjoys a very good awareness level within our target market and we are more preoccupied to preserve this and define our uniqueness rather than competing to be the best.

As part of our commitment to long-term collaborations, we have traditionally invested in both internal and external learning programs to support the development of technical skills and soft skills. Our comprehensive strategy includes high-school mentorship programs, internships, pre-employment training as well as international conferences on business and tech trends for our employees. Internally, we strive to offer our employees an appropriate context for learning, a coaching network, interaction spaces with the leadership team as well as prototyping & innovation opportunities via well-structured initiatives.

Bernd: To ensure a high service quality from the beginning, we integrate our German Service Management throughout the whole period of a nearshore project.

What do you value most about the collaboration with ServiceFactum, especially with regard to the local Service Management of ServiceFactum?

Calin: For us, the Service Manager of ServiceFactum is like a guide who keeps the balance between the client`s requirements and strengthens the performance of our team. We see him as a strong and competent partner to find the best solutions in mutual agreement with the end-customer and lead the whole collaboration to success.

Bernd: Yes, at any time! In particular, the Service Manager needs to manage the critical success factors to mitigate and overcome the spatial, temporal and cultural challenges that arise as part of international development projects. Communication and interaction are very important motors in our collaboration to reach the utmost service quality. As a supervising instance, the Service Manager is present to accompany the process competence, the cooperation competence, the social competence and the engineering design competence of the team. The cooperation with you and your teams is characterized by trust and mutual support. Our communication is always clear, transparent and open.

Calin: Yes, that`s true. The Service Manager keeps an eye on proceedings and considers the current and future relationship situation, the lineup of the human resources and makes problems transparent. We bring in our whole experience from dozens of projects in different constellations and respond flexibly when encountering difficulties.

Bernd: This is also the reason our collaboration is reliable, satisfactory and fun. Over several years, we both have built up a mutual long-term strategic partnership and I appreciate you as a person whose word is more than a contract. Your demeanor reflects the philosophy of your company. Thank you for the interview!

The interview was conducted by Bernd Wandt

The BestShore Strategy from ServiceFactum

Outsourcing software development tasks to other (usually far-off) countries and regions offers clear benefits: Availability and scalability of highly qualified developers, experience in new technologies and also significant cost advantages at comparable qualifications level. If the decision is based on costs alone without consideration of quality, productivity and operational risks, the implementation is usually more expensive than planned and collaboration proves difficult. The BestShoring approach employed by ServiceFactum promises a solution for the process of selecting a suitable development location for a specific task and finding the right developer.

According to A.T. Kearney1 (The purchasing check board, see http://www.einkaufsschachbrett.de ), the “BestShoring” approach as part of a professional purchasing strategy involves the comprehensive assessment of the question in which region or country a particular product should be produced or a particular service should be provided. Basically, there are three different types of BestShoring:

Onshore” means the provision or production of a service (or parts of a service) in the same region with a similar cost structure. From a European perspective, that would mean the Western European countries.

  • The second option is “Nearshore“. This involves the production of a product in a region that is close in terms of both geography and culture, but offers major cost advantages. From a Western European perspective, that would mean primarily the Eastern European countries.
  • Finally, there is “Offshore“, which involves transferring the production of products or services to a geographically distant region. Traditional off-shoring countries include India, China, Malaysia and the Philippines.

Based on a task specified by the client, ServiceFactum performs a two-step BestShoring evaluation of the most suitable location and most suitable developers.

In the first step, ServiceFactum has already selected and qualified suitable development locations for specific tasks from the multitude of global providers using a “Request for Information” (RfI). In doing so, ServiceFactum focuses on the following topics: software products, cloud software, desktop software, mobile software, embedded software and web applications.

Based on many years of outsourcing and off-shoring experience, ServiceFactum already applies comprehensive criteria at this stage. In addition to cost effectiveness, they also include the assessment of service and quality levels:

  • The cost effectiveness analysis should include a detailed consideration of all relevant personnel costs, taking into account not only actual salaries/wages and payroll deductions, but also the availability of qualified personnel, productivity and the simulation of possible wage cost increases. Experience shows that above all, the effort to manage the resources in the new region and the transfer of expertise are underestimated in the cost effectiveness
  • For ServiceFactum, service and quality are of paramount importance. The difficulties involved in managing service and quality over great distances and across cultural divides must be considered, as they require special effort in implementation. Among others, tasks that require a high degree of coordination are usually provided by onshore resources, while more self-contained tasks are executed in nearshore or offshore regions.
  • When it comes to evaluating a location, potential warranty claims are of special significance
    for start-ups or product manufacturers. This is where huge differences in the international legal framework exist. If damage claims can jeopardize the existence of a business, this issue is crucial.

Ultimately, the BestShoring strategy also includes the analysis of potential risks, which should be taken into account and must be evaluated. These include difficult and emotionally charged transfer of expertise, high staff turnover, political instability and the danger of bundling risk at one location.

In the second and final step, ServiceFactum evaluates very distinct customer-specific criteria for the final selection of a suitable development location. These aspects are individually agreed upon with the customer and include, among others:

  • Based on the specific requirements of software companies, start-ups, agencies and IT service
    providers, development locations and business cultures suitable for globally distributed
    software development are defined and compared accordingly.
  • Previous experience in the specific technology fields required is compared to the profiles of
    specific developers that are available. This also leads to individual interviews and the selection of suitable developers that have the appropriate communication skills needed for interacting with clients.
  • At the same time, the availability of the developer is assured so that the project can be
    implemented within the time frame desired by the client. The client’s time-to-market requirements are already factored into the selection process at an early stage.
  • Finally, scalability to accommodate special situations or extensions represents another

ServiceFactum then compiles the most suitable team of developers from 12 selected Best-in-Class development locations or implements turnkey projects including design (UX/UI), development and testing with the help of individually selected and available developers. This results in increased customer satisfaction and provides relief for customer management, while increasing performance and the ability to compete in terms of quality, time to market and cost effectiveness.

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