The Tough Truth About Hiring Off-Shore

I get asked at least weekly whether a startup should use off-shore development resources to get started. The implication in their question is almost always the same: on-shore developers are probably better, but off-shore developers are demonstrably cheaper.

It’s Hiring, Stupid

The tough truth is: this all boils down to a hiring problem.

You can make sweeping generalizations all day about where the best developers live, but you are being unfair (and you know it…). There are great developers in the US, there are great developers overseas. There are terrible communicators in the US, and overseas (both bad in your native language, and bad at the art of communicating).

The biggest reason we hear so many horror stories about off-shore teams is that it’s hard to hire them.

  • It’s hard to hire someone you don’t trust.
  • It’s hard to trust someone until you really get to know them.
  • It’s hard to get to know someone you haven’t met in person.
  • It’s hard to get to know someone who speaks another language in another timezone.

If the tables were turned, and you were in Europe trying to hire someone in the US, you’d similarly be lowering your odds of finding a great partner. This has nothing to do with the quality of the candidate pool.

The Tyranny of the Off-Shore Firm

All the difficulties above are compounded by the typical engagement with an off-shore development shop. We like the consulting agency model, because on the surface it does a few things:

  1. Provides credibility that’s hard to establish with a remote solo developer
  2. Sources the best developers in their remote area, and trains them to work effectively with US companies
  3. Gives a legal and financial umbrella that saves our startup from a lot of complicated paperwork and international employment questions.
  4. Provides a trusted way to add more team members to a project as you scale (or more likely, the illusion of that.)

The best shops will be worth a little extra cost because they really do provide those benefits, and because they are doing quality vetting of candidates so you don’t have to.

The major downside, even for the good firms, is that they add a whole layer of administration between you and the developer with whom you are already having a bear of a time building a trusted relationship.

Getting What You Deserve

So the reason that onshore developers seem “better” isn’t because they necessarily are. It’s just because you have an easier time identifying the good ones via a healthy direct face-to-face relationship that’s less likely to be managed by a dev-shop. Sure, you’re looking at developers that are 1/4 – 1/2 the cost, but you are already behind the count in some serious ways.

All hope is not lost, however! You deserve the best, no matter how/where you hire. If you are going to work with an offshore development shop, be open about what makes it hard, and shamelessly demand the following:

  • A proper interview process. — Don’t let a dev shop manager assign someone to work on your project. You absolutely have a right and responsibility to interview candidates that will work for you. You’ll get push back because the dev shop has to pay for the candidate’s hours to interview with you, whether or not you ultimately engage. Make that their problem, it will incentive a manager to put only highly qualified candidates in front of you.
  • Reference checks. — Ask for reference checks from other US companies that have worked with a candidate developer. You’d expect the same for any team member, right?
  • Trial periods. — If a developer isn’t kicking ass 30 days in, make sure you have a clear path to change. Set expectations up front that your business is too important for you to be stuck with a development resource you don’t “click” with.

You’d get all of these advantages with a developer from your local city. So don’t be crazy and try to make do without them in an off-shore hiring situation where the cards are already stacked against you.

I’ve worked with some awesome off-shore resources, just as good as co-located US teams. Make sure your hiring process doesn’t encourage low quality in addition to a low price.

  • Ori Spigelman

    Worth adding that there is a special case when an expat is offshoring in his own country of origin. Without discounting the challenges of everyday management over distance and different time zones, the network and cultural reach into the off shore does offset some of the causes for the aforementioned vicious hiring cycle. i.e. in my case, as an Israeli expat, I have an Israeli team for whom I have solid references from people I trust in my Israeli network. To an extent I believe I have better insight into the personalities involved than I’d usually have for American engineers, simply because we share a significant cultural layer. Point being that (IMHO) you could mitigate offshoring by having a local proxy, whether yourself or a colleague.

    • Will Koffel

      This is a good point, Ori. I’ve seen this situation work well too. I know engineers who have worked overseas and built relationships there (as well as cultural and language context), and then used remote resources effectively for US companies.

      Unfortunately, the “dev shop as local proxy” model isn’t nearly as trustworthy as personal experience.

      What you are describing is basically a remote version of the adage “hire within your network”, which everyone has a preference for!

  • Mike Sudyk

    Great article Will! My firm builds offshore software teams and I could not agree more with the points that you mention. Many of our clients are not 100% driven by cost but rather they struggle to find AND retain the talent. This is a huge problem for firms that don’t have a very appealing culture or benefits or sexy product.

    The points that we have seen offshore not work is that you have one person driving it within the organization and others forced into it. Or if the onsite staff does not want actual relationships with the offshore team and wants to throw all the crap work their way. This is a recipe for disaster. The same would be true if you treated someone down the hall in this way but its easier to do this when the person is half way around the world.

    My biggest piece of advice for someone thinking about offshore is to always have a US person that you have a good relationship with that will be your advocate. That person will help you make should the right person is hired (NEVER work with a firm that does not give you hiring control), and will help you when issues DO arise, because they will. Doing business always creates problems.