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

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

[Audio] 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. 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. Prologue We hope you enjoy the report. The Scalers | SCALING BEYOND BORDERS 2/32.

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

[Audio] 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) The Scalers | SCALING BEYOND BORDERS 4/32.

[Audio] BUILD YOUR TEAM WITH THE SCALERS 1. Assessing the skyline: challenges and opportunities 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 The Scalers | SCALING BEYOND BORDERS 5/32.

[Audio] 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 remoteoffice 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) The Scalers | SCALING BEYOND BORDERS 6/32.

[Audio] BUILD YOUR TEAM WITH THE SCALERS Gartner highlights four different types of CTO dependent on their IT DECISION MAKERS (ITDMs) IN THE AI ERA core area of responsibility: Digital Business Leader, Business The disruptions caused recently by AI — such as changes in Enabler, IT Innovator, and COO of IT. Traditionally, driving customer expectations or shifts in market dynamics — have innovation, identifying emerging technology, and managing and highlighted the crucial role of ITDMs as fundamental drivers of optimising the IT operation to meet strategic goals all fall under growth, resilience, and competitive advantage for organisations. different remits.5 In forward-thinking organisations, the structure According to IBM, 35% of companies worldwide have adopted is more fluid, resulting in shared responsibility between ITDMs — AI, and 44% are working to embed AI into current applications helping to align business priorities with technology. 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. Source: Digital Business Study 2023, Foundry BLURRED LINES FOR ITDMs 93% of 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 have adopted or have plans to adopt a digital-first business strategy, with investments in AI and machine learning various ITDM roles is becoming blurred. In a 2020 article — that remains relevant and up-to-date despite being three years old — QUICK FACT 4. IBM Global AI Adoption Index 2022 5. Demystifying the four personas of the Chief Technology Officer, Gartner, January 2020 The Scalers | SCALING BEYOND BORDERS 7/32.

[Audio] BUILD YOUR TEAM WITH THE SCALERS 1.1 Innovation without disruption 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? The Scalers | SCALING BEYOND BORDERS 8/32.

[Audio] 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. 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. 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 6. Google Cloud Brand Pulse Survey, Q4 2022 The Scalers | SCALING BEYOND BORDERS 9/32.

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

[Audio] BUILD YOUR TEAM WITH THE SCALERS Source: U.S. Bureau of Labor Statistics (2022) & ManpowerGroup Talent Shortage survey (2023) Nearly 4 in 5 employers globally report difficulty finding the skilled talent they need 1.2M shortage of software engineers in the US by 2026 The tech talent shortage in numbers +186% rise in the global shortage of developers from 2021 to 2025 +22% increase in demand for software developers between 2022 and 2030 The Scalers | SCALING BEYOND BORDERS 11/32.

[Audio] 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. The Scalers | SCALING BEYOND BORDERS 12/32.

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

[Audio] BUILD YOUR TEAM WITH THE SCALERS Redefined: Offshore 2.0 2. 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. 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 Organisations now recognise the advantages of leveraging Emilien Coquard, CEO & Co-Founder, The Scalers 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. The Scalers | SCALING BEYOND BORDERS 14/32.

[Audio] 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 The Scalers | SCALING BEYOND BORDERS 15/32.

[Audio] 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.12 To 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) The Scalers | SCALING BEYOND BORDERS 16/32.

[Audio] 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. Right now, embracing the global labour force can be the difference in a business remaining viable or not. Source: 2023 State of Design & Make, Autodesk 72% of companies are looking for talent outside their local area QUICK FACT The Scalers | SCALING BEYOND BORDERS 17/32.

[Audio] BUILD YOUR TEAM WITH THE SCALERS 2.2 Maximising resilience: leverage the 2.0 model 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. The Scalers | SCALING BEYOND BORDERS 18/32.