Working with various companies across geographies is a great privilege - and an excellent opportunity to observe their differences and similarities. I was and currently am in such a fortunate position.

IMHO the markets do differ a lot, but these are not permanent differences (e.g., deeply rooted in cultural/political/geographical situation), but somewhat different stages of maturity. In other words: some markets are now where others were 5, 10, or even more years ago.

The actual pace of maturation varies a lot as well, but the general stages are the same, and it's very hard to skip any of them entirely. Just a tiny reminder - these are the stages of market maturity, not the company's or individual's maturity. Here they are (classification and naming are entirely mine, you won't find that in any textbook):

  1. desert vacuum (DV) - the local talent is too raw (due to no educational/academic foundations), infrastructure is not sufficient, economic/political conditions make running any business very difficult; the development of a reasonable IT Landscape is heavily constraint
  2. outsourcing/offshore bonanza (O/OB) - there's enough graduates of tech. universities (and the cost of labor is low enough) to attract the interest of companies from more developed countries - not the hyper-scalers or high-performers, but the majority who need to expand their "software factories" to fight the legacies; the new sites are highly dependent (on HQs), and do not play any major role in product vision shaping
  3. software houses/consulting invasion (SH/CI) - at some point, smart people from the O/OB site teams decide to utilize their freshly acquired experience better - by providing their services to the ones who lack those skills but can afford to pay (team for hire, project delivery, custom development, etc.)
  4. modern enterprise renaissance (MER) - local enterprises start to realize that IT capabilities are a crucial element of their competitive advantage, and it's risky to build your own future on external parties (SH/CI) only; so they start attracting the same people who worked for them as consultants, to work as internals
  5. hyper-scalers invasion (HSI) - the IT specialist market has grown up to such scale that it justifies the investment from hyper-scalers or regional/global high performers; these companies are ultra-successful in their industries, they know how to make "the magic" happen; they are the ones who set the global trends and shape new best practices
  6. modern product companies/startups spring (MPC/SS) - folks who've learned their lessons in hyper-scalers/high performers want now to travest the same path, but on their own, under their brand, with complete control in their own hands

Few clarifications:

  • don't treat all that literally; it doesn't mean that successful startups can't be founded at O/OB market maturity stage, or that software houses disappear suddenly e.g. during HSI (there'll always be space for highly-specialized services) - each stage's uniqueness is about the particular type of companies brooding and blooming in it (in a very visible way), after reaching some critical mass
  • the reasons behind each stage transition are different: sometimes it's because of entrepreneurial spirit (people sense a chance to earn more money or discover unoccupied market niches), but also sometimes it's because a prior stage develops a certain kind of new expertise/experience and ... hunger in people (boosted by inspiration from other markets)

Here in Poland, we're currently in the early beginnings of HSI; the specifics of our market is that the transition between SH/CI and MER was very blended. Large enterprises (even with a stable financial situation and strong market position) keep failing to create compelling conditions to attract talent from software houses or consulting companies - this segment is still the strongest (headcount-wise) by far.

What does it mean for the near future? I bet that in 2-3 years, we'll have the first significant wave of hyper-scaler alumni in the region, building entirely new businesses based on their experience, networks of contacts, and unfulfilled (yet) ambitions. They will be avantgarde of MPC/SS stage.

Wait - but don't we have successful startups in Poland yet? Of course, we have - these companies are pretty much ahead of their epoch (kudos to them) and have the first movers' advantage (fingers crossed!). But they also operate in somewhat uncharted territories (and struggle with bringing seasoned startup veterans on board, because they are none around yet!) - that's why they pretty frequently either move their HQs out of the region or look for senior expertise abroad. Quoting Andy Jassy (CEO of Amazon):

"There is no compression algorithm for experience."

Fortunately, nothing boosts the startup entrepreneurial spirit more than drinking from the fountain of startup entrepreneurial success. That's why HSI spurs MPC/SS so vividly. Exciting times ahead.

P.S. Where are all the freelancers there? Isn't it a separate stage? Nope, it depends on what they do (their independence and contracts they accept) - typically they belong to either O/OB or SH/CI.

P.S.S. Why do I claim that a product company is (in terms of maturity/evolution) a higher stage of development than a service company? It's quite simple. Service companies' stakes are bound and scale pretty much linearly with their size (you're being paid for the service - there's a cap, based on your rates and effectiveness), while product ones don't have any ceiling (there are no limits for successful products and their margins) - scaling success can be even better than exponential.

Share this post