Vyacheslav Vanyulin - Outsourcing Developers is the New Normal & Passion Equals Better Products

(Joel Beasley at 00:00:00) Hello, my friends. Today we're talking to Slava, the CEO at Auriga. And we discuss how outsourcing developers has become more mainstream in the wake of COVID-19, how Auriga allows their engineers to easily change projects to keep things fresh, and why passionate engineers build better products. All of this right here, right now on the Modern CTO Podcast.

(Joel Beasley at 00:00:26) Here we go. This is the Modern CTO Podcast.

(Slava (Vyacheslav Vanulin) at 00:00:39) So my name is Vyacheslav. So I'm the CEO of Auriga. And Auriga is a company which develops custom software on an outsourcing basis. And my primary area of interest, software development for mostly embedded firmware. And initially I was like a hardware engineer, but at some time I understood pretty well that it's better to be a software guy.

(Slava (Vyacheslav Vanulin) at 00:01:04) So I changed my career. So I graduated from Moscow Engineering and Physics Institute, and also I made my PhD there, and I've been stuck with material mechanisms of systems laboratory. So now it's Freescale. And I'm pretty proud that I've been part of that. And in 2000, actually, I joined Auriga, joined us like a normal engineer, just a normal engineer who has to develop something for the company.

(Slava (Vyacheslav Vanulin) at 00:01:35) It was maybe not my first job, but I believe it was the right choice. And being here, actually, I was like an engineer, a project manager, a program manager, technical account manager, director of engineering, chief technology officer, chief quality officer. And in 2014, I was appointed to a position of general manager. And in 2019, I was appointed to a position of CEO. So now I'm CEO, and I'm a big boss, a really big boss.

(Slava (Vyacheslav Vanulin) at 00:02:08) And actually, I'm feeling myself pretty good. And it's actually a good example how young IT professionals can rise from engineer to CEO position in just, okay, 20 years. So it's possible. So it's our world, and I believe actually it's our pretty good social elevator. And because of that, I invite and welcome everyone to be an IT guy.

(Slava (Vyacheslav Vanulin) at 00:02:36) So having that, my history in mind, actually it helps me pretty good when I have to address any issue that I'm facing as a CEO. So when I have any incoming task, then I can address it to any of my engineers because I know who can do what. And of course, actually, it makes some adjustment. So of course, actually, I understand myself what I could do when I was just an engineer. What would I would like to do when I was like a CEO?

(Slava (Vyacheslav Vanulin) at 00:03:08) So I can just highlight it from different angles, and it works. It helps me a lot. And also it helps me a lot when I'm talking to our clients. So our clients would like to see that actually I'm a technical guy, a firmware guy, and from hardware engineering. That works pretty good, especially when we're working with German engineering companies.

(Slava (Vyacheslav Vanulin) at 00:03:30) And so we need to learn what's Auriga. So Auriga is like a software company, and we conduct what's called custom software development for clients.

(Joel Beasley at 00:03:41) Oh, cool.

(Slava (Vyacheslav Vanulin) at 00:03:42) So everything we do, yeah, belongs to our clients. And initially, it was just a small company. So it was started 30 years ago. So we've been just maybe a part of, like a partner of Hewlett-Packard. And it was like a Hewlett-Packard initiative just to check whether ex-Soviet engineers, Soviet Union engineers, are good enough just to work for Western markets. And Hewlett-Packard just took this initiative, and we conducted several projects for them.

(Slava (Vyacheslav Vanulin) at 00:04:12) And I would say that was a pretty good start for us. And now we are celebrating our 30th anniversary. We have more than 600 employees worldwide. Wow. We have seven engineering centers in Europe and Eastern Europe.

(Slava (Vyacheslav Vanulin) at 00:04:27) And we have 17 engineering labs of different types. And actually, I feel pretty proud. Pretty proud.

(Joel Beasley at 00:04:36) That's very cool. So you guys are worldwide?

(Slava (Vyacheslav Vanulin) at 00:04:40) Yeah. Worldwide. So we're mostly, of course, mostly in Eastern Europe, Russia, a little bit in United States. But technically, we feel ourselves like Americans.

(Slava (Vyacheslav Vanulin) at 00:04:51) And maybe I would say 99% of our business is in North America and Western Europe. We're still pretty good in embedded development, so it was our initial basement. And having that in mind, it helped us to help our partners in MedTech. MedTech guys like to have someone reliable.

(Joel Beasley at 00:05:17) Right.

(Slava (Vyacheslav Vanulin) at 00:05:18) And guys who have like a hardware background, who know how to code drivers from there, they look very, very reliable. And this is very important for our medical partners.

(Joel Beasley at 00:05:34) Oh, cool. So you do work with med tech stuff?

(Slava (Vyacheslav Vanulin) at 00:05:38) Yeah. Exactly. So maybe we may use more precise statement: we develop medical software.

(Joel Beasley at 00:05:44) Very cool.

(Slava (Vyacheslav Vanulin) at 00:05:45) For medical device manufacturers. So it's pretty important. So it's not health information systems. It's not any database management. It's nothing with HIPAA really, but most of our business is like software for medical devices.

