Unlock Growth with the Right Offshore Development Model

1. beyond borders How IT decision makers will build their tech teams in the AI era

2. BUILD YOUR TEAM WITH THE SCALERS This ebook explores how an altered business landscape has emerged with the rise of Artificial Intelligence (AI) — forcing adaptation, prompting diversification, posing new challenges, and revealing new opportunities. Prologue While the Covid-19 pandemic triggered a significant shift in business operations in the past years — with remote work and global talent pools as the new norm — AI is set to revolutionise how organisations operate and build tech teams. This paper is for CTOs, CIOs, Heads of Engineering and other IT Decision Makers (ITDMs) to guide them as they navigate new waters and chart what we call Offshore 2.0. We hope you enjoy the report. 2/32 The Scalers | SCALING BEYOND BORDERS

3. BUILD YOUR TEAM WITH THE SCALERS Table of contents 2023: a tidal shift 1. Assessing the skyline: challenges and opportunities 1.1 Innovation without disruption 1.2 A shore redrawn 2. Redefined: Offshore 2.0 2.1 A reimagining, not a reset 2.2 Maximising resilience: leverage the 2.0 model 2.3 Offshore 1.0 v Offshore 2.0 3. Offshore 2.0: your most strategic asset 3.1 Our playbook — building offshore development teams 3.2 Scaling beyond borders 3.3 Inside peek: Preqin case study Conclusion 4 5 8 12 14 15 18 21 22 23 25 28 31 3/32 The Scalers | SCALING BEYOND BORDERS

4. BUILD YOUR TEAM WITH THE SCALERS 2023: a tidal shift Three years after the strike of Covid-19 — a major event that has negatively affected growth yet driven business transformation — a new paradigm shift powered by AI is reshaping industries. Companies are now starting to leverage AI-driven technologies to enhance customer experiences and streamline operations. Automation and AI tools can potentially boost workplace productivity, freeing time for more critical tasks, as well as enhancing workplace learning and development and offering personalised training programs to employees. Embracing AI has become essential for businesses to stay competitive and adapt to the dynamic future of work. Unsurprisingly, a 2023 survey by Forbes Advisor found that 64% of business owners anticipate AI will improve customer relationships and increase productivity, while 60% expect AI to drive sales growth.1 1. How businesses are using artificial intelligence in 2023 (Forbes Advisor, 2023) 4/32 The Scalers | SCALING BEYOND BORDERS

5. BUILD YOUR TEAM WITH THE SCALERS Assessing the skyline: challenges and opportunities 1. We will likely talk about Before AI and After AI when discussing the transformation of businesses, including the digitalisation of working and the workplace. Remote work has been the norm post-pandemic, with employees able to perform tasks from various locations. As AI advances, remote work will likely remain the norm, becoming integral to the new AI-driven workplace. In 2022, 39% of businesses reported hiring software engineers for AI-related roles, indicating a growing trend towards incorporating AI technologies into their operations and redefining the future of work.2 2. McKinsey Global Survey on AI 2022 5/32 The Scalers | SCALING BEYOND BORDERS

6. BUILD YOUR TEAM WITH THE SCALERS A NEW AGE OF DISTRIBUTED WORK Whatever objections businesses may previously have had regarding remote working, the coronavirus crisis will be seen as the event that normalised it: with the right technology and culture, employees can be highly productive and efficient in a distributed setup. As of 2023, 26% of workers with work-from-home experience (WFH) during the Covid-19 pandemic would like to work from home five days per week, while 56% would like to work in hybrid mode.3 These statistics show how, three years after the pandemic struck, a significant number of workers — including those in the tech industry — opt to work remotely or at least in a hybrid remote- office setup. This trend presents a unique opportunity, enabling businesses to tap into global talent pools and leverage diverse expertise, regardless of geographical constraints. 3. Working from Home Around the Globe: 2023 Report (WFHResearch, 2023) 6/32 The Scalers | SCALING BEYOND BORDERS

