The Risk in Sending Your Startup’s Technology Offshore

The Risk in Sending Your Startup’s Technology Offshore
karllhughes.com

If you optimize for cheapness, you get poor work, abroad just as here. It's not that the talent level is the problem. There's plenty of underemployed talent overseas. It's engagement. There are a zillion sleazy outsourcing shops that charge U.S. clients $30/hour and pay $6/hour on the other end. If you go cheap, you're getting people paid the same damn wage they'd get if they walked across the street to a different low-paying El Sleazo outsourcing shop, so they're not going to be engaged. This is especially true if it's obvious that you plan on replacing them with local developers once you raise an A round.

If you paid $30/hour (to worker; the cost to US client would be higher) in India or the Philippines you could attract top talent, assuming you know how to recognize it. (As in the U.S., paying highly doesn't guarantee you get good people. Look at the crap that Corporate America gets for CEOs despite paying millions per year. You actually need to be able to assess the talent, and few can.)

If you're a non-tech, not a chance. Non-techs can't tell the difference between people like me and the 99 who convincingly (to a non-tech) say they're like me within the same country, so how are they going to do it across cultural and language barriers?

Outsourcing can be profitable and, done well, it's a good thing for the world. However, nontechnical founders looking to play this first-stage-abroad game are going to lose. To get good foreign talent, a first prerequisite is to treat it with the same respect as good local talent. That means investing in their skills and careers, flying them to conferences, and treating them as (and, in fact, making them) a permanent part of the team. If you're just using them for temporary cheap labor and planning to hire permanent engineers locally once you raise a Series A, they'll figure it out (they're not stupid) and it will show in the work produced.

It's not, but most of the non-techs who are interested in outsourcing are interested in optimizing for cheapness, so the result is what you'd expect.

I'd say that the real arbitrage is to work with extremely talented people (who'd go for $250/h here) at $30-40/hour (plus investment in their career, assistance with immigration if they want it, flights to conferences, and profit sharing... it's still a huge arbitrage after throwing that in) but the sorts of sleazy non-techs who "just need a programmer" and have heard there's cheap labor in the third world are not going to play that way (and they can't assess that upper level of talent anyway). They tend to work with El Sleazo outsourcing shops that charge $20-30/h and pay $4-6/h to the workers. Some of those workers, even at low wages, are quite intelligent and talented... but they're not going to care about long-term issues (e.g. tech debt) if they're just being used for temporary, low-end commodity work, with no managerial interest in their advancement.

In fact, if you're looking for clueless people ("I just need a programmer to do all the work for almost zero upside") your best bet is in Silicon Valley. There are plenty of 22-year-olds who buy into the VC mythology and will work 90 hours per week despite a lack of upper-management interest in their own careers. In the developing world, that cluelessness is rare because frank poverty, corruption and outright stealing (by well-positioned officials and common thieves alike) are more common and having that trait would mean that you starve. Working 90-hour weeks because "maybe after two years, he'll introduce me to his VC buddies" is a clueless young white boy's game.

Personally I'd much rather have 1 ace developer than 10 of questionable value. at the corp I work at they have the luxury of going both ways, just hiring a pool of expensive devs & seeing which ones turn out to be the aces. I understand thats not feasible for startups. & lack of a technical co-founder makes singling out an ace very difficult. I'd try to get a programmer friend to pick out a likely monster programmer & start from there. Having non-technical people hire/negotiate for tech talent is just not feasible IMO. So much money trickles down the drain like that. Corps can survive it, startups can't.