In a year when technology companies such as Lyft have gone public without even achieving profitability, Zoom Video Communications, Inc. (Zoom) has flipped the script on initial public offerings (IPOs) in 2019. The business has not only has maintained a healthy balance sheet as a tech startup “unicorn,” but it also utilizes a unique approach to enterprise software development that likely has contributed to its rapid growth.
Zoom, a cloud-based videoconferencing provider headquartered in San Jose, currently has more than 500 engineers based in China to support the company’s development needs. Zoom’s globalization strategy of having offshore development paired with stateside management may be a rarity among U.S.-based businesses today, but Zoom is thriving at a time when some of its technology peers who have gone public have dipped in value.
Just how profound has Zoom’s success been in recent years? The company’s revenues have exploded from just over $60.8 million in fiscal year 2017 to more than $330.5 million in FY19. What’s even more impressive is Zoom’s gross profit, which has increased from $48.3 million to $269.5 million during this three-year period.
Zoom’s hybrid approach to global software development may be the key to enabling other tech companies to fuel the growth they crave without sacrificing their balance sheets.
The Value of a Hybrid Software Development Model
If you’re starting a new company or are looking to grow your business quickly, you’ve likely found challenges regarding software development. The costs to develop in-house talent or attract highly skilled candidates who are in short supply are significant workforce-related expenditures that make scalable growth extremely expensive.
Your business may have also considered a pure offshore model to develop software, but this strategy is also difficult to manage because of potential language barriers and other challenges unique to specific countries. In Zoom’s case, the company hasn’t tapped into China, a country rife with potential privacy concerns, for its enterprise services just yet.
What Zoom has done is provide a valuable playbook to modern software development that your company can emulate to achieve a more financially stable operating model. And Zoom isn’t the only one; a multitude of companies are heading in this direction. As Stripe states, “Our users are everywhere. We have to be, too.” Tapping into the talented remote developers and engineers living outside of your company’s metro area allows for greater access to talent and more sustainable development processes. With a hybrid strategy, your business can have the best of both worlds by utilizing low-cost offshore software development with onshore management. It’s a win-win.
All businesses should be taking stock of their software development and digital transformation needs and working to install a hybrid offshore and onshore production base. Your company’s success with hybrid software development will depend greatly on a strong project management model tailor-made for your unique requirements.
Looking to accelerate your software development?