Australian firm brings its spin on offshoring to IT channel

Despite the challenges of offshoring, you don’t have to look far to find an Australian IT business that has part of its workforce in South East Asia.

Now, another business is bringing its spin on offshoring to the IT channel.

The CEO of Australian company Adaca, Lambros Photios, with the help of former rhipe CEO and advisory board member Dominic O’Hanlon, has been introducing Adaca’s software development outsourcing service – which uses developers in South East Asia – to IT partners.

The company aims to supply clients with a fixed cost software development team in under 48 hours, for work ranging from mobile and web app development to Salesforce and AWS integration. Adaca can manage a team on behalf of clients.

“At the moment, [MSPs] have lost the ability to service that [software development] market,” Photios told CRN Australia in June 2023, “because of what's happened in the Australian talent market from a software development perspective.”

“For a software developer that earns from 100-120K, that’s been driven right up to 160-180K. So, it’s really priced them out of the market, unless you’re an Atlassian. The idea is to unlock that for MSPs.”

Photios has also launched a remote recruitment SaaS offering, Adaca One, which acts as an employer of record for firms wanting to recruit and manage staff in South East Asia without establishing legal entities overseas and dealing with payroll, human resources, legalities and compliance themselves.

MSPs could use Adaca One to hire business analysts, project managers, technical leads, data entry staff or assistants, for example. They pay a salary plus a platform usage fee, rather than a professional services fee.

“If an MSP in Australia wants to reduce their costs, they could they could spin up a team in the Philippines and recognise that cost benefit,” Photios said. “It ends up being anywhere between about a quarter and a fifth of the price as hiring local talent.”

“As I'm sure you know, local talent’s very lacking these days and the salaries keep going up. So, for some MSPs we’ve been speaking with, it’s a really nice time [for the arrival of Adaca One], because they're looking at other options.”

“The talent just wasn't working”

Both offerings are informed by Photios’s experience setting up remote teams in South East Asia.

In 2015 he founded Sydney development shop Station Five, growing the team with offshore developers. After Covid hit, he switched to providing offshore developers on a project-by-project basis, managed by client-facing project managers. The offering was eventually rebranded as Adaca.

Along the way, Photios saw first-hand that it could be “incredibly arduous to set up in the Philippines, much more challenging than in Australia.”

He also looked at the employee churn rates of providers of offshore talent.

“We spoke to people in the Philippines on the employee side, and employers [who had used competing platforms to hire staff members],” Photios said. “The challenge that just kept popping up time and time again that was reported to us was that the talent just wasn't working.”

Part of the problem in Photios’s view was the “sweatshop” model that required developers to work long hours without appreciation.

Another problem was failure to match personnel with the right working environments and clients, according to Photios.

Lack of skills and client visibility of the progress of work also derailed offshoring efforts, noted Dominic O’Hanlon.

“A lot of the outsource providers put a lot of junior people on projects and train them on the job and the outcomes aren't that good,” he said.

“You don't really know what's going on. If the project gets slippage, you don't really know about that. It's just very hard to manage.”

Raising the bar

To address these issues, Photios said Adaca’s software development service “set up the exact same work culture in the Philippines as what we have in Australia. So, the expectations are one-to-one in terms of eight-hour work days. Work from home is acceptable, or some sort of hybrid arrangement – so we’re flexible, just like we are with our Australian staff.”

Its developers in the Philippines get the same employee benefits as the Australian team, Photios said. “We also offer things like private health insurance for the engineers and for their dependents, because they don't have access to the same healthcare as we’ve got here,” Photios said.

Adaca advertises that its developers each have more than seven years' commercial experience as a software developer and a bachelor's degree at minimum. 

Photios was keen to position the business as not just a software development shop. “We sit down with an MSP to understand more strategically what it is they want to do with their offshore practice.”

He also talked up Adaca One’s focus on recruiting suitable employees for clients.

“We feel that what's actually going to create strong alignment here is making sure that we find the right talent for the organisation that's using the platform,” he said

“We've got three recruiters on the ground in the Philippines on our books full time. And they're actually doing the recruitment. So it's acting as a recruitment arm, as an extension of the tech platform for anyone who uses our platform.

Photios regards the “nuances” as important – like working with South East Asian co-working providers, instead of the “typical tech play, which is ‘let’s partner with the global guys and only the global guys’”.

Channel aspirations

When CRN spoke to O’Hanlon in June 2023, he said conversations with the IT channel about Adaca’s development services had been positive. "Not a single company yet - no-one - has said 'We don't need that'," he said.

“They want good resources; they don’t want juniors that are learning on the job. I mean, in Australia now, if you recruit a senior developer, they’ve only got about two years’ experience some of them – they call themselves seniors.”

Integration work, such as to integrate Azure with non-Microsoft platforms, is popular, Photios said.

Meanwhile, Adaca One’s first customer is a Sydney-based digital agency.

In the IT channel, “the idea here is to really see ourselves at the end of the day as a company that can hopefully serve MSPs and help them to grow,” he said.

Dominic O'Hanlon will appear on stage at CRN Pipeline 2023. See the Pipeline agenda and express interest in attending Pipeline while final tickets are available.