Location is no longer a limiting factor in the world of development. If you want to hire a tech team halfway around the world to build your software platform, you can.
The question is, should you?
The answer is different for every company, and finding it starts with understanding the options you have available, as well as the pros and cons of each. After all, it’s not as simple as offshore or onshore anymore.
Here’s our rundown of the various ways companies can leverage technological resources so you can make the best decision for your business.
Option #1: Build your own in-house team
You need to build out a platform, a system, an application, and you start to wonder: Do I need to hire an in-house CTO or tech team to bring our vision to life? Here’s what you need to know.
Pros: There’s a certain appeal to hiring a full-time technology employee. You get access to a tech resource for 40 hours a week, 50 or so weeks a year, and that person is fully ingrained in your business. He or she has a vested interest in the success or failure of the enterprise. A side bonus: Investors love a full-time CTO and are quicker to invest when they know the tech talent resides in house.
Cons: The biggest downside to hiring in-house tech talent is the expense. First, there’s the cost that comes with acquiring that talent — the time and the energy that goes into the search process, plus the hard costs of salaries and benefits. If you enlist a recruiter, that will cost you 15 to 20% of the first year’s salary — typically a minimum of $20,000. You may also go through the process only to find that your ideal candidate is someone you can’t afford.
If you make a bad choice, there’s the cost that comes with letting someone go and starting the process all over again. And if you hire too early in the process of defining your business model, you could end up with the wrong team in place when it comes time to pivot.
Even if you hire the right resource, the turnover risk is high. The shelf-life of strong tech talent is often measured in months, not years, and that could force you to revisit the hiring process sooner rather than later.
Plus, most companies looking to build out a platform or system need doers, not managers. And hands-on CTOs are unicorns who are tough to attract and retain.
Option #2: Build an offshore team
You’ve heard about the cost benefits of going offshore for tech talent, and you start to wonder if that’s the best option to build out your technology assets. Let’s break it down.
Pros: The biggest benefit of going offshore is cost. You can find resources in various parts of the world who will offer to build what you need for a fraction of the cost you’ll find in the U.S. And in certain cases, it’s a viable option. Offshore resources perform best when expectations are clearly laid out and written down, or when they have a standard template or design to emulate.
Cons: When you’re looking to build one of your business’s most critical assets, however, you need a team that does more than take orders. You need a resource that can understand your underlying business goals and challenges and can think through issues as they arise to find the right solutions. That’s where offshore teams often fall short.
To make it work, you need an understanding of how to build and manage an offshore team — a wholly different process than managing contractors close to home.
Language and cultural barriers play a role in that and can lead to costly misunderstandings. Time differences pose another challenge: If your team is off when you’re on, you could face agonizingly long turnaround times to fix significant issues. And a lack of face time can be catastrophic in complex and nuanced development projects. Think about how different it is to have a conversation with someone over coffee versus one via email. So much gets lost in translation, no matter what language you’re speaking.
Option #3: Hire an onshore team
This option involves hiring an onshore consulting firm or using all U.S.-based contractors to build your software, website or application. In theory, you get the benefit of a U.S.-based team without the HR-related headaches that come with hiring full-time employees. Sounds like an ideal solution, right?
Not exactly. Let us explain.
Pros: You get the benefit of a U.S.-based team, which eliminates the language and distance barriers inherent in the offshore model. You also get a team who understand consumer behaviors in your market. That’s critical in UX design and a challenge for a team living and working in a different culture. But there are also drawbacks.
Cons: Onshore resources can actually cost more than full-time employees (depending on the team you choose) and deliver far less (if skills, time or commitment are lacking).
For one, it’s difficult to find the right resources in the U.S. The software development firms here are expensive, and because the demand for tech talent is high right now, they’re are prone to high turnover. The team you have at the start of the project more than likely won’t be the one you finish with. If you choose to piecemeal your approach and build a team of independent, U.S.-based contractors, you risk hiring developers who charge high rates with limited skills. Just because someone went to a coding school doesn’t make them good at their job. They’re also unlikely to take the time to understand the business challenges at play, which means you get what you pay for and nothing more.
Option #4: Using a blended team
The blended model was created to address the challenges inherent in all the above options — a marriage of sorts between offshore and onshore. Here’s what you need to know.
Pros: With a blended model, there is a team based in the U.S., largely focused on client relations and strategy, and there is another team based overseas, focused on technology development. The U.S.-based team eliminates language barriers, cultural barriers and time differences. It creates the opportunity for in-person meetings, and it opens the door for in-depth conversations around business goals and strategies. The goal of that U.S. team is largely centered on client relations and business development. That means it’s in their best interest to provide the highest level of service possible.
The overseas development team gives you access to talent that may not be available here (other countries offer much more in the way of technology education than the U.S.) with a higher value (resulting in twice the amount of work for the same amount of money you might pay an onshore team).
With two teams working on opposite sides of the world, you also get access to around-the-clock resources, which is almost a requirement in today’s fast-paced business world. When the teams have experience working together, as most blended models do, you can hit the ground running, which is invaluable when you have a deadline for development and little to no time to hire your own team.
Cons: No solution is inherently flawless, and while we believe in the power of the blended model, it does have its flaws. It’s not as cost-effective as working with an entirely offshore team. And if the team you’re working with is good, it will have other projects going at the same time, meaning you won’t have 100% of the attention, 100% of the time.
So, now what?
You’ve got a lot to consider when building out your technology. Every solution has its pros and cons, and it helps to go into the decision with all the information you need to make the best possible choice for you and your business.