7. BUILD YOUR TEAM WITH THE SCALERS IT DECISION MAKERS (ITDMs) IN THE AI ERA Gartner highlights four different types of CTO dependent on their core area of responsibility: Digital Business Leader, Business Enabler, IT Innovator, and COO of IT. Traditionally, driving innovation, identifying emerging technology, and managing and optimising the IT operation to meet strategic goals all fall under different remits.5 In forward-thinking organisations, the structure is more fluid, resulting in shared responsibility between ITDMs — helping to align business priorities with technology. The disruptions caused recently by AI — such as changes in customer expectations or shifts in market dynamics — have highlighted the crucial role of ITDMs as fundamental drivers of growth, resilience, and competitive advantage for organisations. According to IBM, 35% of companies worldwide have adopted AI, and 44% are working to embed AI into current applications and processes.4 These disruptions also highlight a point that can no longer be ignored: technology is a key driver of value, not merely a support. QUICK FACT Source: Digital Business Study 2023, Foundry 93% of ITDMs BLURRED LINES FOR ITDMs If the AI revolution has highlighted the increasingly central role of technology in driving value, then correctly identifying the right people within the organisation to facilitate this is needed. However, as explored by Gartner, the delineation between various ITDM roles is becoming blurred. In a 2020 article — that remains relevant and up-to-date despite being three years old — have adopted or have plans to adopt a digital-first business strategy, with investments in AI and machine learning 4. IBM Global AI Adoption Index 2022 5. Demystifying the four personas of the Chief Technology Officer, Gartner, January 2020 7/32 The Scalers | SCALING BEYOND BORDERS

8. BUILD YOUR TEAM WITH THE SCALERS Innovation without disruption 1.1 Established businesses can sometimes become victims of their own success. The core business structures and processes that have delivered the biggest wins become set in stone and inflexible. As a result, innovative ideas to meet emerging customer needs can get discarded through fear of change. Younger enterprises don’t suffer from these fears of change, meaning they’re able to dart in and pinch market share. This begs the question: How do technology decision-makers in established organisations drive innovation, performance, and competitiveness without interrupting core processes? 8/32 The Scalers | SCALING BEYOND BORDERS

9. BUILD YOUR TEAM WITH THE SCALERS ENABLING SEAMLESS INNOVATION It is important to bring the business, and IT functions closer together to increase velocity — aligning strategic priorities with technology. Decision makers need to decrease the time to market for new products and services and meet customer needs without affecting existing delivery. Many organisations are building a strong cloud architecture to enable longer-term remote working. Due to the current macroeconomic climate, cloud leaders are increasing their use of cloud-based services and products (41.4%).6 In a post-Covid landscape and entering the yet uncertain AI era — where transformation is at the forefront of many business agendas — these roles will be even more strategically central to operations, helping to roadmap possible avenues and analyse existing capability to see if the right people and technology exist within their organisation. If moving to a more distributed setup, business and IT functions need to work in sync to ensure the correct structure is in place and their dispersed workforce has the necessary technology to support core operations. 6. Google Cloud Brand Pulse Survey, Q4 2022 9/32 The Scalers | SCALING BEYOND BORDERS

10. BUILD YOUR TEAM WITH THE SCALERS KEY TAKEAWAYS Businesses are now looking for future-proof ways of operating. While many responses to this new industrial and business era have been impressive, they’ve also highlighted some systemic frailties. manager trusts them to be productive when working remotely.7 Organisations seeking to thrive in uncertain conditions must explore new avenues. The primary function of ITDMs is to ensure the company’s technology strategy serves its business strategy. They need to be development-focused and analyse the technical feasibility of organisational goals. In businesses operating maturely, ITDMs need to be central to global vision and strategy — helping to ensure competitive advantage is retained through technology. Research by McKinsey unveiled that successful businesses are more likely to have data- backed decision making, effective strategies for scaling, and sufficient resources.8 Distributed teams are here to stay after the global pandemic and in the new AI era. Business leaders trust their teams more than ever, with 70.5% of full-time employees saying their In the context of the AI era, the lessons from the Covid crisis highlight the importance of distributed teams, as they offer flexibility and can help organisations adapt to unforeseen disruptions more effectively. 7. Cisco Global Hybrid Work Study 2022 8. McKinsey Global Survey 2022 10/32 The Scalers | SCALING BEYOND BORDERS