(Joel Beasley at 00:05:59) So if you're not dealing with the big data in health and HIPAA, what kind of regulation is involved with the software that you're developing for the medical devices, and how do you navigate that?

(Slava (Vyacheslav Vanulin) at 00:06:11) So I would say we have to conform to the FDA requirements when we are talking about North America, and the MDR requirements when we're talking about Europe. So it's a highly regulated market. And despite the fact that we, as a company, do almost nothing with HIPAA, but we still work with big data. So we are not the personal data operator, but we can develop some algorithms and we're pretty good with that. And I would say that in this particular case, when we're talking about MedTech, our engineers and our company work as like an advisor.

(Slava (Vyacheslav Vanulin) at 00:06:49) We can explain to our clients that using this technology, we can achieve this or that. And being a trusted partner for them, it helps them to listen to us. Of course, I understand maybe that we are not going to take this part of the business to ours. And they are talking quite truly to us. So it helps.

(Slava (Vyacheslav Vanulin) at 00:07:09) It helps to build trust. And I will say that a lot of things are about building trust when you're working for medical device manufacturers. Highly regulated market. They would like servicing. I cannot say that it's totally open book, but in general, we have audits by our clients every year. They come to our premises.

(Slava (Vyacheslav Vanulin) at 00:07:32) They interview our engineers. They check everything. Was everything okay? Was something not okay? We have a list of issues and corrections that we have to address.

(Slava (Vyacheslav Vanulin) at 00:07:44) And it's just not just an engineering thing. It's just like human resources, like business development, like financial statements, like general building infrastructure, everything. So being part of this business is actually, it's very complicated and very rewarding.

(Joel Beasley at 00:08:02) Yeah. I know a little bit about the software development consultancy space because we had another company come on recently called Formidable. Their CTO, Ryan, came on. And they specialize in web app development, but they do a lot of different things. And one thing that he mentioned is that their level of engagement with a client varies a lot, where they'll be sometimes just team augmentation, or sometimes they'll do product management, or sometimes they'll fully come in and act as the client's engineering team for the time.

(Joel Beasley at 00:08:39) So I'm curious, how do you, when you're engaging with a client, what's your process like for deciding the level of engagement that your team is going to be involved with?

(Slava (Vyacheslav Vanulin) at 00:08:52) Yeah. It's a good point, actually, and it's our history of our company. So frankly speaking, we're pretty good at two things. So it's something called research when a company is new. We have a lot of things which are not yet officially invented.

(Slava (Vyacheslav Vanulin) at 00:09:07) The client would like to be sure that it will operate, that it will live in the real world. And we have a situation when the client has like some old stuff, and it's been here for 20 years. Nobody knows what to do with that. And he would like to hire someone who can help him just to conduct a technological audit and propose how to conduct it. And when we're talking about two ideas, it means that we shall follow two maybe guidelines.

(Slava (Vyacheslav Vanulin) at 00:09:43) We have to be pretty active to some extent, for independence, and we have to maybe jump there and there pretty fast. So we have to verify different ideas, whether it works or not. And having that in mind, we are in pretty tough communication with our engineering team on the customer side. And when they will be able to talk with us, communicate with us, they understand pretty well that we are, you know, the same as they.

(Slava (Vyacheslav Vanulin) at 00:10:16) It's pretty good. Maybe a little bit of different culture, so it's okay. But we belong to different technology areas. We have a lot of samples and we have a lot of ideas, and we can tell maybe a good example that this can be done in that way. We have two or three or five successful implementations that work pretty good, and we can provide the references.

(Slava (Vyacheslav Vanulin) at 00:10:43) And for us, the successful engagement is when we are highly and entirely integrated with the client's teams. And after that, we can speak about R&D, we can speak about product management, about just maybe outstaffing. Outstaffing is not the word I like to officially pronounce. But very often actually, it starts as outstaffing. In mid-time, we switch back to outstaffing.

(Slava (Vyacheslav Vanulin) at 00:11:19) Of course, clients say we have established process. Actually, you follow our process. You like your engineers. We trust you. So please add a couple more engineers here.

(Slava (Vyacheslav Vanulin) at 00:11:29) So we believe that it'd be fruitful for both of us, so they will do something useful. So that's it. So we're pretty active. Sometimes we've been told that we're pretty aggressive. And because of that, we have pretty good relations with CTO guys.

(Slava (Vyacheslav Vanulin) at 00:11:49) These folks would like to know exactly how and what we're going to do. And they would like to send our potential proposal. They would like to communicate with us how we or they are going to support it after going live, et cetera, et cetera, et cetera. And at the same time, we have pretty tough relations with the guys which prefer to work like a black box. So here are the requirements, do that, here's a fixed price.

(Slava (Vyacheslav Vanulin) at 00:12:15) We can work that, but usually, we have too many stupid questions, stupid technological questions, because we can—

(Joel Beasley at 00:12:25) What are some stupid questions that come through?

