If that were to happen the problem would not be the "local" developer scene. It would have been most probably your hiring practice or your bad references.
My point here is that there is no free meal when you try to hire a remote person via Upwork. The only difference is that you leverage the global talent pool and most probably you can find someone in weeks as opposed to months (or never).
Yes, I can definitely see that happening. And the main upside of an onsite developer in that situation is that a 'local'/onsite developer is much easier to identify when they are just sitting at their desk and much easier to encourage them to do otherwise. As much as people hate the "manager looking over my shoulder" feeling, it is very important in most workforces because the vast majority of remote workers (in my experience) will absolutely take advantage of the "remoteness" and use it to slack off. Sure, if you're a small or top tier company you might be able to solve this by making your hiring practices more strict, but the reality for most managers is that you must hire some of these less-than-ideal candidates and mentor/watch them, and being remote makes that harder.
I'm generally for the remote work model and this type of issue can mostly be solved by changing the way you interact with your team and do checkups, but regardless I find it strange that someone like yourself who is presumably very experienced in the remote work space would imply that there is no difference between a local slacker and a remote slacker.
When we hire engineers, we post in Upwork and several other forums and we go through the identical process
vetting candidates, via multiple interviews, screenings, reference checking etc etc.
When we post in other places we have to explain that this is for a "remote" job - and many job posting sites make this very awkward - so in that sense Upwork posting is easier - since all the candidates understand/are remote ready .
However, I don't use the Upwork reference history much (sorry Hayden :-) ) - because there are too few companies that hire their long term staff remote - but thats not an Upwork problem - its "the world is broken" problem.
So this means that reference checking is hard.
Shortcuts that we use, is that we trust the hiring practices of certain global companies.
Yandex for example in Russia has very strong hiring practices - this means that an engineer from Yandex is a strong qualifier . Similarly for certain companies from other countries.
I plan to put some of these practices I have learned in a follow up post - because I see how people like you end up getting burned.
The trouble is that people will typically do their reference checking on UpWork, which incentivizes people to leave positive reviews on it, just like Uber and AirBnb do. It does tend to require real names and you can often find information about people elsewhere, but a lot of people don't. So if you try to do a more thorough check, the candidate may not be expecting it.
I was attracted to it because skilled manual labor was practically abandoned by techies.
15 years after I started oDesk there are plenty of startups that are tackling the problem of building global/remote teams around engineers. Nobody is helping the crew that comes to my home to fix my fence or driveway or floor.
I saw a space that is as big as 10% of the workforce of most countries, the skilled, often licensed technicians that work in the home improvement, construction industry - that huge slice of the workforce still remaining abandoned by the techies - by the disruptors. By people that tout wanting to "shape the future of humanity".
You may find it surprising that the answer here is both around remote work and pretty advanced technology that enables a remote architect/civil engineer/drafter to draft/design/spec and a "local" customer to visualize the end result ahead of time and a local crew to follow the instructions/spec and build.
But to tell you the truth when I told to the Upwork team in my farewell get together what I was intending to do (I described it "home services" then ) I saw lots of raised eyebrows.
Even more when I went back home to my family in Greece, and had to explain how "building fences" for people is my best idea for how to change the world... they just thought I was making a joke :-)
So I understand completely @treelovinhippie's reaction.
eg tackle poverty, hunger, homelessness, climate change, freeing everyone from 9-5 jobs to pursue their own passions, reducing living costs to give everyone more free time to pursue their passions, creating new models for collective governance, helping communities to bootstrap collective intelligence, distributing the web and institutions, building models for open P2P accounting and supply chains, brain computer interfaces etc etc etc etc etc.
Attempting to monopolize the home improvement industry by becoming a middleman that routes tasks and takes a cut, with the goal of selling the company off is truly lacking imagination.
At the very least you could build Ergeon as a distributed and open network co-operative. Cap your team to a max of 20 people, pay everyone including yourself the same salary, either distribute zero shares to anyone (inc founders or investors) or equal non-transferable shares to all contractors + team (with dividend payouts), setup the company such that it can never be sold (whatever legal setup makes sense), have public transparent financials, charge a 1% transaction fee but cap your annual budget and pay back any excess to the network of contractors. That would be profound.
I now get the hippie substring of your username .
People live in homes,one can argue home improvement is improvement of the quality of life for people who live in homes which is very relevant to the future of humanity.
This may have been the case a few decades/centuries ago depending on how lucky you are in terms of where you are born.
Today the majority of the founders I know of are not driven out of "ROI" - but instead they are driven out of some personal passion/interest to change/fix some aspect of the world. You can read the various manifesto posts from Paul Graham on the topic from "what we look in founders" http://www.paulgraham.com/founders.html to "why founders are kind" (cant find the link...)
From my side, my passion is .. I want to dismantle the local-work system that makes people's life/career being determined to a large extent from where they are born.
I hate that.
That there are potential profits in unlocking gains in efficiency makes it even more rewarding.