Today on the vodkast Mukesh Munka and I are discussing strategies for optimizing cost-effectiveness with a variable resource model. From nearshore to offshore, India to Costa Rica, tune in for insights on navigating the changing landscape of remote work post-pandemic.
- Strategies for optimizing hybrid workforce models 🔄
- Insider insights on architect bill rates and cost competitiveness 💰
- The rise of Africa as an emerging market 🌍
Takeaways
• COVID-19 has changed the perception of remote work, with many companies realizing the value and productivity it brings.
• Offshore operations are becoming more popular as companies look for ways to lower costs while maintaining productivity.
• India is still a competitive option for offshore operations, but prices have increased since the COVID-19 pandemic.
• Emerging markets like Africa and Argentina are gaining traction for offshore operations.
• A hybrid model that combines onshore and offshore resources can provide cost savings and flexibility for companies..
Autogenerated Transcript:
Kelly Wendlandt (00:00.462)
We are live with Mukesh Munka. Mukesh, you were telling me how busy your day is, but you finally got the hoodie on versus your pajamas, which is a good start.
Mukesh Munka (00:07.124)
Yeah, it was.
Yeah, I know. I know. And it’s been busy because, you know, as you know, as I told you, like, my wife is in India with two teenage daughters here in the house. It’s become crazy in the morning to send them to school, get the lunch pack and everything, get all my calls doing in the car. It’s been crazy, but I’m loving it.
Kelly Wendlandt (00:29.678)
Do you know how I know your wife is not at the house?
I know because you are in the kitchen and I have never seen you in the kitchen before on one of these videos. So your wife must not let you in the kitchen very much. You’re always in your office when we talk otherwise. But now that you’ve got the girls, you have to cook, you have to do the laundry, you have to do everything.
Mukesh Munka (00:39.222)
I know
Mukesh Munka (00:46.398)
Exactly.
Mukesh Munka (00:50.87)
Yeah, I know, I know, but it’s good. Like, you know, at least I’m learning all of that stuff. You know, it’s little challenge for me. Now I feel like, you know, it’s more easier to work in the office than in the house. You know, it’s crazy. It’s crazy.
Kelly Wendlandt (01:04.974)
Yes. Well, your kitchen looks very nice. I like the white cabinets. That’s a nice touch. And you’re in California for those people who don’t know. I’m actually live from Florida right now for a few days. Yep. So I’m remote as well. So, Mikesh, I wanted to talk to you about offshore and near shore. I was on a call yesterday with some people from Medtronic.
Mukesh Munka (01:09.974)
Yeah.
Thank you.
Yep, my name is…
Mukesh Munka (01:19.944)
Okay.
Kelly Wendlandt (01:35.47)
And they were talking about how important it is for them to be looking at ways to lower their costs so they can maintain competitiveness and continue to build great product. But at a price point that the market allows for. And they talked a lot about offshore and specifically India. But I know in your world it seems like
We’re talking to a lot of customers about India, but also places like Costa Rica, Argentina, and then our debt center. So are you seeing other customers that have a primary focus of lowering cost of operations right now, or is it just the couple that I’ve bumped into recently?
Mukesh Munka (02:13.43)
Yep.
Mukesh Munka (02:29.982)
No, no, I think Kelly, COVID has changed the perception of the people about how remote work can be successful because, you we did not have a choice. Everyone had to work from home for two years. And in the two years we have seen like, you know, everything kind of became more positive in terms of work rather than going down.
people sitting at home working remotely kind of have done more than what they do in the office because all the communication, all the commute time, all the time that they have with the coffees kind of discussing with their you know other friends in the office all those time has been gone where people kind of just get up start their day kind of do more extended hours because they are sitting comfortably in their house doing things remote. So, that remote culture has kind of given so much value.
