We have built software for a long time. A looong time. Rich worked 2 years at an agency, 3 years as a freelancer, and over 12 years running strategy and execution building products for startups, mid-market, and enterprise businesses at @Tragic Media. Not to mention a few equity roles acting as CTO for a handful of startups. Todd worked 7 years at various agencies before joining Tragic Media where he helped Rich grow his boutique software agency for over 11 years, not to mention always working on freelance projects.
We have experienced first hand the tumultuous evolution of onshore vs offshore. The pros and cons of working with an agency vs contractors vs building your own team. Our philosophy at Tragic Media was built around the benefits of working with senior onshore teams.
But ultimately Rich had to shut down his onshore agency, mostly because offshore has evolved and we couldn’t compete. Unfortunately, the offshore model still has a lot of problems for many companies, but with the right oversight and leadership the benefits are too big to dismiss.
In this article we will focus on the pros and cons of working with offshore / nearshore development talent, and why we feel having onshore leadership with offshore development talent is a winning combination.
What is Fractional Leadership?
Fractional leadership is a growing service area where experienced leaders (CTO, CPO, COO, CMO) contract with your company to help fill gaps in your growing team. Sometimes they are contracted to help execute on specific projects, to build infrastructure and processes so that you can confidently scale your internal team, or to fill knowledge gaps and oversee execution for a specific area until your company is ready to hire a full-time leader.
Fractional leaders collaborate as a core part of your team. They bring vast experience and help your team to make informed business decisions. Their goal is to set your business up to succeed. Your success is their success.
Learn more about the benefits of fractional leadership here.
The Problem with Offshore / Nearshore Development
Whether your teams are from India, Eastern Europe, or Latin America, resources are insanely cost-effective compared to the US. But results can vary dramatically depending on who you worked with, how technical you are, and how much oversight you are able to provide. Below are some common issues and difficulties that arise when working with overseas development teams.
Communication
The biggest issue by far is communication. It's not really a language barrier. Most overseas talent speak great English. But there are cultural differences, so saying a certain phrase or making a specific request could be greatly misinterpreted. In the US we use a lot of idioms, slang, and industry lingo. So you might make a request that makes sense to you, but the resource could execute exactly what you said instead of what you meant.
Quality
There are extremely talented engineers all over the world. No one country is necessarily better or worse than another, it comes down to the individual. Depending upon how you source and vet your overseas talent, you may not receive the quality that you think you are. This of course happens in the US often as well. You pay an agency a high price for quality and later learn that they outsourced the work to a junior contractor to maximize their profits. But when working with overseas talent, you are dealing with a lot of additional barriers that could prevent you from finding and vetting the quality resource you need for your project.
Time zones
This is another challenging issue, and this challenge varies depending upon what country you work with overseas. For example, one of the benefits of working with nearshore teams (Latin America) is that the time zones are much more closely aligned with the US. But if you are working with Indian talent, which tends to be the most cost effective, you are dealing with the biggest time zone difference (~12.5 hours). Most people that work with Indian talent either connect at the beginning or end of their day, which means that you are either working very early or very late in order to keep your team working effectively.
Turnover
This is not always a problem, but many overseas development agencies have a hard time retaining talent. So you could be building a product with a team, and then suddenly half way through you could lose several resources and with them a huge amount of knowledge. Onboarding new resources leads to delays, additional costs, and a risk to your final product quality.
Architecture
Another big problem is in execution of a project architecture and the amount of technical debt that you incur before you even launch. To be fair, this can happen just as easily in the United States when working with an agency, or when your internal team lacks strong technical leadership. But without proper planning and oversight of the project architecture, your end product might technically work but the minute you want to make a change or start to scale, everything could fall apart. Tech debt is the subject for another article, but I have heard too many stories of teams that outsource overseas without proper oversight, then later are forced to completely rebuild most or all of the product because too many corners were cut or the product was not architected in a forward looking manner.
Best Practices
With any development resource, it is important to provide clear direction and set proper expectations regarding requirements and deliverables. When outsourcing, especially overseas, this is doubly important. Not only do you have to ensure proper architecture, as outlined above, but you must also ensure best practices are followed regarding security, naming conventions, and documentation. Resources will often cut corners to get something done quickly or will not communicate that they need more time to complete a task that follows best practices. Offshore projects go awry quickly when you don’t properly implement standards and best practices that must be followed. Not doing so will lead to the rapid accumulation of technical debt.
The Pros of working with Overseas Talent
With the above said, there are still a lot of benefits to working with offshore / nearshore talent. Below are just a few.
Cost
As already discussed, the cost benefits of working with overseas talent is one of the biggest benefits. You can get incredible developers for a fraction of the cost of US talent. Depending upon where you source your talent, you can find senior developers for $20 - $60/hr. That works out to a 70% to 600% savings.
Time zones
This is labeled as a Con above, but it is also a Pro. Working with overseas talent allows you to create a team that works 24 hours a day. When working with overseas talent, US teams spend the day working on designs and business decisions, and then hand off requirements to the offshore teams to build during the night. But if you have development talent in the US, you could potentially have development running 24 hours a day.
Talent
US development talent can be extremely competitive (depending on what you are building and what resources you need). For instance, currently it is insanely difficult to find leading AI and Machine Learning talent. These resources are not only extremely expensive, but they also are very picky (because they can be) on what problems they want to solve or teams they want to work on. For top AI talent you are going up against the likes of Google, Microsoft, OpenAI, etc. But with offshore talent, you can more easily outbid competition and get exceptional resources for your team.
The Magical Synergy of Fractional Technology and Product Leadership + Off-Shore Development Talent
In order to work successfully with overseas resources you need a few important things. Below are a few key areas that make fractional leadership and offshore resources a magical match made in heaven. Of course, if you have your own technical and product leadership you can find and manage your own offshore resources, as long as they have the experience and time to do so effectively.
Roadmaps
Onshore fractional leadership can focus on the big picture. They build the roadmap and requirements that will ensure long term product success. US leadership can lay out the requirements and work with overseas talent in clear engineering speak, minimizing communication errors and maximizing the efficiency of the development process.
Oversight
Working with overseas talent goes the most smoothly when you can provide tight oversight of your resources. Outlining standards and best practices and ensuring they are followed is of the utmost importance. Daily standups, code reviews for all pull requests, and strong documentation are essential to ensure consistent code quality. Tight oversight also helps to catch issues with poor performance or lacking experience early, once again keeping the quality of your development at its highest level.
Decision Making
It is essential that you have leadership that understands how your product is being built, and what development decisions are being made along the way. This is not only imperative for ensuring a quality product, but it also helps to reduce the impact of resource turnover.
Having onshore leadership that lays out the roadmap, keeps close oversight of development, creates ongoing documentation
Conclusion
Unlike working with an agency, a fractional technology leader has your best interests in mind. They can help you make informed decisions with your business success in mind. They are not trying to push their resources or to create unnecessary work to extend the contracts for their teams.
As described in this article, when you pair an onshore fractional technology leader with an offshore team there are many benefits. But the biggest takeaway is that this pairing maximizes the success of your product development, while minimizing the cost.
Are you interested in learning more about fractional product and technology leadership? Let's chat.