Why we insist on hiring locally

Sometimes there are hidden costs to offshoring, argues Simran Gambhir

No one can deny that there’s a fierce fight for talent. It’s why many companies believe they have no choice but to look offshore, and use developers remotely.

It’s a question we’ve been asked by prospective clients - how do we compete with offshoring when the perception is that it’s so much cheaper compared with homegrown (Australian) talent?

On the surface, the perceived cost savings look attractive - a development team in India or South East Asia may be 30 per cent cheaper than a team in Australia.

But we believe hiring locally ultimately delivers the best value. Here’s why.

Communication

It’s always going to be easier to communicate with people you can physically see and/or meet with on a regular basis. For starters, you have the advantage of being in the same time zone. You can hold weekly meetings and get prompt feedback.

Language is obviously another issue, but it goes deeper than that. Many offshore developers consider random emails or using task-tracking tools as a form of communication. But it doesn’t build the same emotional connection you get from really getting to know your team. When that happens, your people become loyal and go above and beyond to deliver for clients.

Context

Context is key to any project. If the developer or architect doesn’t understand the objective you’re trying to address, they won’t be able to offer any extra input. You don’t want to simply hire someone to do the work, you want them to suggest and advise. After all, they’re the experts at this.

Even good offshorers can’t understand your business problem on the ground. They may not understand local user needs and requirements, or the regulatory environment and compliance. When you hire local developers, you build a team who understand your specific business context. They will suggest solutions and provide the "thought leadership" that elevates your chances of success. For example, when building an education app, we had developers who knew how Australian teachers work, and how they would want to use it.

Cost

On the face of it, offshoring seems cheaper. But the headline cost is not always the full story. Consider a 10-month offshoring project, taking 10 months and costing approximately $140,000. That doesn’t include the cost of delays, travel, heartache, or quality issues.

Compare this with onshoring, which may cost $200,000 for the same project, but only takes four months and is higher quality and delivered on time. Those onshore developers will suggest innovative solutions if the context changes.

When we interviewed in India for a Unix sysadmin role, we found one candidate who was suitable who we had to poach from Google. Ultimately it cost $140,000, not significantly less than the $160,000 it would have cost locally. So there was no major cost advantage, plus it took far more time.

Competence

Jeff Paine, CEO of security firm ResponSight, observed that there are real incentives for Australian companies currently based in the US to bring some or all of their development back home, and US companies are realising the same.

Paine has said that Australia has a highly skilled talent pool and real depth of experience that “we don't see as readily available in overseas candidates”.

He has also observed that “great people in Australia tend to stay longer with you on the journey, with much less 'mercenary' contract behaviour”.

While it is still hard to secure talent in Australia, Paine believes it’s still significantly easier compared with Silicon Valley or other US locations.

Ultimately, I have found that Australian-trained developers tend to be higher skilled than their counterparts in many other countries. Tertiary education is rigorous here, and you know what you’re getting. This isn’t the case overseas, where it’s much harder to check credentials. We’ve had large numbers of false and misleading resumés, some of which were simply copied off the internet.

One person overseas claimed to have been a systems admin, but his actual experience involved merely pulling out backup tapes and plugging them back in! I suppose he was right to theoretically say he "managed terabytes of data".

That’s not to say that there isn’t talent offshore. But when you find them, there’s usually little cost advantage. Some of the world’s best security people are in Israel and India, and it’s worth going for them, but it will cost much more.

Simran Gambhir is the founder of IT services firm Ganemo Group and chief technology officer of fintech hub Stone & Chalk. He was previously CTO for Flybuys and News Corp’s digital arm.

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