11. BUILD YOUR TEAM WITH THE SCALERS Source: U.S. Bureau of Labor Statistics (2022) & ManpowerGroup Talent Shortage survey (2023) Nearly4 in 5 employers globally report difficulty finding the skilled talent they need The tech talent shortage in numbers 1.2M shortage of software engineers in the US by 2026 +186% rise in the global shortage of developers from 2021 to 2025 +22% increase in demand for software developers between 2022 and 2030 11/32 The Scalers | SCALING BEYOND BORDERS

12. BUILD YOUR TEAM WITH THE SCALERS A shore redrawn 1.2 In today’s globalised economy, recruiters can access global talent pools. However, this isn’t being fully exploited due to outdated ways of thinking. Some time ago, ‘offshoring’ was a buzzword — a grey area that many confused with the cost-cutting practice of outsourcing rather than a value-adding extension of an existing organisation. Now, it’s a normalised concept and practice, although the possibilities it presents aren’t always fully realised. If the business world was already separated into a pre- and post-Covid timeline — and now a pre-AI and post-AI landscape — then how offshoring and distributed work are viewed has entered a new age too. 12/32 The Scalers | SCALING BEYOND BORDERS

13. BUILD YOUR TEAM WITH THE SCALERS OFFSHORE 1.0: WELL-CHARTED WATERS SPOTLIGHT: Offshore 1.0 Some businesses want low-cost engineers who have to work very long hours on short-term projects — resulting in mediocre output. The types of businesses that require offshoring are usually startups looking to kick off their first product and then upscale cost-effectively or growing enterprises requiring tool development support. Typically, offshore developers are based in lower-cost destinations. Because of these things, there remains some stigma and negative connotations within larger enterprises. 1 2 A cost-focused mindset Short-term and project-based 3 4 External teams, not augmented extensions Project-focused instead of product-and- company-focused However, in recent years many businesses have realised that offshoring gives them access to untapped pools of highly skilled engineers without the limiting premises costs. And now, new opportunities and ways of working have arisen post-crisis, with organisations looking at offshoring — and distributed teams in particular — with fresh eyes. 5 6 Often, poor technical validation Little added value to the business 13/32 The Scalers | SCALING BEYOND BORDERS

14. BUILD YOUR TEAM WITH THE SCALERS Redefined: Offshore 2.0 2. Offshoring used to be about finding a price you couldn’t get at home; today, it’s about finding the skills and people you can’t get at home The impact of the coronavirus pandemic and the AI revolution has highlighted the significance of adaptability and innovation for companies worldwide. AI has accelerated the need for reshuffling existing strategies and embracing new thought processes and business models, leading to the potential entry of agile and skilled innovators in the industry. Organisations now recognise the advantages of leveraging distributed teams as a resilient and competitive asset. Offshoring has become increasingly appealing, given the ability of distributed teams to navigate significant changes and unforeseen disruptions that could otherwise impede operations. A fully dedicated team committed to driving performance and delivering value to the organisation, regardless of geographical location, is a crucial advantage for years to come. Emilien Coquard, CEO & Co-Founder, The Scalers 14/32 The Scalers | SCALING BEYOND BORDERS

15. BUILD YOUR TEAM WITH THE SCALERS 2.1 A reimagining, not a reset Before the two major events that changed the business world as we know it in the past few years, the Covid-19 pandemic and the surge of AI, remote working was sometimes spoken of pejoratively. It was often epitomised by the image of the carefree ‘digital nomad’ hopscotching across the globe. In 2019, 12% of UK workers reported working from home at some point in the week. Today, 44% are home working.9 Recent research in the UK showed that nearly three quarters (65%) of recruiting agencies believe skills shortages will be their top hiring challenge for 2023.10 A struggle to find local talent alongside significant skill shortages among job candidates can cause a lengthy recruitment process, often leading to core business disruption. 9. Characteristics of homeworkers, Great Britain: September 2022 to January 2023 (Office for National Statistics) 10. Bullhorn GRID 2023 Industry Trends Report: UK & Ireland 15/32 The Scalers | SCALING BEYOND BORDERS