(Slava (Vyacheslav Vanulin) at 00:12:28) So for example, so typical question about med startup. So guys, do you understand it's a medical startup? Yes, I understand. So okay, for example, you are developing some like fancy user interface. Do you aware that we have to develop at least two of them?

(Slava (Vyacheslav Vanulin) at 00:12:47) Daylight interface and night interface. And, I believe, we have to think about something in between. And you have to check with your risk management, whether it's okay or not. But we have fancy interfaces like Apple, MacBook. Okay.

(Slava (Vyacheslav Vanulin) at 00:13:03) But it doesn't work that way. When you submit your product for FDA approval, they will never pass it. And here are a lot of reasons. Another maybe topic. Okay, guys. Here's an idea that each product has to be verified with static analyzer.

(Slava (Vyacheslav Vanulin) at 00:13:21) And there are some strict rules. And of course, it's not here, but maybe in five years, but we have to follow those. And in order to follow them in five years, to be ready, we have to start right here because we know how it goes. And are you ready for that? And the typical topic and the typical question for us is, are you sure that your software is medical software?

(Slava (Vyacheslav Vanulin) at 00:13:47) Because if it states so, then we have to use like a multiplier, like five times multiplier. Of course, we have to verify requirements, we have to conduct tests, we have to conduct configuration. There's some case like validation and verification. And we can actually get rid of that. But then it's just a prototype.

(Slava (Vyacheslav Vanulin) at 00:14:09) A technology prototype. We can verify some technology fancy things, but being here for 20 years, I understand that goes nowhere. So yeah. And this is actually our history, our experience that we are ready to share. And maybe just a good point.

(Slava (Vyacheslav Vanulin) at 00:14:27) Sometimes we are educating our clients. So you know your business area. You know the typical cases, and we know the typical outcomes from different industries. So here's the situation. So if you're okay with that, then we can go that way.

(Slava (Vyacheslav Vanulin) at 00:14:44) If you're not okay with that, we have some ideas, maybe check with them. And so it happens with time. So usually, we need some time just to achieve that point. But usually, it's all about trust. So we have to build trust with each other.

(Slava (Vyacheslav Vanulin) at 00:14:59) So the client has to—okay, full transparency. So he is able to access any of our engineers just to check in on systems, what is going on right here right now. And then he can make a decision whether everything is okay or not. And because of, okay—we are very proud of our engineers, and we are proud of the fact that we can do very good applied things.

(Slava (Vyacheslav Vanulin) at 00:15:26) We may be pretty bad from the business point of view, but our engineers are the best from the science, technology, engineering, math, something like that. So typical STEM engineers.

(Joel Beasley at 00:15:39) Well, I've actually heard a lot of people recently talking about how there's a shortage of awesome coders in the labor market. How are you finding the best people?

(Slava (Vyacheslav Vanulin) at 00:15:49) They're right. It's impossible to find the huge amount of people right here right now. And because of that, actually, we are doing the same. We're building networking with universities. So actually, our advertising thing, it's Moscow State University.

(Slava (Vyacheslav Vanulin) at 00:16:07) That's okay, guys. So you're here, you're there. So we're trying to come back. So here are two types of marketing. Marketing for clients, marketing for labor market. So okay, guys, you're a student, you're a highly qualified engineer, so come to us.

(Slava (Vyacheslav Vanulin) at 00:16:21) And here's the rumor that it's not easy to join our team. Of course, we have like professionals, like guys who just graduated from the institute. We are proud of them. But frankly speaking, they are mostly useless. They know how to code, but they know how to code being alone. That leads nowhere.

(Slava (Vyacheslav Vanulin) at 00:16:43) But we know that in order to deliver a good product, we have to work as a team. And a team can be small, maybe just three or five engineers. But every member of the team has its role, and every member of the team has to follow some rules. And of course, with that, when we hire someone, we train them. We faced this issue 15 years ago.

(Slava (Vyacheslav Vanulin) at 00:17:08) Now the situation is even worse. So when an engineer joins our team, our company, they train—trains maybe for two months, excuse me. So it's just technology training. So you know Java, it's perfect, but here's a dedicated framework.

(Slava (Vyacheslav Vanulin) at 00:17:27) And our clients would like to own this. And here are typical templates there, so please follow them. And besides that, there's a lot of so-called soft skills. So usually I can agree that we have pretty good hard skills. While the soft skills about time management, communications, being on time, promise what you do, do what you promise, et cetera, et cetera.

(Slava (Vyacheslav Vanulin) at 00:17:51) It's not an easy task. And this is about that. So first of all, building relationships with universities, institutes, building a large network for freshmen, for guys to come with us. So if you're ready to do some specific things, so here. And I would say that our medical clients help us a lot. Then we train them.

(Slava (Vyacheslav Vanulin) at 00:18:09) And we have an internal knowledge base. Knowledge base, so I think it has two levels. So one, a technical base, it's all about the product. So guys inside the team can share it freely. And on the top level, we have a marketing description.

(Slava (Vyacheslav Vanulin) at 00:18:28) So there was a case, there was a pain, and there was a solution. And we tried to soften this pain with a solution that works in that way. It helps the other engineers just to jump in. Okay, there's a guy, they did something, and they did pretty good. Can you just explain to us on an engineering level? Nothing specific, because we respect the encryption of our clients.

