Counteracting threats to your business posed by offshore competition
StarBase, founded in 1992, is a London-based performance testing software consultancy with established testing expertise in a wide range of industries. We spoke to Stephen Davis, StarBase founder and MD, about the threats posed by the economic climate and off-shore competition.
What do you think will be the biggest challenge for StarBase in 2012?
The biggest challenge is uncertainty in the current financial climate. It is uncertainty as to whether the economy is going through a slow gradual recovery or whether it’s just about to crash again. If Europe has big problems then that will obviously affect the UK and global economy and impact ‘confidence’.
There are two forces at play at the moment. The first is the recession, with the imperative to ‘do more for less’, achieve more with less money. The second driver is a return to quality; companies want to get things right where off-shoring hasn’t worked or achieved the financial savings anticipated. Some clients are motivated by both, which can cause a conflicting view: they still want quality, but at lower prices.
That is the challenge for 2012. Without the return to confidence, companies are less prepared to make long term commitments. We used to get involved in two to three year programmes; I don’t think there’s anything more than 12 months now.
How do you compete in this economic climate and faced with offshore competition?
Focusing on clients’ needs and really understanding their requirements. For StarBase, this means positioning ourselves as being people who understand what our clients need and focusing on being a knowledge-based business. This is supported by providing excellence in client management through people and communications.
Targeting higher-value niche areas that we are able to offer a better service better than off-shore providers. Testing covers a whole range of activities – functional, performance and security are the main ones, but there are approximately 20 different types of testing activity. We have decided to focus less on mainstream functional testing because it’s been picked up by off-shore providers. We decided to focus more on the more complex areas of testing such as Performance Testing and Technical Testing. These areas, require excellent technical and interpersonal skills, more domain knowledge and are also challenging. StarBase can’t compete on day rates with off-shore providers, but by specialising in this way we are able to deliver excellent value.
Focusing on value, not price. We are not focusing on day rates, but rather on the value that we contribute to our clients. Increasingly, people are recognising that on-shore services can provide greater value without necessarily costing more than the off-shore approach. Several times we’ve found that when we’ve been in competition with off-shore providers, we cost less because we complete the project in less time and use fewer people. What we are seeing is that many organisations are beginning to bring critical functions back on-shore, and that’s the market that we’re playing in.