Is the US market an attractive opportunity or a trap of opinions?
Hi, Habr! My name is Pavel Short, our company is developing mobile and web applications. About a year ago, we began to "feel" the US market. The main reason, I think, is clear: the buckling with the dollar and the need to diversify projects in the portfolio. Like everyone who works only in the local market. In this publication, I would like to share the experience of "expansion" (if you can call it that).
I note that our company in its development pursues an "opportunistic" strategy. That is, we rarely bother to preliminarily analyze the data and strategically think over the decision, rather grab hold of the opportunity, try to implement it. It does not work - we forget and look for a new opportunity. That is what happened to the US market when my partner Maxim pinned me, saying: “Well, you are a good seller in the Russian market, what do you have little to sell to the Global market?”. Well, on this “weakly” I went to California for a month to look for customers and win contracts. I admit that that moment in my head only double-digit dollar rates and the huge profits that we get in the US market were spinning.
I will say that in a year I have grown wiser ... The volume of our foreign portfolio at the time of mid-2016 does not exceed 5% of the company's turnover, and the regular customers (and the contracts implemented) can be counted on fingers. What conclusions we drew:
The fact is that the IT market has its own seasonality, which is superimposed on national holidays. In the outsourcing market, the “season” begins in mid-summer, when customers find it difficult to find a developer to close a vacancy (executors are on leave and do not want to go somewhere) and smoothly flows into autumn-December, when customers close annual budgets. January, February is a recession, spring is a revival of activities. Specifically, in the United States - "relax" comes from the end of November, when Black Friday begins and lasts until Christmas. Usually this is the time when people take vacations and many decision makers find you more at resorts than at work.
')
Unlike the Russian market, which is still growing. This means that in Russia not even the market leaders can disdain to say “fi” to uninteresting orders and draw beautiful budgets that will be held at the customer. Or give deals to partners. In the US market, things are somewhat different and the same strategies that we are currently applying in Russia do not work here. Here we must be able to optimize the process, reduce costs, be effective. Plays the role of a very big competition. The largest supplier of outsourcing in the US - India. And the words "well, you know, the Indians - they are the same gavnokod, and the Russian - such as not gavnokod" do not work. In fact, the Indians are great fellows. Firstly, over the past decades of assault on the US market, they all learned English quite well (unlike us, where even in large IT companies 80-90% of the state can hardly speak English). Secondly, they acquired a bunch of expertise and did a great job to improve the quality of the code. Thirdly, they are entrenched in the quality of tops in many large companies. Well, it is clear who the tops usually give preference. Also, do not forget about Mexico, Peru, Argentina, the Philippines: those countries that are near, in the same time zone. It is easier to communicate with them. Ukraine, Belarus and Eastern Europe, which also firmly entrenched in the United States, and in recent years have increased their influence. Due to the growth of the dollar, many Eastern European contractors left Russia in the direction of the West, which reduced the level of competition and, as a result, Russian outsourcers feel very good now. Temporarily, I believe.
For the US market, a focus on specialization in a particular area and expertise is noticeable. For example, you can meet the "consultants" to work only with Drupal or only Wordpress. At first it was unusual for me, but then I realized that this was due to the fact that the market had moved to the horizontal and stopped growing. When the market is horizontal, one of the sales strategies is to sell a typical (template) product. In custom development, it is quite difficult to do, since the risks are increased and standardization and a template process are required to reduce them. I will explain with an example in which the “mobile application” is replaced with a “window”, and the attributes, respectively, too.
As most of the mobile application development contractors are now talking to the customer in the Russian market:
- Hello, I need to make a window. Could you tell me what the timing is - money?
- Hello, I am a manager Vasily and I will be happy to help you! You see, making a window is a very difficult technological task, so now I cannot voice you the price and terms. We can try to write the TK and only on it to evaluate, well, or start the window manufacturing process, based on your wishes only, but you have to pay in fact. How would you be more comfortable?
- WTF ??? I want a window. Can you tell me at least approximately?
- Oh well. See it. The average bill we have on the window goes from 30 thousand rubles, but it happens that we make windows for both 15 thousand and 150. Everything depends on the profile, on the form, on the size ...
Well, and so on.
How this conversation looks like in the US market:
- Hello, I need a window, could you help me?
- Hello, I am a manager Vasily and I will be happy to help you! See, we have the TK on a square, round and rhombic window. Let's see which one suits you best and decide which one is better to do. With 100% payment today we will make a 10% discount. Here are the prices for each window.
Those who work in the United States have somewhat “standardized” the development process, breaking everything up into cases within which time can be predicted - time - quality. It is clear that it is impossible for specialists on “everything” to be, therefore the market has been segmented by regions and expertise in order to provide “standard” solutions.
This part of the market is much larger in volume than in Russia. But those who benefit are the most productive, the most efficient, beneficial for customers, and provide a high level of comfort and satisfaction. And I understand why. Because there are 10 more competitors nearby with the same UTP and another 100 with very similar ones. Disgusting "phi" can not be said.
We in Russia have a similar situation with the web market, the mobile market trend is still emerging.
Summing up, I will say that for us the US market is a very interesting experience. And if everything works out for us, then we can learn to work in a completely different market, where much higher qualifications and a different approach to work are required than in the Russian market. It's like a game in the High League.