(Slava (Vyacheslav Vanulin) at 00:18:53) And it helps. It helps to entertain, first of all, the fresh engineers. As I understand, in particular, it's not just some old stuff product. There are about 40 products or 40 projects that are going right now, right here, at the same time. That's actually interesting.

(Slava (Vyacheslav Vanulin) at 00:19:10) And it helps us to retain the engineers. It's always a problem. What is better? A service company like ours or another company? And we, as a service company, have one good, huge advantage.

(Slava (Vyacheslav Vanulin) at 00:19:25) We can, at any given time, find a suitable project. If you get tired, you're tired of a technology, of your project manager, of your client, okay, guys, you have another fortune. Just choose. So it's a way just to attract the people, entertain them.

(Joel Beasley at 00:19:47) So you're able to keep things fresh for your engineers and all that.

(Slava (Vyacheslav Vanulin) at 00:19:50) Yeah, exactly, exactly. It's pretty important now. An engineer has to feel comfortable. And besides that, we're trying to follow some soft skills rules.

(Slava (Vyacheslav Vanulin) at 00:20:04) We have values, and we have to use them fairly on a daily basis. And we're insisting that, okay, guys, if you join us, then you have to follow the rules. And it's the thing that our clients anticipate from us. And many clients have chosen us because our values somehow correlate.

(Slava (Vyacheslav Vanulin) at 00:20:25) And when our engineers communicate with their engineers, engineers for clients, we think maybe a little bit different, but alike. And they understand pretty well that in case of some complicated situation, we will follow some rules, and it works pretty good, especially for the guys who are trying to save some lives. And it's also a community. And I will say that now, as Zoomers and millennials, they tend to be something useful. They would like to be potentially useful for the generation.

(Slava (Vyacheslav Vanulin) at 00:20:57) And when they see that our company developed some project for ventilation, for example, they would like to be part of that project. And we're utilizing that. It's nothing complex. Everything is simple. Just tell about the interesting things that you're helping right now.

(Joel Beasley at 00:21:16) That makes sense. Yeah. I recently, we had another guest on the show for a company called Omatic, and they empower nonprofit organizations with technology to deal with big data. And he was talking about how, again, we were talking about the labor market and how it's hard to find good engineers, and especially in context with COVID making everyone work remote, it seems like now every company has to pay San Francisco prices for their engineers.

(Joel Beasley at 00:21:51) But he was saying the way that they're able to compete for engineers is by playing up their mission of how they help nonprofit organizations and do good in the world. And as you were saying, young engineers, millennials want to know that the work they're doing is doing some good in the world.

(Slava (Vyacheslav Vanulin) at 00:22:11) Exactly.

(Joel Beasley at 00:22:12) I think that's a common thread that you're doing.

(Slava (Vyacheslav Vanulin) at 00:22:14) Exactly. Yeah. And I believe that companies who would like to attract new cases have to follow that trend. Actually, we have lots of engineers who are quite mature, not young.

(Slava (Vyacheslav Vanulin) at 00:22:30) And they try to share their vision, and they see the situation from different angles. And now I would say that it's a good point that young engineers, they're quite active. They always disagree. They have their opinion. They would like to defend it.

(Slava (Vyacheslav Vanulin) at 00:22:49) And it helps to build a better product. It works especially well when we're developing something here. I'm putting a good example. It may be just a fact. That's a fact.

(Slava (Vyacheslav Vanulin) at 00:22:59) Cosco is operating mostly from Europe, Eastern Europe, and Russia. I have to say that, technically speaking, we have large access to good engineers. Officially, in Russia, Russia holds the fourth place for good STEM engineers. United States is the third place. And I believe that first place is India or China, or the second place is China or India.

(Slava (Vyacheslav Vanulin) at 00:23:31) Cosco, we have a pretty good labor market. We know how to attract engineers. We know how to keep them entertained. And that helps us. Nothing else.

(Joel Beasley at 00:23:43) All right. Let's talk about cost savings with outsourcing for cost savings. So let's say I'm the CTO at a small startup, and our app is really starting to take off, and I decide I need to outsource engineers to meet demand. What's the most cost-savvy approach to take there while still making sure you're getting quality people and quality work?

(Slava (Vyacheslav Vanulin) at 00:24:06) Well, tough question, especially today. Traditionally, when we're answering this question, we're trying to keep in mind four things: the size of the company, its reputation, the values, and skill set. I'm starting with the size. The size of our company, excuse me.

(Slava (Vyacheslav Vanulin) at 00:24:33) Actually, if the company is too big, okay, a huge company, for example, like Accenture or Wipro, something like that, it's a huge company. Then if you're just a small startup, you are not interesting for them. They can actually staff a huge team of 100, 400 engineers, but you will never receive the same amount of attention that you may receive from a company like Cosco.

(Joel Beasley at 00:24:58) That makes sense.

