How do you protect your Intellectual Property while outsourcing? One of the challenges of moving software development offshore is that different countries behave very differently where Intellectual Property is concerned. The national laws of some countries support vendors in those countries co-owning your intellectual property. Meaning that regardless of your contracts, your Intellectual Property is no longer just yours. Some other countries, while not allowing the theft of your Intellectual Property by law, will still practice the re-use of your Intellectual Property, albeit illegally.

It is commonly believed that one of the countries that does NOT engage in these practices is India, so India becomes a very viable candidate for offshoring.

However, India has another challenge, and that is the high attrition rate, which can be as high as 22% or more, meaning that in a 12-month period, almost a quarter of the team working on your products or services will leave. In the case of software engineers, this means that a lot of knowledge & understanding has walked out the door, and where have they gone to? Often to work on a competitor’s products in the same industry. And how much will it cost you in real terms to replace them?

So, it is vital to get that attrition rate down. When I am conducting RFPs and setting up contracts, I stipulate that the attrition rate must be no more than 6%, or heavy penalties apply. How I accomplish that is by paying a small extra premium per person, and contractually ensuring that it reaches the software engineers doing the work, so it does not just line the pockets of the vendor.

Also, when sending your engineers to train or coach the offshore team (which I recommend you do frequently), make sure that they make a fuss of them. Take them out to dinner, and generally make the offshore team feel important and valued. This creates a more positive work environment for them. Offshore engineers are much more likely to stay with YOUR company if they feel valued and are paid a little extra, rather than leaving to go elsewhere and taking a pay cut.

The small extra premium, and frequently sending your company’s engineers to India does cost more, and has to be allowed for in the cost model, but the saving in terms of reduced attrition & better offshore work environment, leading to better productivity and lower maintenance costs, IS worthwhile.