16. BUILD YOUR TEAM WITH THE SCALERS GLOBAL TALENT MARKET Wider talent pools becoming accessible is a positive. However, as those geographical barriers have broken down, businesses are now competing globally for the best people, where once they only had to fight off local contenders. The global developer population is set to reach 27.7 million by the end of 202311, with India overtaking the US as the largest developer population centre in the world with 5.2 million.12To compare, the pool of software developers overall in the UK in 2023 is 240,506.13 Besides competitive remuneration and benefits packages, most tech professionals value working in a globally dispersed team due to the immense value of collaborating across different countries and time zones. In such borderless teams, developers experience improved engagement and satisfaction with their organisations. 11. Number of software developers worldwide in 2018 to 2024 (Statista) 12. New Intel - How many software engineers are there in 2023? (GoRemotely) 13. Software Development in the UK - Market Research Report 2018-2023 (IBISWorld) 16/32 The Scalers | SCALING BEYOND BORDERS

17. BUILD YOUR TEAM WITH THE SCALERS SEE THE CHALLENGE, TAKE THE OPPORTUNITY Why should businesses be location limited when looking for talent? The answer is that they shouldn’t. Some businesses may still view distributed teams and offshore with an outdated focus on cost saving rather than talent access and global expertise. However, forward-thinking organisations see new challenges and think of opportunities. In leveraging these advantages, these businesses see the offshore model as a genuine competitive edge rather than an exercise in fiscal restraint. QUICK FACT Source: 2023 State of Design & Make, Autodesk 72% Right now, embracing the global labour force can be the difference in a business remaining viable or not. of companies are looking for talent outside their local area 17/32 The Scalers | SCALING BEYOND BORDERS

18. BUILD YOUR TEAM WITH THE SCALERS Maximising resilience: leverage the 2.0 model 2.2 A development team operating in the mindset of Offshore 2.0 works in an environment a world apart from the ‘outsourcing sweatshops’ of negative connotations. These are fully integrated, handpicked employees in high-spec, high-tech Offshore Development Centres (ODCs). In these uncertain times, that kind of job security is highly valued. They’re committed to their company and onboarded with the culture and values. FUTURE PROOFING: FOSTER A SHARED VISION AND MISSION A dedicated team is 100% focused on the company’s vision and engaged with the product — not a single project like outsourced developers. In times of crisis, an augmented team is empowered to step up and think about innovation and long-term value and has the desire to help the business on a strategic level. 18/32 The Scalers | SCALING BEYOND BORDERS

19. BUILD YOUR TEAM WITH THE SCALERS FUTURE PROOFING: WORKING ACROSS BORDERS Right now, the battle for talent is insane. Everyone knows how hard it is to find great talent locally, but not everyone knows to look elsewhere. First, with Covid-19 and now AI turning the world upside down, businesses are trialling new ways of working to stay resilient and remain competitive. The world has changed... Welcome to Offshore 2.0. The offshore dedicated development technological setup means the team is always ready to work in a distributed capacity as a norm. For example, an offshore software development team in India — with the correct tools, infrastructure, and management practices — can seamlessly collaborate with their counterparts working in HQ in Europe, the US or Australia. Despite the geographical distance and timezone overlap, these teams use the same tools and follow the same processes as the rest of the organisation. Essentially, they become an integral part of their in-house team. Deepak Arunachalam, COO & Partner, The Scalers 19/32 The Scalers | SCALING BEYOND BORDERS

20. BUILD YOUR TEAM WITH THE SCALERS SPOTLIGHT: Offshore 2.0 Access worldwide talent pools 100% dedicated team Augmented, part of your in-house team Culturally aligned with your vision and mission Long-term focused Shared vision and mission Value adding when crisis calls for innovation 20/32 The Scalers | SCALING BEYOND BORDERS

21. BUILD YOUR TEAM WITH THE SCALERS Offshore 1.0 Offshore 2.0 A cost-focused mindset External teams Short-term focus Project based Crisis vulnerable Developers only execute, no added value Your project is one of many for developers Value-adding mindset Augmented teams Long-term focus Shared vision and mission Crisis capable Extra value to your organisation Developers focused 100% on your business 21/32 The Scalers | SCALING BEYOND BORDERS

