IT outsourcing is an ever-expansive industry with players entering and leaving the game frequently. However, the total number of IT outsourcing firms crosses barriers. In fact, the industry is expected to reach <a href="https://www.statista.com/outlook/tmo/it-services/it-outsourcing/worldwide>"$512.50 billion in 2024</a>. Stabilizing the position and leading a company to success is very difficult in such a competitive state. However, a 19-year-old entrepreneur from Ukraine made it possible and has been leading his company “Digis” successfully since 2015.
Digis is an acronym for “Digital Solutions and Innovation Ground.” The company stands as a pioneer force in the software development industry. Committed to innovation and quality, Digis offers software solutions, state-of-the-art mobile applications, and expert IT consulting services. With a global footprint and a customer-first philosophy, Digis is a trusted partner in terms of navigating the complex digital landscape, fostering growth, and driving success in an ever-evolving digital world.
Therefore, let’s start with this interview. However, before that, let’s learn more about our guest.
Who is Nick Nagatkin?
1) Firstly, congratulations on being a part of our 40 under 40 professionals. Getting started with the first question, what factors contribute to your company's success, and what makes you stand out from your competitors?
Well, it's been a long and challenging journey. Honestly, it took us eight and a half years to build the company. In general, I've accumulated more than 11 years of experience in IT with expertise in building products. I've been involved in the development of hundreds of products. Also, I believe the main reason for our success is the passion that our core team, including top management, has for product development and startups.
We are intimately familiar with the struggles that come with startups because that is our background. We love educating ourselves and learning new things. Our passion for technology is paramount, and this is what drives us. All the other aspects, such as being well-optimized and knowing how to develop software, come later in the process.
2) What are the main risks of working with an outsourcing company?
Well, there are numerous risks associated with outsourcing. Sometimes, we find ourselves acting as customers to other outsourcing and service software development companies.
One significant challenge is when you're looking to hire a team of software engineers. You go through the interview process but ultimately work with completely different individuals. These are possibly more junior or someone entirely unexpected, leading to confusion.
Another risk arises when you're oversold on services. The company that you hire to do work for you might say they can do more than they really can. Once you've started the project, it's hard to change to a different team.
This situation leaves you with two challenging choices. Firstly, stick with a team not delivering as promised. This could lead to budget overruns and missed deadlines. The second is to face the complexities of changing the team mid-project. This dilemma represents one of the most significant risks associated with outsourcing companies.
3) Since you are good at coding and it's a common perception that Maths can impact it, can you share your perspective?
Well, back in school, I excelled in mathematics and even won numerous competitions in math and physics. I believe having a strong foundation in basic logic is crucial for being a proficient software engineer. While math is a significant aspect of logical thinking, it's not the only way to develop these skills.
Mathematics is inherently related to logic, so we often say that being good at math can make you a better programmer. However, it's essential to note that there are other paths to enhancing logical skills.
I've encountered many exceptional specialists who did not come from a mathematical background, but they still excelled in their roles. So, while math is beneficial, it's not the sole determinant of becoming a skilled programmer.
4) Is being proficient in mathematics one factor contributing to your entrepreneurial journey?
Well, it's a bit of a yes and no situation. Having an entrepreneurial background is entirely different from being extremely technical. You don't necessarily need extensive technical knowledge to start a company.
I would argue that persistence is perhaps the most crucial factor. If you are ready to spend 9 years building a company and keep learning, you can become knowledgeable in business and technology. It doesn’t matter where you start from.
However, having a good grasp of math is helpful. So, it's more about an intrinsic quality, like persistence, that aids you as an entrepreneur. That's the reality of it.
5) How does your brand differentiate itself from the overcrowded competition globally?
Among the numerous aspects of our company, I'd like to focus on one key feature: we are not just a software development company addressing your technical needs; we are a comprehensive product development company.
We guide you through the entire product development cycle, starting from the ideation phase, conducting marketing research, analyzing your market, and more. Our services extend to delivering complete projects, maintaining them, and assisting with fundraising and other strategic matters.
Over the past 9 years, we've built an extensive network that includes founders, venture capitalists, angel investors, and various knowledgeable specialists. This network plays a crucial role in our approach to product development.
When working on a project, we bring in advisors from our network to provide domain knowledge that we may lack. These advisors, often from venture capital firms, offer insights into the market and understand what customers seek.
This collaboration helps us align with our customers' goals.
Our patented approach, known as the Smart Outsourcing Automation Paradigm, sets us apart. This approach involves two main ideas: 'Smart Outsourcing' and 'smart money,' where clients receive not just financial support but also access to our company's expertise, experience, and network.
