Q&A: Intetics Managing Partner Alex Golod on Protecting Intellectual Property

Alex Golod serves as vice president of business development and one of three managing partners for Wilmette, Ill.-based Intetics. In part two of a three-part Q&A, international expert Michael Muth discusses with Golod how his firm protects intellectual property.

Michael Muth: How many developers do you have on staff in Eastern Europe and where?
Alex Golod: Though I don’t have exact count, we have about 100 employees in Belarus and about 50 in Ukraine. Not all are technical staff. We also have accounting, sales, marketing, etc.

MM: How do you qualify the developers who work for you in Eastern Europe?
AG: While it’s not quite like Google or Microsoft in the number of steps you have to go through to qualify, we do have technical and English tests as well as a developed interview process. Most have experience that comes from other organizations. They’re not just fresh graduates.

For graduates, we’re not looking for experience but a promise to deliver. We do have strong emphasis on training and development. We have HR people who have a well-designed mechanism of choosing the best. It’s very fluid over there. Some don’t fit in our culture. Some would be better off working for the government. We are very dynamic organization.

MM commentary: One difference from many American firms is that Intetics is often hiring locals by locals whereas many other Americans are foreigners hiring locals, which puts the outsiders at great disadvantage.

MM: How can your developers be experts in so many different areas?
AG: There is a cross-training and coaching process and they are experts in the first place. We also build expertise in certain areas on teams that specialize in Microsoft, Java, etc. Having said that, it can be a problem. For mainstream skills, it’s easier to find talent. For example, we don’t have anyone who specializes in COBOL.

As we’re a fairly young company with younger employees, most of the people who work for us have no experience in COBOL. Oracle is quite expensive to implement and there are few specialists who implement Oracle in Eastern Europe. The same it true for SAP skills. That’s why we have relatively few Oracle and SAP experts.

MM commentary: While this may be more of a marketing problem than an operations issue, I do question if Intetics can be a Jack of all trades and master of all.

MM: How do you certify easy communications with non-native English-speakers?
AG: They’re all non-native English speakers. We don’t have a single one for whom English is native. It’s a second language for most and sometimes even third after German. It’s not like India. I studied English from the first grade. I’ve had 10 years in school plus six years in college.

There are many who have studied and majored in English and German in our company. Intetics also provides a comprehensive English-language program. Most of our employees are young and learning English fits them well. English is the language for international business.

When I go to our development centers, I want to sit through interviews and ask questions to test their English-language skills. English is important if you interface with the client. There are some who are good and still don’t want to converse with the customers. While they’re good with e-mail and instant messaging all day long, they can get shy, uneasy or scared during conference calls.

MM commentary: Communications is a two-way process. Some Americans get frustrated with people who don’t speak just like they do. Intetics can’t do anything about that.

MM: How can you manage foreign developers and intellectual property better than your competitors?
AG: Intellectual property for us can be a perceived problem. In 12 years, though, we’ve never experienced a problem. The code belongs to our clients. It’s all in our contracts. We have NDAs signed from very beginning. I haven’t heard about it with companies based in Minsk. I’ve heard about it from India, China and the Philippines. We protect and safeguard the IP of our clients.

Without that, we lose. The code our team is developing has no value without the context of company business. What are our developers going to do with it? There are some usable components in software and libraries, but out of context of the project, it’s useless. I would be more concerned about disgruntled employees who destroy the work of the whole team.

Our clients haven’t expressed a concern with IP. We have several checks and balances. Our environment is physically secure. Some clients insist on using their own private networks for their projects. No other employees of Intetics can get into their private network (even remotely).

MM commentary: While the U.S. government still warns against trusting the legal systems in Belarus and the Ukraine to protect intellectual property, it’s much less of an issue with B2B than B2C software.

MM: How do you deal with issues such as bribery, extortion and corruption?
AG: We don’t really have to deal with those issues. In developing economies, commodities industries are facing those issues. IT is more of a “new wave” industry and government bureaucrats haven’t yet mastered IT.

MM commentary: It these are problems in business in general, they will filter into IT at some point.

MM: How do you protect your intellectual property in Eastern Europe?
AG: Our protective measures include signing NDAs and contracts, monitoring logins as well as network and Internet monitoring. Additionally, legal mechanisms protecting IP in Ukraine and Belarus are definitely more enforceable than they were 10 years ago.

MM commentary: Hopefully IP protection will be even further along 10 years from now.

MM: How does your team in Eastern Europe like working the 5 p.m. to midnight shift?
AG: That’s something that doesn’t happen very often except for with specific client communication needs. They do stay later. We do have a shift in schedule for sales and client management staff. We have someone available to answer questions until midnight. That’s an advantage. There are several overlapping hours.

It’s an eight-hour time difference with Eastern Europe. We have all kinds of communications in the morning. Around 11 a.m. to noon Chicago time, our European staff starts leaving. The local client team takes over. In the morning, our staff comes in and takes care of the requests from the previous night. It’s not as bad as in some other countries with a 12-hour time difference. Also, we don’t have just U.S.-based clients.

They’re in Germany and the United Kingdom, too, where the time difference is one or two hours. Sometimes it’s a problem when the client wants something urgent at closing time in Chicago. We try to avoid it by better planning and management. Time difference can be an advantage rather than a problem when we have around-the-clock development. Both teams collaborate closely on the most crucial projects.

MM commentary: While our assumption in the U.S. is that outsourcers adjust their workday to ours in most cases, apparently that’s not the case.

MM: What’s your relationship with Arachno in Germany?
AG: They are representative partners. They don’t earn salaries from us. They earn commissions more like a representative or reseller. We don’t have an office there.
Belarus and Ukraine are near-shore destinations for Germany and the United Kingdom. It’s much easier to meet. There is much more back and forth. They prefer to visit our development centers. We exhibit at CeBIT and other European events. Since our head office is in the U.S., we are trying to meet most of our U.S. clients in person if it’s feasible.

MM commentary: Their contact person in Deutschland does have an @intetics.com e-mail address.

MM: Why do you develop software in Minsk, Belarus and Kharkiv, Ukraine?
AG: That goes back to the history of Intetics. It was founded in 1995 in Minsk, Belarus. The founder and president moved headquarters to Prague. That was before I stared with Intetics. In 2003, we established the company here.

We decided to move the headquarters to Chicago in late 2002 when I joined as a partner. We established a second development center in Ukraine due to a lack of political stability and a shortage of qualified technical resources in Belarus. All three Intetics partners are originally from Minsk. We chose Kharkiv, Ukraine because of similar advantages and characteristics to Minsk. It’s a city of 2 million.

It has a strong educational base with several universities. It has a well-developed infrastructure and well-qualified technical specialists we can hire. We did market research and short listed a few cities in Russia and the Ukraine based on education, salary, infrastructure and laws. We then sought out a local partner as someone who could lead our new office.

We found a few people we interviewed. It took a long time (about six to eight months). We wanted a wholly owned subsidiary. We did a lot of due diligence. Now after a couple years, we can see the fruits of our labor. We think we picked the right city and hope to grow that office to 100 people by the end of next year.


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