Our company just let go of all our remote LATAM hires. We paid high end in their LCOL areas.
They were somewhere between ok and not good. Felt like we got about what we paid for - their cost was about 50% of a US dev. They were as productive as a low end US dev, so in some cases ok value but since hiring low performers tends to hurt a team overall they weren’t worth it.
We’re a mid range company (decent cash comp, not much else since startup). I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it?
As a Brazilian dev living in Europe, one thing people just don't get about offshoring is that good devs have options, even in poorer countries. Companies offshoring usually offshore crappy projects, crappy projects attract bad talent.
Also really top devs (at least in Brazil) can make more than 50k USD per year (fluctuates widely based on exchange rates) at Brazilian companies, it is cheaper than US but the tail-end of talent can still be expensive.
If you really want to attract good devs in cheaper areas the best way is to just open a branch of your office there, pay top-salary and don't just use it a dump ground for the projects no one at home wants to take. So treat them the same as at home. I had a roommate who worked in one of those companies that take offshoring projects, lets just say it is not the best talent pool and the good devs there leave fast.
Feels a bit chicken-and-egg - if I live in, say, Brazil, and I know that there isn't a great market for good devs here, will I put in the effort to become a good dev? If I really have a passion for dev work, will I try to move or work freelance?
Not that you're implying it, but I think it's fair to point out that people in ex. Brazil aren't worse at dev work, just that there is probably lower incentive to be good.
My point was, there ARE opportunities in Brazil that don't involve working in a slave outsourcing factory. Even individual remote dev contracts are not always the top tier of talent. The real good talent working remotely from Brazil is probably working for startups in silicon valley not your average mid US company.
Just as you compete for top talent locally you also compete for top talent globally when hiring remote.
I live in Sweden now and have dealt with a lot of Swedish companies over the years. It is hard to explain this to the locals because they see Sweden as a big tech hub where all the talent is at, but the scale of things in Brazil is _crazy_. I worked in a telecom project where this one single company had more active (paying) SIM cards than the population of Sweden several times over.
Just because it is a poorer country doesn't mean it is easier engineering, if anything the engineering is harder.
I think GP's point was that the best devs don't stay in Brazil, even if some can pay decently for Brazil. Whether those people not staying in Brazil are signifigant is only guesswork.
This is the usual ebb and flow of offshoring in the tech industry that's been going on since the 90s.
There has never been a scalable arbitrage for tech talent by going over to another geo, and there won't be one in the foreseeable future. What US HCoL talent gets paid is unfortunately the fair and natural market rate for that caliber of talent, at least if you need to hire more than like 10 people.
It's quite simple market forces, from where I stand.
Companies in high income areas have two options for outsourcing:
1. Just go for the cheapest salary, quantity over quality style.
2. Find a replacement that has a comparable level of skill, experience and knowledge to the local talent they have or would need.
Now for (1), there is almost no floor. You can get devs for five bucks an hour. For some people, it's the only way they can make any money, so they take it.
For (2), people will gravitate towards earning 10-30 % less than a local equivalent developer. Low prices drive up demand, and since there isn't that much supply of strong candidates, that drives up their fees. At the same time, the employer pays a bit of a tax in terms of time zone, proximity and cultural differences, which introduces overhead, so it can't quite reach the local salaries. But it can get pretty close.
A lot of the outsourcing horror stories are (1). A lot of the actual success with outsourcing is, in my experience, (2).
I believe (1) is primarily responsible for these ebbs and flows you mention. The feedback loop for software development (in terms of whether it pays off economically) are _long_. That seems to force history to repeat all the time, because decision makers rarely see the consequences of their actions. The incoming generation of leadership did though. And then the generation after that didn't.
I think many companies intend to do (2) but find themselves in (1) because they try to force their assumptions about the mythical cost savings, which aren't actually there.
I've seen companies blatantly pursue the lowest possible hourly rate, kinda disregarding anything else (time zone difference, quality etc). I believe it comes from a procurement mindset (works for other areas, and probably taught in business school):
1. One $unit of $resource from supplier A is cheaper than from supplier B.
2. The price difference is sufficient to allocate a certain amount to dealing with quality issues (from lower efficiency to lawsuits).