The 'Automation' part emphasizes that anything that can be automated should be automated. By implementing this principle correctly, we achieve optimal efficiency, delivering the best value to our customers. We are committed to our customers’ goals not only as technical providers but as striving partner’s too.
6) Do you regularly take feedback for constantly improving your product & services?
Yes, absolutely. We continuously gather customer feedback, maintaining a constant flow of insights. After each project, we conduct retrospectives to analyze what went well and identify areas for improvement.
I find joy in the process of learning and self-education. Over the last 11 years in the IT field, I've dedicated myself to this learning journey while building our company. This commitment to continuous improvement and learning is ingrained in our company's DNA.
As part of our ethos, we strive to enhance our services constantly. We actively introduce new services to meet the evolving needs of our customers. This is why customer feedback holds immense importance for us. It serves as a valuable tool for refining and advancing our offerings.
7) How do you deal with negative feedback?
I don't have an aversion to receiving negative feedback. It's akin to discovering that something in the architectural structure of your company, certain processes, or procedures isn't functioning as intended. I often draw parallels between building a company and developing software because they share many commonalities. As a developer, you write code, and after a certain period, you compile it, initiating testing to see real-life results.
Similarly, in business and company development, you establish procedures, roles, areas of responsibility, and KPIs and then set them in motion. The actual results become apparent after weeks or months, and you often receive customer feedback to understand their satisfaction.
While receiving negative feedback is not a common occurrence for us—more of a rare exception—it signifies that something went wrong and highlights an area for improvement. Embracing continuous improvement is ingrained in our DNA, both in developing and running our company.
8) Your company offers technology and resources. Have you ever sold them as a combined service?
Yeah, essentially, we offer three or four main types of services. The first one is what we call 'outstaffing.' In this scenario, if our customer wants to scale up their team and seek flexibility, they can approach us. We provide specialists under their management, seamlessly integrated into their team. We act as a back office or consultant, offering advice without significantly impacting the overall development process.
The second service is end-to-end development. When a customer approaches us with an idea or a project they'd like us to develop, we take charge of the entire process. From building the software to delivering it, we also educate the customer's employees on handling the new system.
The third service is IT consulting. Sometimes, individuals or companies facing challenges in their projects contact us for assistance. We analyze the project, assess the processes, interview team members, and provide a comprehensive report on what needs improvement or fixing.
Additionally, we offer support in recruiting for in-house positions using our proprietary tools developed for recruitment purposes.
9) How do you educate your client on what matters and what doesn’t? Also, which of these requirements would you prioritize: exploring scalability, reducing IT costs, and optimizing existing processes?
There isn't a one-size-fits-all answer to that question because it varies from project to project. However, I'll try to provide a generic response. In most cases, I would start by assessing the costs and the budget for the solution. If there's no budget, there's little room for maneuvering. Sometimes, we may advise customers that their budget isn't sufficient to kick off the product. Even if they can cover the software development part, lacking funds for marketing can be a hurdle. We often recommend allocating funds for market research, doing ABC, and seeking investments. This would be a strategic approach to launching their product. We educate them about the product development and launch process.
The second consideration is optimizing current processes. A business can achieve early traction and better understand the underlying dynamics by improving existing processes. This is crucial for understanding the math behind development and the overall business strategy.
The third aspect is scalability. While scalability is important, it's often acceptable to develop a quick and dirty first version for early-stage projects or startups to gain initial traction. Once investments are secured, there's an opportunity to rebuild from scratch for scalability. This sequential approach is often practical for many projects.
10) Talking about post-consult consultation ghosting, how often do you face it? Also, how do you think we can minimize this challenge?
At Digis, our positioning is centered and highly optimized. We transparently communicate to our customers that our overheads are 30% lower than the market benchmarks.
This means that while providing rates comparable to the rest of the market, the quality of our specialists and our overall delivery is superior and often more cost-effective than our competitors. Geography also plays a role in pricing. Consultants in the US typically command higher rates, and as you move east, the costs tend to be more reasonable.
Digis operates in six countries—Mexico, Poland, Romania, Ukraine, Azerbaijan, and Georgia. These locations offer different time zones and diverse talents, contributing to cost efficiency and an excellent cost-to-quality ratio. When we provide consultancy, our customers often stay with us if they decide to launch the product. Having already received valuable advice from us, they find it logical to continue the collaboration, especially when we offer cost-effective solutions.
In most cases, customers appreciate our efficiency, and if they can acquire similar services at a more reasonable rate with us, it becomes a compelling offer. However, if a company charges significantly higher rates without offering additional value, customers may opt for a more cost-efficient option, aligning with our value proposition.
11) Based on your experience, how do you see the outsourcing industry evolving in the next five years?
