Offshoring and integrating IT talent

The global demand for talent in the IT industry is pushing companies to offshore as a means of growing their talent pool. Some are going beyond a pure offshoring model; they actively integrate local teams into the parent companies. In this episode of the DX Talk, Pieter van Diermen, president of the Pyco Group, outlines this business model and tells the story of Magnolia’s Vietnam development office.

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BOT: Build, operate, transfer

The Pyco Group helps its clients set up, bootstrap teams and establish their centre in Vietnam, explains van Diermen. The group has offices in several countries, but its BOT (build, operate, transfer) business focuses mainly on Vietnam.

In the ‘build’ phase, it leverages its pool of employees at Pyco Group to create the core team that will eventually be manning the new company. At the same time, Pyco creates a new legal entity in Vietnam, with the aim of transferring all business to the new company when ready, thereby allowing clients to be immediately operational.

In the ‘operate’ phase, it helps clients manage the company in Vietnam, usually for at least three years. It engages HR, finance and admin staff to ensure that the company is fully functional.

In the ‘transfer’ phase, Pyco ensures that the company is autonomous and hands it over to the client. “You don’t have to wait until the legal entity is set up,” says van Diermen. “If you want to move from an OPEX to CAPEX, the key is on the door.”

Core digital teams

Pyco differentiates itself by helping companies build their digital teams, van Diermen explains: “We help clients build projects, but we also help them build their teams. People come to us because we are able to help them scale those teams rapidly. Often, companies have a great roadmap, but they have a hard time finding that talent at home, so they ask companies like us to help build those teams in Vietnam, to help them get to market faster.”

The core team is the important part. “We want to build around people that we actually can trust and vouch for,” says van Diermen. Pyco usually starts building the core team with long-time employees, creating the culture around that team. These employees have the option of joining the newly established company. Pyco also offers recruiting services to help the new company find other employees and grow the team. When the new company is legally set up, everything is transferred down the line.

Seeding company culture

The key to a successful transfer is to seed the new company culture from the beginning. That’s something that Pyco does well, having been in Vietnam for 20 years, says van Diermen: “We understand developers here, the culture, what is different, what is better, what is maybe not so good. We try to mediate as well between the clients and the new employees. It’s important to build that culture in the new team, to make them feel from the beginning that they are part of the new company and to understand its culture and values.”

Budding IT hub Vietnam

Vietnam is building its reputation as an ideal location for IT and development. The large population means that there is a ready pool of talent. As van Diermen notes, Vietnam has some very good universities, with about 50,000 new developers graduating each year. The level of English is good, and language and cultural barriers are low, a legacy of Vietnam’s long history as a French colony.

Once known solely for low-cost labor, Vietnam is attracting more and more companies to create product development or sales hubs for the region. It’s well-positioned for that, from a geographical standpoint in the middle of Southeast Asia, but also through political and economic stability, and incentives for digital and software companies to move into Vietnam.

Van Diermen sees Vietnam growing as an IT hub: “It’s never going to be as big as India obviously, but I think it’s quite different as well. There’s more of a product development and digital approach in Vietnam. A lot of the big players in India are more generalists. When it comes to gaming, software development and web, Vietnam is definitely the place to be right now and hopefully for years to come.”