So then suddenly like with all the market kind of coming down where people, all the companies kind of have put their money on hold and kind of spending because they don’t know what’s going to happen next. Every company is now in the last one year I have seen like, you know, they’re trying to find a way of getting more work done, but with the less budget that they have, you know. So the best option that they see now is like, you know, Hey, how can we do that going to…
like offshore channel, like, you know, people sitting down in India and you said it rightly, you know, there are companies who said, you know what, I need a hundred percent coverage of us time zone. And then look for an option like Costa Rica, Costa Rica might not be as cheap as India, but it kind of land somewhere in between India and the U .S. rates. So it is still kind of gives them 40 to 50 % benefit of not spending so much money here in the U .S. So, yes, I am seeing a lot of traction. I,
In the last two weeks, I had three meetings with three different clients and all on offshore. We have signed with one of them. They wanted to do their entire project with offshore team. And then I’m kind of talking to two others where they wanted to move a lot of their positions to offshore and kind of try to get the same amount of work that they are doing here in the US. So yes, it is changing.
Kelly Wendlandt (04:44.878)
Yeah, it seems to me like India is becoming more competitive for resources. And so prices are inching up or jumping up even in some cases. Is the typical, for example, for a senior architect, Microsoft architect in India, what is an expected bill rate?
for that kind of position if we’re in India. What can you get a great senior Microsoft architect for in India? Is it $70 an hour? Is it $80 an hour? Is it $60 an hour? Like what, am I close there or not?
Mukesh Munka (05:13.918)
you
Mukesh Munka (05:27.574)
I would say you are close little higher side but I would say still things have changed so much since 2019 after the covid you know before the covid like you know India was been looked into hey it’s a very low price market where we don’t get some good quality resource because the prices were always in the range of 30 to 35 dollars or 40 dollars at the max you know where
That’s been going on for the last 15 years. I come from the offshore background. I started my career in India at offshore in 2001 and came to US in 2005 and they kind of found offshore a couple of times with my past companies and grown them to like more than 1200 people in the past. So, but since the COVID, things have changed. Since the more work we’re going remote, companies were trying to get the work done through India.
the consultants have kind of seen what value that they are giving to the US clients or to the other clients in the different countries. So their expectation has gone very high. So the range has come down almost 40 % higher. So now definitely for a senior architect level person, it’s not like going to be like $40. It’s definitely going to be like somewhere around 55 to $60. But definitely that range has gone.
Kelly Wendlandt (06:46.51)
Okay. Okay.
Mukesh Munka (06:50.134)
much higher than what it was.
Kelly Wendlandt (06:50.83)
If we’re if you’re looking at Costa Rica as an example to compare that with is the Costa Rican senior architect. Are they what $85 maybe or $90? Do you? Is that closer? Yeah.
Mukesh Munka (07:05.75)
yeah they are going to be close to around 80 between 85 to 90 dollars so yeah there is you still see like a 30 percent more from what you would get from India but then with India you kind of only can overlay four to five hours the first half of the US time zone in 99 percent of the time but with Costa Rica you’ll get the 100 percent of the time zone.
Kelly Wendlandt (07:27.95)
Yeah, Costa Rica’s some, I think it’s central time and it’s either central time or right around central time. And it’s a five hour direct flight from Minneapolis, St. Paul. And if you’re south in Texas or something, it’s less, you know, it’s less anything, anything south of Minneapolis, St. Paul, you’re, you have less time. So it’s a very easy flight to get to. So I, I certainly understand why customers are looking at that. And I would say Argentina, we don’t do as much.
Mukesh Munka (07:31.894)
Yep. Yes.
Kelly Wendlandt (07:57.206)
work with, but we have some contingency of Argentinian developers and that seems to be more in line with maybe it’s halfway in between India and Costa Rica from a price perspective.
Mukesh Munka (08:13.782)
Yeah, Argentina kind of goes pretty similar to Costa Rica as well because we have few consultants you know that we have from Argentina working for some of our manufacturing clients here in the US and they’ve been doing very well for the last four years. So yeah, it’s pretty much the range kind of pretty much goes pretty similar to what we have in Costa Rica but definitely little higher than you know India of course.