(Slava (Vyacheslav Vanulin) at 00:24:58) Yeah. At the same time, if you're just trying to negotiate with small companies, then they will be too dependent on you. We, as a company, can say no. We are not going just to follow, to pursue this project because it's not easy for us, and we understand pretty well that we cannot perform well here.

(Slava (Vyacheslav Vanulin) at 00:25:19) And we may say, okay, excuse us, but we're not ready. We may recommend someone because we know a lot of guys here. But it's a good point. You have to find maybe a partner who will be near your size. And you have to understand that your size of engagement will be interesting for them.

(Slava (Vyacheslav Vanulin) at 00:25:43) It's maybe a hint.

(Joel Beasley at 00:25:47) That's really interesting. I didn't realize that the size of the company would play such a large role. It seems like you have to get that just right because if they're too small, they'll take on any project because they need to stay alive. But if they're too large, they won't give you the attention you need. You need someone that's sized so that they turn down the projects that aren't right for them. And if your project is a good fit, they'll take it on and do a great job.

(Slava (Vyacheslav Vanulin) at 00:26:15) Exactly.

(Joel Beasley at 00:26:16) Cool. Okay.

(Slava (Vyacheslav Vanulin) at 00:26:17) Yeah. Then we are talking about reputation. This may be an important point. If you check any website of any IT company, they look exactly the same.

(Slava (Vyacheslav Vanulin) at 00:26:32) The same claims, the same values maybe, the same people, the same photo, the same projects, everything the same, and everyone is happy. And you, frankly speaking, can choose anyone. But after that, you have to ask for references. Okay, guys, you're here, you have some ideas, we believe you, you explained the situation pretty good, but can you share references? And I would recommend to take references from someone local.

(Slava (Vyacheslav Vanulin) at 00:27:01) If, for example, we would like to win some projects in North America, then we can provide some North American references. If we would like to win some project in Germany, we would provide some German references. It helps. The people with the same cultural traditions will verify some important topics for them. And after that, they could really make a decision whether to choose them or not.

(Slava (Vyacheslav Vanulin) at 00:27:27) It's pretty important that you actually really declare the things that you are going to implement. And it helps us. We have 30 years of history, so we have 30 years of references, and we can provide them. It helps us to start new business pretty well. And then you have to check the values because the startups are usually very aggressive.

(Slava (Vyacheslav Vanulin) at 00:27:58) They would like something pretty fast. People have to make some commitment, et cetera, et cetera, et cetera. We are active. We can be also aggressive. But in general, our engineers also expect, okay, guys, we can do that, but without any commitment.

(Slava (Vyacheslav Vanulin) at 00:28:18) It will look somehow, but in 50% of the cases, it will fail. If you're okay with that, let's try. If you're not okay with that, please don't go that way. It's mental things that come due to the fact that we're working for MedTech. Working for MedTech, for avionics, it is impossible just to deliver a product which will work only in 50% of the cases.

(Slava (Vyacheslav Vanulin) at 00:28:47) Whatever you do, the plane shall fly. The medical device shall save the life of the patient. Zero tolerance. And this is maybe one of the issues, one of the topics that we have to explain to every newcomer. Okay, guys?

(Slava (Vyacheslav Vanulin) at 00:29:06) It's not just a website when you see something, well, you saw an exception. It doesn't work that way. It will kill someone definitely, maybe not one time. And because of that, it's better when the values are nearly the same, company values nearly the same. At least you declare them, and reputation, your reputation can confirm or not confirm that. I would say that usually, high reputation confirms that you follow your values. We're starting with reputation, and we're switching to the values.

(Slava (Vyacheslav Vanulin) at 00:29:49) And then it's the right skill set. And here is also a good point. If you're developing something pretty new, then the situation is pretty complicated. There is nobody on the market who knows that skill set. And this is the reason why your partner, your outsourcing partner, has to hire someone and train them.

(Slava (Vyacheslav Vanulin) at 00:30:18) And if you're okay with that, and you task your partner with the metadata of training, of staffing the team, then actually the current skill set doesn't make any sense. But if you want to receive something right here, right now, then of course you have to check the right skill set. And of course, there are companies who have narrow focus. For example, our company, it's embedded and MedTech. Some companies are like enterprise application. We're not only MedTech. We work in R&D.

(Slava (Vyacheslav Vanulin) at 00:30:58) We know machine learning. We work in big data. We work with IoT. But for us, it's just a tool. It's not our focus. We can explain to our clients how they can utilize that in order to achieve their goals.

(Slava (Vyacheslav Vanulin) at 00:31:11) So it's like four things: size, reputation, values, and skill set. And if you're okay with any of them, then you possibly find a suitable partner. But it's not that easy.

(Joel Beasley at 00:31:27) It's not that easy.

(Slava (Vyacheslav Vanulin) at 00:31:28) Yeah. Then you have to make an agreement about the engagement type, whether it will be a fixed price project or agile.

(Joel Beasley at 00:31:37) Right. So this comes back to making sure that the team's going to be the right level of engagement, as we were talking about before.