The market in Russia will once cease to grow. According to experts, this will happen in the next 2-4 years (2018/2020). And I think this should be ready in advance.
I note that our company in its development pursues an "opportunistic" strategy. That is, we rarely bother to preliminarily analyze the data and strategically think over the decision, rather grab hold of the opportunity, try to implement it. It does not work - we forget and look for a new opportunity. That is what happened to the US market when my partner Maxim pinned me, saying: “Well, you are a good seller in the Russian market, what do you have little to sell to the Global market?”. Well, on this “weakly” I went to California for a month to look for customers and win contracts. I admit that that moment in my head only double-digit dollar rates and the huge profits that we get in the US market were spinning.
I will say that in a year I have grown wiser ... The volume of our foreign portfolio at the time of mid-2016 does not exceed 5% of the company's turnover, and the regular customers (and the contracts implemented) can be counted on fingers. What conclusions we drew:
1) Before the trip it is worth checking “the season is not the season, the holidays are not holidays” in the country
The fact is that the IT market has its own seasonality, which is superimposed on national holidays. In the outsourcing market, the “season” begins in mid-summer, when customers find it difficult to find a developer to close a vacancy (executors are on leave and do not want to go somewhere) and smoothly flows into autumn-December, when customers close annual budgets. January, February is a recession, spring is a revival of activities. Specifically, in the United States - "relax" comes from the end of November, when Black Friday begins and lasts until Christmas. Usually this is the time when people take vacations and many decision makers find you more at resorts than at work.
')
2) The US market has already established trend, there is no significant growth.
Unlike the Russian market, which is still growing. This means that in Russia not even the market leaders can disdain to say “fi” to uninteresting orders and draw beautiful budgets that will be held at the customer. Or give deals to partners. In the US market, things are somewhat different and the same strategies that we are currently applying in Russia do not work here. Here we must be able to optimize the process, reduce costs, be effective. Plays the role of a very big competition. The largest supplier of outsourcing in the US - India. And the words "well, you know, the Indians - they are the same gavnokod, and the Russian - such as not gavnokod" do not work. In fact, the Indians are great fellows. Firstly, over the past decades of assault on the US market, they all learned English quite well (unlike us, where even in large IT companies 80-90% of the state can hardly speak English). Secondly, they acquired a bunch of expertise and did a great job to improve the quality of the code. Thirdly, they are entrenched in the quality of tops in many large companies. Well, it is clear who the tops usually give preference. Also, do not forget about Mexico, Peru, Argentina, the Philippines: those countries that are near, in the same time zone. It is easier to communicate with them. Ukraine, Belarus and Eastern Europe, which also firmly entrenched in the United States, and in recent years have increased their influence. Due to the growth of the dollar, many Eastern European contractors left Russia in the direction of the West, which reduced the level of competition and, as a result, Russian outsourcers feel very good now. Temporarily, I believe.
3) Standardization
For the US market, a focus on specialization in a particular area and expertise is noticeable. For example, you can meet the "consultants" to work only with Drupal or only Wordpress. At first it was unusual for me, but then I realized that this was due to the fact that the market had moved to the horizontal and stopped growing. When the market is horizontal, one of the sales strategies is to sell a typical (template) product. In custom development, it is quite difficult to do, since the risks are increased and standardization and a template process are required to reduce them. I will explain with an example in which the “mobile application” is replaced with a “window”, and the attributes, respectively, too.
As most of the mobile application development contractors are now talking to the customer in the Russian market:
- Hello, I need to make a window. Could you tell me what the timing is - money?
- Hello, I am a manager Vasily and I will be happy to help you! You see, making a window is a very difficult technological task, so now I cannot voice you the price and terms. We can try to write the TK and only on it to evaluate, well, or start the window manufacturing process, based on your wishes only, but you have to pay in fact. How would you be more comfortable?
- WTF ??? I want a window. Can you tell me at least approximately?
- Oh well. See it. The average bill we have on the window goes from 30 thousand rubles, but it happens that we make windows for both 15 thousand and 150. Everything depends on the profile, on the form, on the size ...
Well, and so on.
How this conversation looks like in the US market:
- Hello, I need a window, could you help me?
- Hello, I am a manager Vasily and I will be happy to help you! See, we have the TK on a square, round and rhombic window. Let's see which one suits you best and decide which one is better to do. With 100% payment today we will make a 10% discount. Here are the prices for each window.
Those who work in the United States have somewhat “standardized” the development process, breaking everything up into cases within which time can be predicted - time - quality. It is clear that it is impossible for specialists on “everything” to be, therefore the market has been segmented by regions and expertise in order to provide “standard” solutions.
4) Present custom development of unique solutions
This part of the market is much larger in volume than in Russia. But those who benefit are the most productive, the most efficient, beneficial for customers, and provide a high level of comfort and satisfaction. And I understand why. Because there are 10 more competitors nearby with the same UTP and another 100 with very similar ones. Disgusting "phi" can not be said.
We in Russia have a similar situation with the web market, the mobile market trend is still emerging.
Summing up, I will say that for us the US market is a very interesting experience. And if everything works out for us, then we can learn to work in a completely different market, where much higher qualifications and a different approach to work are required than in the Russian market. It's like a game in the High League.
The market in Russia will once cease to grow. According to experts, this will happen in the next 2-4 years (2018/2020). And I think this should be ready in advance.
Source: https://habr.com/ru/post/306092/
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