About Me: I’ve created 3 software companies: Five9 (IPO), DoctorBase (cash sale) and JetBridge (current co), much of it using offshore software developers. I’ve made a lot of expensive mistakes you should avoid.TLDR: Adopt something like our Developer Handbook and give it to every developer before the interview. A majority of offshore developers after reading it decline to interview with us, which is nice because it saves my HR team lots of time by automatically weeding out the bottom 75% (marketplaces and outsourcing companies recruit the bottom 50%).
Most customers who go to marketplaces or outsourcers for competent software developers do not get what they are advertised, often leading to expensive failure for non-technical founders and professional risk for enterprise managers. Here’s how the schemes work (and how to solve for them) –
“Hire ex-Googlers on our marketplace!”
Why would a software engineer who makes $250k+ for FAANG companies (and can WFH) lurk on marketplaces to work on an idiot’s idea with no stability or benefits at a fraction of the wages?
This marketing gimmick works because it’s human nature to go online and believe we found a $100 bill for $20, but the international labor market, especially post-Covid, has become extremely efficient. Even average developers get multiple messages from recruiters every week – they no longer need to go to marketplaces. And they’re mostly remote work offers.
So what kind of developers go onto marketplaces looking for work?
The kind that don’t know how to reverse a string (basic stuff) or will pull a bait-and-switch on you (the developer you talk to will not be the one doing the work).
Marketplaces can be very effective for sourcing UIUX designers, graphic design, mechanical turk tasks and more, but increasingly competent software developers are not on them.
“Two weeks free if you’re not satisfied!” is often a marketing gimmick by marketplaces. Two weeks is simply not enough (especially for non-technical founders) to determine if a developer is good.
If you find a developer you like on a marketplace, ask them if they’re willing to take a technical pair programming session with an onshore CTO you trust.
Try it – the response is often amusing.
And if you get an amusing response, walk away with your money still in your bank account.
“We take you from MVP to IPO!”
Almost every software outsourcer I know (except the huge ones) are trying to build their own software apps. Outsourcing can be a grueling business and many SMB outsourcers dream of becoming a SaaS company. If they knew how to build successful MVPs they wouldn’t still be in outsourcing.
Because outsourcing is a labor arbitrage game, outsourcing companies try to pay a 3:1 ratio from fees to wages. Meaning if an outsourcing company charges $75/hour, they’re paying the developers about $25/hour.
So why would a competent developer work for an outsourcer that takes 66% of the revenue created when they’re doing all of the work post-sale?
Enterprise outsourcing companies are places for semi-competent software developers to hide on over-staffed teams (and not give a shit), the exact kind you don’t want. Besides, the large outsourcing companies only take “digital transformation” projects that have $1M+ budgets (just look at the earnings reports of the publicly traded outsourcing companies).
SMB outsourcing companies are a great place for project managers and junior developers to cut their teeth (on your dollar).
This gimmick works because enterprises often have legacy projects that smart, ambitious software developers don’t want to work on (like 20 year old banking applications built on J2EE), and SMB outsourcing companies hire a “Product Manager” that can speak decent english (their developers will mostly not).
Most MVPs do not need a Product/Project Manager, they need a competent Tech Lead (a senior fullstack engineer who has led teams before). Ask any experienced Tech Lead and they will confirm.
If an SMB outsourcing company quotes you for both the developers’ time as well as a Project/Product Manager, walk away. It’s a technique used to hide the fact that they don’t have competent developers.
BTW, most competent developers speak English (since most of the educational content, workshops, conferences, etc are in English). Which also makes sense because good developers are supposed to be good at learning languages.
So what’s the solution(s)?
In my experience, and according to all of our data, anywhere from 3% – 9% of offshore software developers are commercially competent. Since software development is a non-licensed profession that often makes 10x more than most jobs in emerging economies, this makes sense.
Outsource the technical interviews to a highly competent 3rd party.
If you’re a technical manager working in an enterprise, you likely don’t have the time (or risk profile) to conduct 11 – 30 technical interviews for every 1 offer to an offshore developer. And if your company needs to make 2 offers for every 1 accepted offer, obviously double that time-number. There are cost savings to be had going offshore, but the risk profile is much greater.
If you’re a non-technical founder, and if you have the money, first hire a technical co-founder or technical employee onshore (or an elite dev offshore). I get it, believe me, it’s incredibly difficult and expensive, it’s easier to just hire someone on a marketplace and test your MVP idea.
The problem is this – it is highly unlikely your idea is the one with Product Market Fit. According to David Rusenko (sold his startup Weebly for $365M to Square) it will likely take 20-30 iterations of your idea before achieving a product that has any chance of making you money. This requires an in-house technical founder/employee who can then manage an offshore team. Relying solely on an offshore team just won’t work.
In 23 years of being in startups, I’ve never seen a non-technical founder without a technical founder ‘get rich’ by partnering with an outsourcing company. Not once.
And if you can’t find a technical founder, honestly ask yourself – how will you find your first 10 enterprise customers or your first 10,000 consumer users? How will you sell investors or sell your company?
And if you’re an enterprise hiring manager, outsource the professional risk by having a highly competent 3rd party conduct the first round of technical interviews for your offshore dev team.
Feel free to disagree (I’m always open to learning) at firstname.lastname@example.org