22. BUILD YOUR TEAM WITH THE SCALERS Offshore 2.0: your most strategic asset 3. In Offshore 2.0, businesses fully realise how leveraging the extended team model can be a key driver of performance and competitiveness. With tech talent shortages rife across Western Europe, Australia, and North America — building a dedicated development team gives organisations access to untapped pools of highly trained engineers with the skills needed to scale speedily. The Scalers builds development teams in Bangalore, India — a country that places an enormous emphasis on education and a city that has earned the moniker: ‘The Silicon Valley of Asia’ as it’s the second- largest tech ecosystem in the world. Bangalore also offers a lower cost-per-developer, accounting for salary and space, and India itself produces 25% of the world’s software engineers every year. 22/32 The Scalers | SCALING BEYOND BORDERS

23. BUILD YOUR TEAM WITH THE SCALERS Our playbook — building offshore development teams 3.1 SPOTLIGHT: Bangalore HIGHLY SKILLED Second largest tech ecosystem in the world World-class technical institutions Using our ‘7-Step Model’, we source highly talented developers from a pool of India’s most skilled engineers based on your requirements. We make first contact and put them through a rigorous assessment process, leaving only the top 1% that will be part of your team. HANDPICKED Won ‘Most Dynamic City in the World’, two years in a row Massive hub for R&D centres, including Google, SAP, and Microsoft Unlike outsourcing, the developers are handpicked by our internal hiring team. While we do the shortlisting, you do the final interview. You get the right cultural fit, and they get a professional structure and a respected brand to commit their work to. 23/32 The Scalers | SCALING BEYOND BORDERS

24. BUILD YOUR TEAM WITH THE SCALERS HANDS OFF HOME VALUES It’s an augmentation of your current team using our proven approach to hiring, logistics, and operations — a bespoke solution that helps you to innovate, scale, and compete without disrupting ongoing operations. Your managers have total control over the day-to-day structure and operation of the team. However, all administrative tasks such as payroll, office management, and HR are handled by us — leaving you to focus on scaling your business. Your Bangalore engineering team is a 100% fully dedicated extension of the existing unit — giving the managerial team at HQ total control over training and development — fostering togetherness across the development function. A strong and unified team culture helps to achieve business objectives. Fully dedicated employees think about your product and services with a long-term perspective, contributing ideas to add value to your business. 400+ R&D Centres from big companies like Google and Amazon in the city 1M+ software engineers live and work in Bangalore 24/32 The Scalers | SCALING BEYOND BORDERS

25. BUILD YOUR TEAM WITH THE SCALERS Scaling beyond borders 3.2 Imagine your business has decided to build a fantastic customer offering. You need the best developers in the industry to help make a best-in-class product and top-tier QA leads to ensure your product passes all the required tests and is the most reliable solution on the market. Unfortunately, your existing development team does not have the capacity you require. What can you do to find the talent you need? 25/32 The Scalers | SCALING BEYOND BORDERS

26. BUILD YOUR TEAM WITH THE SCALERS THINKING LOCALLY In the UK, it took 65 days on average to fill a tech vacancy locally in 2019. And only 35% of applicants had the necessary skills. Unfortunately, this number keeps growing today, four years later, due to the worrying tech talent shortage in Western countries. If you want to hire a team of elite talent, this could take months. More importantly, they may not possess the skills you need to meet your business goals, which may affect core business. THINKING GLOBALLY You have access to global talent pools, making building a team of talent a speedier process — with significantly less time spent on recruitment than at home. In addition, the talent you bring into the organisation will have the skills you require to develop a best-in- class product, test rigorously, and quicken time to market. By building up your extended team, your business can take on a larger volume of work with ease. The management, administration, and processes are already in place: increasing capacity is simply a matter of speaking to your Partner Success Manager. 26/32 The Scalers | SCALING BEYOND BORDERS