It's challenging to predict the future, especially in these unpredictable and chaotic times marked by global crises, wars, economic recessions, and the rapid advancement of Artificial Intelligence (AI).
While I'm a technology enthusiast and have grown up reading sci-fi books, I'm concerned about humanity's readiness for AI's implications. We've established our AI and R&D laboratory to stay ahead in IT outsourcing and develop proprietary solutions.
In the AI Outsourcing landscape, I see two potential scenarios. The first is a transformative one where technologies like ChatGPT reach a level where they can autonomously develop entire applications. This could lead to significant changes in the global IT market, potentially reducing the need for many software engineers. Instead of a team of eight specialists for a typical product, only three might be required, including a software architect, a ChatGPT operator, and a tester or product manager to assess and improve results.
On the other hand, AI technologies might empower software engineers, acting as co-pilots to enhance their capabilities and speed up processes. In this scenario, the market might not undergo a drastic change. Predicting trends in geography and other areas is challenging due to the constantly evolving global context, with new conflicts and wars emerging regularly. Economic uncertainties make it difficult to foresee future trends.
Despite these uncertainties, one thing I'm certain about is our continuous improvement as a company. We are committed to learning, enhancing our processes, and refining our procedures. I believe that by constantly evolving and working better than we did a year ago, we can navigate through any challenges that may arise.
12) How does your approach differ regarding working and developing with AI technologies? Also, are there any ethics that need to be taken care of?
Ethical considerations have become increasingly crucial in the realm of AI. While it hasn't been publicly confirmed, there's a sense that we are technically nearing the realm of Artificial General Intelligence (AGI). However, progress towards AGI is seemingly hindered by ethical and moral questions and potential limitations that governments might impose on companies developing AGI. The immense power of AGI poses significant concerns for the current state of humanity.
In IT Outsourcing, many companies focus on developing basic and clear solutions, such as computer vision. These solutions often involve tasks like identifying elements in an image or describing the contents of a document.
The ethical dimension is not always at the forefront for most IT Outsourcing companies, particularly those not deeply entrenched in advanced technology. However, for companies deeply involved in cutting-edge tech, ethical considerations become more prominent, especially as we approach the potential development of AGI.
13) What would you tell an entrepreneur, especially if they are developing with AI?
First and foremost, as an entrepreneur in IT outsourcing, it's crucial to closely monitor AI technology due to its potential impact on the entire market and industry. Staying informed about current AI capabilities and even considering the development of AI solutions internally is essential to adapt to this rapidly evolving landscape.
Another key consideration is the prevalence of fraud in the industry, which we touched upon earlier. Many outsourcing companies act as mere middlemen without adding any real value.
These entities cannot develop software, offer consulting services, launch products, or conduct effective marketing research. In the coming years, such companies may face significant challenges as the global IT market contracts are accompanied by layoffs and an overall challenging context for the industry.
To navigate this complex environment, companies must rapidly educate themselves about their purpose and unique strengths. They must identify whether they primarily provide access to top talents from specific locations, such as Pakistan or India, acting as a recruitment company.
Alternatively, they need to articulate their approach and differentiators if they are involved in actual software development. Companies may struggle to survive in the evolving landscape without a clear value proposition.
14) There are people in the industry who pretend to develop but can’t and are only there for the money. How do you spot these people? Also, is there a benchmark to check this?
We have a comprehensive screening process in place for our customers. This intricate procedure allows us to understand our Ideal Customer Profiles (ICPs). For startups, we assess factors such as the industry they operate in, their current stage of development, whether they have secured funding, and whether they have a sufficient budget for our services.
Similarly, for small and medium enterprises (SMEs), we delve into understanding their needs and expectations. If they are funded, we also evaluate their overall business performance. This screening process helps us align our services with each customer's specific requirements and goals, whether they are startups or SMEs.
15) What movies do you recommend for budding entrepreneurs?
I'm familiar with most of those entrepreneurial movies but know them in Russian (my mother tongue), so I'm unsure about the English titles. One great film with Will Smith involves him chasing a dream and another about the autobiography of a trader from Wall Street.
I enjoy watching biography movies about entrepreneurs. For example, I find the story of Richard Branson quite inspiring. His background was one of the first entrepreneurial books I read, and it left a lasting impact. Seeing others doing great things is always motivating, and it fuels my aspiration to be one of them.
- A company's success is attributed to its passion for product development and tackling startup challenges.
- Working with outsourcing companies involves risks such as misinterpretation of team capabilities, overselling services, and team composition challenges.
- Entrepreneurship doesn’t require extensive technical knowledge. Persistence is key.
- Digis differentiates itself by offering end-to-end product development services in the market.
- Acknowledge the importance of negative feedback and actively seek continuous improvement.
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