Kelly Wendlandt (08:36.654)
Are there any emerging markets that are considered great values? I know I hear people talk about Ghana. We don’t have an offshore facility or partner in Ghana yet, but I’ve heard a number of people talk about Ghana. But are you aware of any other countries that have a lot of engineers that are trying to compete?
Mukesh Munka (08:54.216)
Yes.
Mukesh Munka (08:58.006)
Yes, so recently in the last 12 to 15 months, one country that has come up very very strong now from the offshore point of view is Africa. The entire Africa I would say mostly like countries like Kenya, Ethiopia, South Africa as well but South Africa is kind of pretty expensive and kind of goes pretty similar to what US is but…
Kelly Wendlandt (09:18.274)
Yep.
Mukesh Munka (09:25.942)
Definitely Ethiopia and Kenya and as you said Ghana, those countries are coming up very strongly now. They kind of have the complete coverage about what we could do for the US and at the same time, they go a little cheaper than what we have for Costa Rica and Argentina, but maybe a little bit more expensive or closer to that what we have in India. But then, since the market is a new emerging market, the consultants are kind of
Kelly Wendlandt (09:50.062)
Yeah, closer to India.
Mukesh Munka (09:56.022)
be more dedicated to the world. We had the same model in India 20 years back when the offshore model started 20, 25 years back where we used to kind of take the US client as the premier client and we used to give everything to them. But now since they’ve got so much expertise with the, you’re working with US clients, it became very casual now, but with Africa, since it is new, you see that eagerness.
and aggressiveness coming out of the resource very well. So that market is kind of coming up very well.
Kelly Wendlandt (10:28.43)
Okay. So they’re given the best, their best people and the best deals to American customers, US customers. What about the, what about the nearshore? Like we have a Dev Center at Lodge of Solve that is a mix of, you know, more recent college grads mixed in with some senior kind of people. And we offer that, you know, those services that generally around $85 an hour. Um, is, does that fit in to that?
Mukesh Munka (10:30.966)
Yep. Yep. Yep. Yep.
Kelly Wendlandt (10:56.174)
variable resource model with offshore? Do the people that, I guess the question is, do the people that are hiring offshore, do they look for onshore or is it pretty separate? Are they different clients right now?
Mukesh Munka (11:13.8)
No, actually some clients they would love to see the entire hybrid model where they say you know what hey I cannot put like 10 people in my project in my own site because then you know it’s going to be like three times my budget amount so what they normally say like but I still want I should get the same comfort zone so going 100 % offshore will not give them the same comfort zone because that becomes little risky because they themselves have to coordinate with offshore and
Sometimes the challenges that you get with offshore is the coordination, communication, and sometimes the quality as well. And you don’t have any control because you don’t have anywhere where you can directly kind of have that person kind of work and get the things done. So they normally try to kind of take one or two person in their own site from the client and say, hey, you guys coordinate with the offshore team, get the work done. But some client says, you know what? Hey, I want to have maybe just one person.
at on -site who will just work with my team, my management, but I want two to three people in your near shore center. They will work the US time zone, but they are local here in the US. And if we need them for any critical meetings every month, we have someone who can come here, sit with us, understand the things and work with the offshore and get the things done. So it becomes very effective. So they would like to keep in such a way like where they keep like 5 % on -site, you know, 25 % onshore.
and the rest 70 % offshore. So some clients wants to see that hybrid model where they have all three, which I think is very effective because time to time you feel like, hey, if I can go and meet the client and understand, it will be more helpful. And that is only possible if you have someone in the near shore development center who can fly down to the client side. So some clients definitely wanted to see that as a value.
Kelly Wendlandt (13:03.564)
Yeah.
Yeah, you can lower your cost probably by 30 % and have that variable resource with local resources in the US and then some in different parts of the world coordinated through the US. So that makes sense. Well, Makesh, thanks so much for your time. Great talking to you. For everyone else out there, you’re watching the podcast.
Mukesh Munka (13:09.118)
Exactly. Exactly.
Mukesh Munka (13:29.718)
Thank you so much, Kelly, for.