27. BUILD YOUR TEAM WITH THE SCALERS INSIDE PEEK Preqin, a London-based financial data and assets company, had an existing development team in London. They needed to scale their team quickly, and they couldn’t do it locally. The sky-high premises prices, scarce talent pool, and the resultant lengthy recruitment process meant they needed to think imaginatively. In response, they pursued a partnership with The Scalers that blossomed into a long-lasting collaboration. The Scalers built Preqin a world-class team in Bangalore — beginning with an initial growth from 4 to 10 engineers, then to 30, and adding an additional 80 in the second year of partnership. Today, Preqin’s Indian team consists of 367 employees. They collaborate daily with the London HQ and have been key to creating the updated Preqin Pro. Imagine you and your competitors all have their offices in London, but you also have this super-talented, super-scalable team in Bangalore. It’s like a secret weapon. You have access to talent they can’t find at home. You have the power to grow — they don’t. You can build in just a few months a team that would take 12–18 months in Europe. Emilien Coquard, CEO & Co-Founder, The Scalers 27/32 The Scalers | SCALING BEYOND BORDERS

28. BUILD YOUR TEAM WITH THE SCALERS Inside peek: a Preqin case study 3.3 Interview with Daniel Barnes, Senior VP of Engineering, Preqin Q: How did you start working with The Scalers? We were previously with another company who were based in India. While they weren’t particularly good at project management nor delivery, we really wanted to set something of our own up in Bangalore, as we loved the place and people. We just didn’t know how. We found The Scalers online, and I met with Emilien. After the meeting, I realised the two businesses just fit together really well. We thought we’d try starting with four developers. We went from 4 to 10 very quickly. Then from 10 to 30 very quickly. And, we’ve just added another 80. 28/32 The Scalers | SCALING BEYOND BORDERS

29. BUILD YOUR TEAM WITH THE SCALERS Q: How does collaboration with your Bangalore team work? Incredibly well. One thing I want to emphasise is that we don’t treat them as an offshore team. We’ve got engineers in London, engineers in Bangalore — they are all part of the Preqin engineering team. They’re completely integrated. Q: Beyond recruitment and HR, how have The Scalers added value to Preqin? They’ve been a huge help in terms of localisation, helping us manage the Bangalore team on a local level operationally. The local knowledge is invaluable when navigating India’s unique rules and regulations, building our benefits packages, and of course building the team culture with the ‘Preqin DNA’. Trust is really important in this regard, and we really trust The Scalers. 29/32 The Scalers | SCALING BEYOND BORDERS

30. BUILD YOUR TEAM WITH THE SCALERS Q: What have been the biggest challenges? Growing a team from 0 to 95 is of course a challenge. Having a trusted partner on the ground has made this much easier for us in terms of building the team culture in Bangalore and sourcing candidates — which would have been very, very challenging for us without The Scalers. And Covid, of course. Q: Speaking of which, in a post-coronavirus landscape, how do think the situation has changed for companies wanting to scale their development teams? Face-to-face contact is important, but I don’t think having people in the office five days a week is required for successful delivery. The balance going forward might be three days in, two at home. There needs to be a reason to come to the office, collaboration for example. Collaboration is key. Q: Lastly, how has it been, working with The Scalers? It’s been a success, and I don’t say that lightly! 30/32 The Scalers | SCALING BEYOND BORDERS

31. BUILD YOUR TEAM WITH THE SCALERS Conclusion In a new business and tech landscape, four years after the coronavirus pandemic and at the beginning of what seems an exciting AI era, a clearer picture of the future has begun to emerge. Driven by a relentless pursuit of innovation and seamless integration with core business operations, we will witness: the pursuit of expertise by sourcing talent and skills in global pools, a global talent hunt for AI expertise, robust and remote-ready technology infrastructure, fluidity between ITDM roles, and a clear vision of how offshore teams can enable organisations to scale swiftly. As challenges arise and opportunities unfold, one crucial question remains: Are you Offshore 2.0 ready? 31/32 The Scalers | SCALING BEYOND BORDERS

32. BUILD YOUR TEAM WITH THE SCALERS Go offshore with The Scalers Contact YOUR LOCAL OFFICE: UK +44 20 3868 7491 IRELAND +353 1 513 4580 FRANCE +33 1 86 65 65 05 NETHERLANDS +31 20 323 3272 US +1 929 242 3810 AUSTRALIA +61 2 8318 0404 Book a meeting DISCOVER MORE sales@thescalers.com 32/32 The Scalers | SCALING BEYOND BORDERS