(Slava (Vyacheslav Vanulin) at 00:31:44) Yeah. And here's the typical situation. When I was young, every project was only fixed price. Requirements, estimates, a price, and deadlines. And normally, every company managed to follow the deadlines and budget. But now we have agile. Agile helps us to develop something unique.

(Slava (Vyacheslav Vanulin) at 00:32:12) We don't waste time on negotiations. It's perfect. But the budget—I would say that if we're talking about typical system-level products, the budget may be 50% greater. But if I talk about typical enterprise application, I will say 500%. It's due to engagement type. This is the reason why many CFOs are pretty unhappy with the typical agile contract.

(Slava (Vyacheslav Vanulin) at 00:32:50) CTOs are pretty happy. They will receive whatever they would like in the time they would like. But CFOs start asking hard questions. Okay, guys, how much will it cost? What is the end date? And because of that, I would say that there are maybe three or four important time frames: the first three months, the first six months, the first year, and the first three years. When you're just building relationships, everything is fine. But usually after three months, you have to deliver something, and this something has to be delivered everywhere, so business users have to use it. At this point, you have many disappointments because usually technical guys are pretty happy, but business users can tell that, okay, guys, it's something else.

(Slava (Vyacheslav Vanulin) at 00:33:44) I thought I would get something else, and this is useless for me. And we have to quickly change the course, and we have to bring the end users into the world. And at this point, they start really helping to manage the product. Before that, it's okay for them. They're, whatever we do, we have requirements. But after three months, they understand that now they have to be part of the team.

(Slava (Vyacheslav Vanulin) at 00:34:08) Okay. They have to be part of the team.

(Slava (Vyacheslav Vanulin) at 00:34:15) And then we have to deliver something. The six months usually is a time frame when our business users are happy or unhappy. But if they're happy, then everything is okay, and we're going right. And after one year, one year, usually comes with CFO, and CFO starts asking questions. You asked for 200K, but you spent 500K.

(Slava (Vyacheslav Vanulin) at 00:34:40) It's two times, well, two times greater. Can we do something like that? And we have to negotiate that on a contractual level, on a business level, whether it's cost-saving or cost-effective or not cost-effective. And usually, if we build a good product, then the CTO defends us. Usually, we influence the company through the technical guys because we are pretty highly integrated.

(Slava (Vyacheslav Vanulin) at 00:35:07) We are pretty well integrated. It's highly integrated, as you name teams. Then the CTO, product manager, customer experts from our company, and they somehow advocate. And the CFO can say, okay, okay, okay. But in the third year, the situation may change another time.

(Slava (Vyacheslav Vanulin) at 00:35:30) Okay, guys, we've become big. We're spending too huge a budget for you, or maybe too small a budget for you. We believe it's time just to add a second vendor. And we tend to agree that a second vendor maybe is a good option just to speed up the activity of the first vendor. And I have to say that Cosco is a typical second vendor.

(Joel Beasley at 00:35:55) Oh, really?

(Slava (Vyacheslav Vanulin) at 00:35:55) Usually. Yeah. Yeah, usually. Usually we've been added as an alternative.

(Slava (Vyacheslav Vanulin) at 00:36:00) And it's quite interesting. Despite the fact that we are quite small as a company and quite small maybe as a budget allocated to us, we are working like a catalyzer. We boost the productivity of the first vendor pretty well. And they're trying to perform, and it helps us to be on a high level.

(Joel Beasley at 00:36:23) That's interesting. So when you're working as the second vendor, who is it that actually hires you? Is it the first vendor hiring you to improve them, or is it the original client?

(Slava (Vyacheslav Vanyulin) at 00:36:34) Original client. Of course, original client. No. It worked that way. So for some reason, the original client made a conclusion that the current vendor isn't good enough and some changes have to be made somehow. But before they're going to make some drastic changes, they would like to be sure that the second vendor is something really second. It can bring some value. Yeah. And then they start searching for the typical search process, procurement process, or they look for us.

(Slava (Vyacheslav Vanyulin) at 00:37:11) And this is also quite interesting. So usually we always come to the same situation. We enter the short list like company number three or four. And in this list, we have two values. We have the highest price, the highest price. But we have the best technical approach. And here is a situation when CTO fights with CFO on the customer side. Yeah. And because we know how to negotiate with CTO, we help them to win the battle. So yeah. It's like basis of outsourcing for clients. So we usually tell about that. We usually tell about that to our clients. Of course, guys, if you would like to enhance the performance, you can hire two companies at once, especially if you're quite new to outsourcing.

(Joel Beasley at 00:38:09) So being at the higher end of the price spectrum, do you guys ever have clients that are in your sales cycle and then they end up leaving the sales cycle to go try someone else and then they come back to you because the company that they went to in the first place wasn't satisfactory and they realized, oh, we do need the higher level of quality. Please help.

(Slava (Vyacheslav Vanyulin) at 00:38:31) Yeah. It happens quite often. And the situation, maybe the typical situation, because we have the best technical description, best technical approach. Usually we have a phase when we connect. Like the defense of our technical approach. So here's the requirements, here's our proposal, our architecture. We are going to do this in that time frame. It will cost that way. And we were ready to discuss our approach with any of your vendors. So if it happens, then usually we win. So but sometimes it goes the other way. So I would say maybe like four times or five goes the other way. One time's a win. But maybe in one year, then some project managers start calling us, okay, guys. Yeah. You were right.