3. If it turns out the quality issues are higher than expected, switch to supplier B.
The thing is, this doesn't work with software development. (2) has that pesky long feedback cycle. (3) typically is about equivalent to starting over from scratch.
I can raise two points to disprove this - I'm East Euro, but have worked with people from all over the globe in all kinds of companies.
First, my experience with devs at mid level companies is that the average dev ranges from competent (as in, can work within an existing framework to accomplish tasks), to incompetent (cannot do the same consistently), with there being a top 10-20% who are truly good (able to deliver complex high quality software from a blank sheet, capable of working on complex existing systems meaningfully etc.). This applies to all companies (including ones in the US).
Second, at high level companies, there's lots of European talent (usually in West Europe) - these people are as good as their US peers (by definition, and usually has been my experience), but make less than what you would take home in a mid level US company.
Mid level companies have wide ranging talent since they almost by definition pay below market for talent, and don't even enjoy the brand value draw of the top companies. These companies benefit from the fact that there is some lag in labor discovering their true market value.
>Second, at high level companies, there's lots of European talent
Lots is subjective. The problem is the scale. You can easily hire 100 great devs in London over some period of time. 10000? Maybe not. It would take you too long to pick them up.
You don't get paid for talent, or education, or responsibility, or any other reason that could be plausibly presented as fair. You get paid for friction: how easy it would be to replace you, and how much harm it would cause if a good enough replacement cannot be found. On the average, as individual circumstances vary.
There is friction in turning fresh graduates into experienced developers. There is friction in hiring people in a region where you are not operating already. There is friction in using additional middlemen. There is friction in learning to do business in a new situation or in a new culture. But the friction can be overcome – in the long term and when the scale is large enough.
In no small part because if you look at that talent you’ll notice that… they’re mostly not natives to those areas. i.e. the highly paid in San Francisco are mostly immigrants from LCOL countries. Generous immigration policies ensure it. If immigration policies do change, you might start to find tech top talent in other geos but for the most part the people they really wanted to outsource to in the first place have already moved next door.
> I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it?
I’ve been hearing about outsourcing destroying jobs since the 90s and that’s how it’s always gone: the suits salivated at the prospect of cutting wages by, say, 90% and had total write-offs because of it, because they missed that even in a poor country people have options and anyone smart enough to be a good developer is also smart enough to recognize that their skills are worth more. Outsourcing has some big costs related to communications so while you could find decent people at 50-70% of local labor rates, coordination overhead makes that a net loss even before you hit things like the security risks.
Part of the problem there is that the business people really want to think that they understand their business so well that they can give perfect instructions, and it takes a certain humility to recognize that more time goes into knowledge transfer and discovering the true needs than might be obvious.
Interesting… 50% of US dev cost is like what if you don’t mind saying? 100k?
I found the biggest issue with these engagements is the trust with remote developers.
Until you’re over the many hundreds of thousands of dollars per year range, it works pretty well as a rule of thumb. If your company wants the cost of working in an office, they’re probably not paying high salaries to work in a rundown shack and the people making those high incomes also want better quality benefits (especially in the United States where healthcare is so expensive and cheaper plans mean more time having to argue with someone whose bonus is based on denying care).
Is that 90k the "lower average"? In Ukraine? I find that very hard to believe. Even here in Czechia that would put you firmly in the top 5 %. I don't think I personally know more than 2 people who make anything like that, and one of them isn't even in IT.
Top 5% overall or top 5% of dev jobs? Former sure, latter might be not? I live in Prague, and there are definitely multiple companies that pay more than 90k to middle positions. especially if it's before taxes.
Salary is not the same as paying a contractor. So, while salaries for senior engineers is 100k, as a contractor they might be charging 150K per year ($75/hr).
They were somewhere between ok and not good. Felt like we got about what we paid for - their cost was about 50% of a US dev. They were as productive as a low end US dev, so in some cases ok value but since hiring low performers tends to hurt a team overall they weren’t worth it.
We’re a mid range company (decent cash comp, not much else since startup). I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it?