I still can’t believe how many executives of great American businesses struggle with this choice. Let me help settle it once and for all.
Personally, I disgrace modern outsourcing companies that call themselves “outsourcing companies”. They sell, look and work using the same old pattern they all used back in 1995 when I first heard the term “outsourcing” that was born in 1981. Nothing is new about those companies today.
Smarter players have gone through at least 2 phases of evolution. From outsourcing to delegation and then straight to partnering. Level of trust between clients and IT vendors at that stage changes from total control to “suggest your vision and execute it”. That’s what we need!
In 2009 we were still an outsourcing company slowly becoming a company our clients would delegate their product needs to. That year we had 2 contracts that showed me exactly who needed external help and why.
I received an email from Ken (not his real name) who happened to be the CEO of his own Santa Cruz based startup.
He was looking for cheap developers to create (you’ve guessed correctly) a social networking app and since our main development power back then was located in Eastern Europe he felt like we were the right fit.
After weeks of debates he agreed to pay impossible $15/hr (hey that’s 2009!) per developer to make his dream app happen. Of course we signed him up. Like many other prospects we came across at that time Ken came to us “burnt” after trying his luck in India first.
Overseas partner failed, but so did we in 2009 when Ken hired us as California based app development experts.
We worked hard for a few months and delivered the app 2 weeks past due date.
It was top notch; could handle heavy loads and was scalable. Back then I thought that the reason for Ken’s app inglorious death was his lack of strategy and money to move things around.
Now I see that it was our mistake in the first place. We should have helped him create his strategy, make him budget marketing effort and launch limited version of the application rather than blowing all the money on development.
Startups look for remote help, because they are short on cash. Instead, they should always strive to build their own internal team.
That same year we somehow managed to land a deal with Xerox. Everything was different about that deal. We had to hire 22 more .NET experts to satisfy our client. They requested formal proposal with cost involved only once. They trusted us to make a lot of technical decisions that helped Techery evolve into a company that clients delegate to, not outsource to.
And that’s how 5 years later we, together with a couple of other contributors, helped Xerox launch their world famous Xerox Cloud Print.
The reason for such a huge company to knock at our door was obvious. Cloud was hot and Xerox needed to reserve their place “on heaven” ASAP. It was a startup within enterprise and they had to move fast. This meant they couldn’t scale their teams fast enough. So they needed to delegate big parts of development and consulting to companies like ours.
If you are a well-established business — you look for external help, because you can’t hire required talent in timely fashion, but you want no surprises related to quality, so you want local providers.
Some people might say that it becomes almost useless to let someone abroad do the job today, because salary levels are almost identical “here” and “there”.
That is far from true. Bigger companies will always struggle with shortage of talent rather than higher rates.
And of course if you’re looking for 1 or 2 developers to quickly create a “Facebook killer” (amazingly, hundreds of startups are still trying to accomplish this task every year), then you can find a $30/hr US based dev as well as a $30/hr India based dev.
But as said above: if you’re a successful company you’ll have a much bigger problem.
Here’s the basic breakdown of salaries in India, Europe and USA:
European folks are using heated market to make employers reach deeper into their pockets:
And Indians are true to their everlasting approach of selling “as many as you need” for “lower than home rate”. Average app developer salary in India is:
Just by looking at this numbers it looks like India is the undisputed winner.
$5,2K (India) vs $100K (EU) + vs $80K (US).
Well, you won’t be hiring indian developers directly. So in reality some Indian company will sell you this same $5K/year guy for up to $60K/year.
Meaning the correct numbers are:
$60K (India) vs $100K (EU) + vs $80K (US).
The winner is still India.
But is it really?
For self-funded startups — yes. Countries like India, China, Pakistan will always be appealing just like Super 8 will always be the choice for a traveler on budget.
Startups should get ready to have to learn to speak their developers language, sleep during the day, do some coding and lose a lot of money and time.
But what should funded startups and healthy businesses do?
Last year we interviewed 102 developers from San Francisco Bay area and only 3 were decent. We interviewed 55 candidates in Europe and 2 were good. We never interviewed anyone based in India.
But the fact is — you can hire a shitty company with shitty engineers locally. It will not deliver. Just like some shitty company from a “third-world” country will not deliver either.
You have to stop hunting down developers. You have to be looking for companies that could become your long-term partners with niche experience, local team leaders and brilliant processes.
You need providers that are run better than your company.
Stop looking for developers. You need to find prominent managers and employ state-of-the-art agile processes. This way your potential candidates will stay home and you won’t lose them to more advanced places like Silicon Valley or Amsterdam.
There are 6 main things a YOUR tech company will have:
1. Your industry niche expertise
2. Local on-site management
3. Local or remote in-house development teams
4. Product-driven thinking producing tons of proactive suggestions
5. Ability to scale teams fast
6. Smooth custom tailored process
I understand it’s hard to determine if the company you’re looking at possesses all 6. So don’t hesitate to ask for advise. Email me your questions ([email protected]).
My mission is to help you learn how to make your company more productive, so that together we could build a better economy powered by amazing companies like ours.
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