(Slava (Vyacheslav Vanyulin) at 00:39:35) So the general amount of the project and the general approach was exactly what was described in your proposal. So we start thinking about bringing your own board. So it happens. And but in our case, usually it takes about one or two years. So it takes some time.

(Joel Beasley at 00:39:54) I feel like when you get those clients that come back, though, they gotta be the best clients to have because they really have an appreciation for what you're doing.

(Slava (Vyacheslav Vanyulin) at 00:40:03) Yeah. Yeah. Exactly.

(Joel Beasley at 00:40:04) That makes sense. So you guys are based mainly in Europe and Russia. Right?

(Slava (Vyacheslav Vanyulin) at 00:40:09) Exactly.

(Joel Beasley at 00:40:10) So what are some of the other, like I know, like, China and India are large outsourcing destinations in the world. Do you find yourself not just competing with other companies, but competing with like entire countries in a sense?

(Slava (Vyacheslav Vanyulin) at 00:40:24) I would say no. Because for example, we have some negotiations with India and China guys. And more, I would say that we work indirectly for some China companies. But in general, the idea is so. The China and Indian companies would like to have an external interface to their European clients. They're quite big, but for some reason they're unable to communicate with European clients because of the cultural differences. Sometimes it's good, sometimes it's not good. And we are in the same time zone. We have some clients who know the typical issues and we have to communicate them actually in the time zone with the cultural equalities, I would say. At the same time, we have teams who know how to negotiate with guys in India and China. Just maybe it's like a typical approach. And the situation with salaries in China and India is quite interesting. So at some points, the typical hourly rate, I dislike this word, but it exists, the hourly rates. They are higher than the hourly rates in Russia, for example. And this is the reason why we're not competing with the countries. We're competing with technology, with the ability to build the right process, the right teams. So I'm used to using the right teams, right skills, right technology, right values, right size. And because of that, if you're doing everything right, then you win. So and it doesn't matter whether you're Russian, Indian, American, or German guy.

(Joel Beasley at 00:42:03) That makes sense. Yeah. And so I feel like outsourcing in the past has been kind of taboo to talk about at companies at times. Do you feel like the world has opened up more to outsourcing because of COVID and remote work?

(Slava (Vyacheslav Vanyulin) at 00:42:16) Exactly. Exactly. So it was a joke. So actually we had a lot of clients who were not yet our clients because actually they have been too afraid of outsourcing. And it was like nearshore and offshore and actually North America and Europe, actually it's like two different continents. And they're unable to communicate despite the fact that we have references. They have some doubts. Once then we have the quarantine situation, everyone works from home. And they discovered the fact that they're unable to manage their own team. And outsourcing companies actually were the only companies who set up the right process. They know how to manage the resources remotely. And we actually help a lot of our clients to manage their teams. Of course, we had such experience and we've been highly integrated, tightly integrated with them. So at some point, actually we've been dragged the product management and program management to our managers just because of the COVID situation. And we actually taught our clients how to manage the remote sites.

(Slava (Vyacheslav Vanyulin) at 00:43:32) And because of that, actually I believe that the idea to outsource to another continent is not a problem now. Everyone does that. And the situation changed drastically. But outsourcing companies know how to manage resources. And unfortunately, not yet. So this is our advantage.

(Joel Beasley at 00:43:57) That makes sense.

(Slava (Vyacheslav Vanyulin) at 00:43:58) But situation may change, actually, and our clients will know how to do that. But I think that we also master our skills. So yeah. Like

(Joel Beasley at 00:44:08) So I've heard you mention a lot of different words for outsourcing, whether it's outsourcing, outstaffing, nearshoring, offshoring. Can you clear up the differences between those and where you and Origa position yourselves?

(Slava (Vyacheslav Vanyulin) at 00:44:23) Outsourcing and outstaffing. Outstaffing, like, maybe it's simplest way of outsourcing. When clients would like to get our engineers, one engineer for a couple of weeks. Okay. It may be a good point to start, especially when you are a new company or fresh from the market. So but usually it's a way to nowhere. And we can help our clients conduct free consultancy. But in general, actually we would like to set up a service. Okay, guys. Let's hire a team. So when we have a balanced team of testers, like architectural guys who can do whatever they would like to do. And the idea is the following. We would like to be a pair to your engineers. Typically, the engineers on client side know what they would like to achieve, but they have a lack of some practical knowledge in this particular area. So they know what, we know how. And then we have to match each other. And when we're doing this way, then we're quite successful. So we're talking about service, service of project management, sometimes product management, and it's quite important. I know lots of technologically advanced companies, they develop great products, but they don't know how to manage software projects. So because it's not the key proficiency. And when they communicate with us, there are lots of miracles for them. And sometimes they stick to our process, our construction situation. And this I call, I don't know, service as a service.

