Is Outsourcing Tech Worth Sacrificing Culture?

Ask any entrepreneur what is most important to them as they are building a business and surely many of the answers will be "company culture." Creating a deeply meaningful culture impacts who you attract to work for you, and retain to do business with. Culture influences the way in which people work at a startup, and ultimately what they achieve together as a team. If you, the founder, want to invest in good people, their work will need to provide them with meaning and a search for something greater than themselves. This is where the beauty in creating a company culture lies, the ability to help your company and its employees fulfill their destiny.

The magic of managing a company culture lies within articulating your values and hiring people who share them. These values are the building blocks of your business, so it is important to be clear with your founding team on what you believe. Once these values are identified and aligned the startup will become much more synergistic. Digging deep for these values is important as they really can be the root of differentiating from your competitors.

Identifying the values is just the beginning. The real culture is created when people are hired that share the values. These are the people that manifest the goals in which your company is trying to achieve. Their actions build culture, and when aligned make a company’s engagement strong. The ability of hiring to drive culture is equally as important in the executive leadership of the founders. If executives don’t share the company’s values, pretty soon the values are not a part of the company. The founding team needs to set an example and model the identified values. Doing so reinforces culture and the commitment to your employees. Actions like this give meaning to work, and create a culture where employees participate in something extraordinary.

Freelancer. Photo: From file

However, actions like offshoring and outsourcing for jobs pose a threat on company culture, and can destroy the very fabric of a company you are trying to build. In an effort to reduce cost and maximize profits, many American companies have begun to reduce their North American workforce by outsourcing critical jobs outside of the U.S. In a study conducted by the University of California, nearly 14 million white-collar jobs including engineering, information technology, and architecture are vulnerable to being outsourced offshore. This is the inverse of the American Dream. When talent is outsourced it creates difficulties for people to find jobs of upward mobility where they can make a name for themselves. Offshoring causes U.S. companies to lose their two best assets: their human-capital and company culture. In order to build a culture, it is essential to invest in people and a community.

The US Department of Labor reports that more than one in three workers who are displaced remain unemployed. Is this the scenario that we wish to have? This is a lose-lose situation. Outsourcing has brought record unemployment in engineering fields, and under-enrollment in STEM related fields in colleges and universities.

Don’t outsource your talent, keep it in-house and build on the culture you have created. Simple price-cutting to gain traction in international markets does not justify offshoring the talent of your best people and negatively impacting the culture your company has built. "Workers are no longer people. They are costly commodities to be cut in order to increase shareholder value," says tech enthusiast Gary Alexander.

A thriving startup scene, such as Los Angeles, could be greatly harmed if its startups and high growing companies outsource its technical talent. The LA and Silicon Beach startup culture has grown to be so strong that it would not make sense to negatively impact something that is fresh and unique. It is a town of transient people who dream big and want to change the world. It is a culture of storytellers that has developed into a really healthy tech ecosystem.

Startup accelerators like Launchpad, Mucker Lab, Amplify and Start Engine have blossomed and companies like ZEFR, Beachmint, Maker Studios, Snapchat, and Whisper are leading the revolution that is taking place in LA. The creativity and talent that exists in Los Angeles is what makes its startup culture so unique. The town culture, similar to company culture, requires values and people that love working there. In LA the people working for these values are its startups. The activity of outsourcing forces the local technical talent to compete head-on with foreign workers. It reduces the brand name of the US firm and potentially gives away its proprietary technology. Actions like this could increasingly harm vibrant startup cultures such as Los Angeles and Silicon Beach.

When asked about the current state of outsourcing in the Los Angeles tech scene Talent Acquisition Consultant, James Chmielinski had this to say, "LA Tech leaders can leverage outsourcing simultaneously while protecting company culture. Symptoms of a failing strategy are easily recognized on a team, sparking rebellion. What starts as incremental change trickles down with a perception and magnitude that can cause attrition for an entire group. It is correctable but the failure in execution can lead to unwanted turnover. It happens frequently.”

The thought I leave you with is this – why destroy something that has proved to be great? Outsourcing technology is not the answer to gaining competitive advantage. Focus on your culture and nurture your talent to become the best version of yourself that you can be.

Would Abraham Lincoln chop down his log house? I think not, unless he really needed the wood.