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Working in outsourcing model I wonder what are your experiences with fluctuation on vendor's team level. Assuming smaller teams (up to 20 people) when team rotation on vendor's side reaches e.g. 30% or more over a year or two customer will feel dissatisfaction caused by changes in the team and need to introduce new people to both domain and technical knowledge. This generates costs on both sides. On one hand from customers perspective it seems safe to put such information/requirements into contract but on the other hand IT market shows that team changes on vendor side are happening and it is a challenge to keep the same team for a couple of years.

On the other hand - rotation on team level has it's benefits for both vendor and end customer.

How do you deal with this on vendor level? How do you deal with formal contracts with end customers?

  • Are you asking as an employee of an outsourcing company or as someone who hires an outsourcing company? – Bart van Ingen Schenau Mar 4 '18 at 12:56
  • I'd say both perspectives are interesting for me. – Arek Mar 5 '18 at 14:07
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As someone who has worked years on both sides of the counter, my experiences and two cents:

From the vendor's view

  • Avoid fixed-price contracts at any cost (sorry for the pun). But seriously, they can break your neck when your costs are galloping off and you can't make prices spiral up.
  • Build and keep a small core of experienced developers. They can train new team members and if the shit should hit the fan they can absorb the biggest troubles.
  • Have a solid training plan for new team members that will help them learning the subject matter easily and quick.
  • And on the long term: aim at slowing down your rotation. I know that sounds easy peasy and I know that some companies avoid investing into their workers at any cost (there's that pun again), but on the long run the investment is more than worth the money.

From the buyer's view

  • Even if you don't intend making one, but you should at least talk about concluding a fixed-price contract. If the vendor is blocking your request immediately and he has no good reason for this (company policy e.g.), this can be a hint that he's going to have trouble with delivery.
  • Ask your vendor to bring a developer to the next meeting.
  • Check the vendor on company rating sites like Glassdoor or Kununu. This will give you tons of information about its reliability.
  • And on the long term: try building longstanding business relations with reliable partners. I know that sounds easy peasy and I know that some companies avoid investing into their vendors at any cost (say hello to our old friend, the pun), but on the long run the investment is more than worth the money.
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I've also worked at both sides and frankly speaking I don't see any benefit neither from the vendor's, nor from the customer's perspective. In terms of the contracts, usually it's:

  • N hours of development per feature/project (fixed price);
  • N hours of development monthly (usually it's a 'support' contract type);
  • Pay as you go, or 'time&material'. You'll be billed at the end of the month depending on how much time the team spent.

As far as I saw, nobody specified the rotation degree. But some contracts include the seniority of the developers.

Another thing is a dedicated team, where as a customer you work with the developers directly and may interview them before signing the contract. Here the customer can refuse to work with a replacement.

In case of a fixed price, the cost of the rotation is covered by the vendor as they normally don't bill additionally for onboarding a new team member. The client has a risk of the deadlines not being met though.

In case of support or time&material contracts, the onboarding is payed by the customer, because they basically pay for the hours worked. However this varies from vendor to vendor. I've seen cases when a customer is billed for 100% of overhead, also with no discounts if a senior guy was replaced by a middle guy. Some offer discounts, some don't include overhead hours into the invoice. And some provide juniors for free until the junior is ready to deliver something valuable.

For the dedicated teams, if you're a customer and you're fine with the replacement, it's usually your responsibility and money to cover the learning curve of a new guy.

Perhaps the only benefit of rotation is when the replacement is much better than the previous guy(s), but this is a rare case and might mean that something was already wrong.

In general, sure, try to keep the rotation degree as low as possible, but even with the rotation in place if the team still delivers, there won't be dissatisfaction.

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An extraordinarily high attrition rate should be a concern for both the buyer and the seller. Since it is an outsourcing type of arrangement, which should be reimbursed on a time and material basis, both parties have skin in the game and should jointly uncover root causes and jointly arrive at solutions. It is likely predictable that the buyer would simply push responsibility to the seller but this is a significant mistake and will likely exacerbate the situation.

So to answer the specific two questions: both parties need to engage the other party and begin a joint investigation and solutions effort.

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