(Slava (Vyacheslav Vanyulin) at 00:46:07) Service platform, sorry, because this way. So outstaffing is the simplest way of outsourcing. There's some other words we can say like managed services. So I believe that many clients use that when we add something. So in general, if we can add value other than just hassle engineers, then we join the engagement. If we cannot, then we say, okay. Guys, excuse me, but not. Nearshoring and offshoring. Nearshoring, it's an idea quite simple. So if you are in the same country, maybe on the same continent, then it's nearshoring. Got it. So the idea is just your partner can join you pretty fast. And normally they follow the same cultural tradition. So you would expect, you wouldn't expect any cultural differences. It helps to start quite fast. Offshoring, different continent, like North America, Europe, or Asia, nothing else. So and having that in mind that when we have the COVID situation and everyone is remote, then it doesn't matter. So offshoring, nearshoring, as for managed services, if your potential vendor can describe you what will add as a value, then you can track them.

(Joel Beasley at 00:47:33) That makes sense. Thanks for explaining that. That makes a lot more sense now. So we're coming up on time. As we're wrapping up, what's like, there's so many outsourcing providers. What's the main difference that you guys have come to find to be your best differentiating factor, the reason people keep coming back to you?

(Slava (Vyacheslav Vanyulin) at 00:47:54) Okay. So we simply deliver. We simply deliver what we have promised before. So we're a legacy company that delivers. So maybe it's our primary, actually, slogan that we can actually share with our clients. And our values, actually, act with integrity. Work as a team, selfless actions, focus on the client. And we love what we do. And because of that, we deliver. So quite simple.

(Joel Beasley at 00:48:22) Very cool. And I know you've talked a lot about how values are super important to make sure that your company values are aligned when you're looking for an outsourcing provider. So how do you define your values at Origa? And, yeah, let's start with that, and then I have a follow-up question.

(Slava (Vyacheslav Vanyulin) at 00:48:40) Well, it's a hard question. So initially, they've been actually just invented. So it was an idea of founder. Okay, guys, we have to follow some rules. And it was the idea that maybe it was maybe not strict rules to follow them. But when you have a history of negotiation, history of engagement, and you understand pretty fast that you're facing the people who really share them, then you have to stick to them and to accumulate the amount of people who support that. And now I believe that it's quite a good tradition. So of course, every five years, we change them a little. Because actually they have to be familiar for a new generation. Right. So people have to support them. They have to be clear for understanding. But the meaning is the same. The phrases may be a little bit different, but the meaning is the same. So it works the same. So it's a history. It's like English folklore. So you have to cast them for two thousand years, and then it'll be perfect. The same for us. We have thirty years. I can't say it's perfect, but it works pretty good.

(Joel Beasley at 00:49:46) When you first joined Origa, was the company a lot smaller?

(Slava (Vyacheslav Vanyulin) at 00:49:50) Yeah. Exactly. So it was about maybe 100 engineers. So now it's 600.

(Joel Beasley at 00:49:56) So how have you seen the company values evolve as the company has grown six times?

(Slava (Vyacheslav Vanyulin) at 00:50:01) So the values, maybe officially, weren't changed, but we've been trained a lot how to work as a team. And we've been, maybe not trained, used to how to, okay, act with integrity. We have to tell the truth, but tell the truth, okay, you say politely. So it's easy to say that it will not work because we have some doubts. But we can say that, okay, guys, we have some doubts that it will work in time, but we will propose this. And you have to be aware of that that we may be not meeting the deadlines as it helps. And when the team grows bigger, then we have to train our engineers to utilize their soft skills. Because actually when it's 100, you know each one. You know by name. Actually know the birth dates, you know the children, what's what. But then 600 and you have seven different cities, then it's impossible, but you have to communicate. And you have to communicate right, polite, and bearing in mind your cultural differences. And so our founder put lots of efforts on training, something on teaching me how to negotiate right as well. And I will say that for me, of course I changed the position. But every time I had a mentor, and the mentor told me, okay, Slava. Here's the time. So you change your role. It's a different angle. See it that way, not this way. And you have to be more like a diplomat, more communicator, other than just a manager. And this is a time of permanent soft skill training for me. And I would say when the company grows six times, we train soft skills each time. So maybe it's maybe not a clear answer, but it's my impression of the situation.

(Joel Beasley at 00:52:04) That makes sense. That makes a lot of sense. You gotta focus more obviously when there's more people, you gotta focus more on how well you work together. And to do that, you have to improve your soft skills. Alright. One last thing we're wrapping up. What's the call to action? How do people get in touch with you and have Origa build some awesome technology for them?

(Slava (Vyacheslav Vanyulin) at 00:52:28) So just well, website. origa.com. And you have contacts, or you have, actually, you can contact guys in North America, in Boston, or in Europe, in Vienna, or even in Russia, in Moscow. And you can just write me. So I believe you can share my email with you. Vyacheslav dot Vanyulin at origa dot com. So just send the request, sir, and perhaps, actually, we can establish a good cooperation.

(Joel Beasley at 00:52:54) Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you'd like to hear discussed on the podcast, either add me on LinkedIn or send me an email joel at moderncto dot io. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.