Pretty much any tech business will have to make this decision again and again through its different stages.
Your company needs developer capacity, but should you go ahead and put up job ads for local talent or look at offshore markets? The solution isn’t always clear, and a bad choice costs you months and a lot of money.
Truth be told, you can’t really pit offshore developers against in-house ones because they are not really competing choices. The top-performing companies most of the time have a mix and use the options strategically, each one at the place where it is most reasonable. Knowing when it is offshore rather than in-house, hiring works with can fasten your growth tremendously while at the same time saving the runway.
Your Runway Is Tight and Speed Matters
Startups that quickly go through a seed round are in a tough spot economically. Each additional month of runway means less money and hiring developers locally in major tech hubs would require a commitment of $150, 000, 200, 000 per developer on an annual basis before they even write a single line of code.
If you have not started generating revenue or have a tight budget, overseas developers can enable you to have a full team for the cost of two local senior engineers. It is not about cutting corners but rather making your money go far enough to get to the next milestone. Running out of money due to paying premium salaries for work that could have been 60% cheaper is a foolish mistake.
Time is the real multiplier here. Hiring locally in a competitive market can take from three to six months between the time the posting goes up until the new employee becomes fully effective. Offshore development firms can provide you with seasoned developers working on your project within a matter of weeks. When you are trying to be first to market or need to show certain metrics to secure your next round of funding, you cannot afford to lose those months.
You Need Specialized Skills for Short-Term Projects
Not every technical challenge requires a permanent employee. For instance, you may need blockchain knowledge for a short three-month integration, or machine learning skills to add a new feature, or DevOps help for moving your infrastructure. Recruiting permanent employees to fill temporary skill gaps generates unnecessary costs even after the needs are gone. Offshore development teams are highly flexible, which is why they are perfect for such cases.
You can hire experts for as long as you need them only, and then just scale down without any layoffs or awkward talks. Such flexibility is almost unthinkable with full-time employees. Besides, the talent pool is also important. Locally, it may take you months to find a senior Rust developer or somebody with specialized experience in a certain AWS service, even if you are able to find them at all. Offshore development agencies have specialists in their networks in dozens of different technologies, so you can get the expertise that is nearly impossible to find if you are working on your own.
Your Product Roadmap Demands More Hands Than Your Budget Allows
Growth creates a difficult paradox. You have confirmed product, market fit and have a roadmap packed with features that customers are requesting. Developing those features will generate more sales, but you don’t have enough developers to work at the pace the market requires.
Offshore teams are multipliers of the company’s productive forces in this case. Rather than deciding whether to develop the features or extend the development timelines to quarters, you can get the people you need for your roadmap and still keep your budget under control. A team that would cost $800, 000 annually in San Francisco might cost $300, 000 by hiring offshore developers of similar skill.
The math makes a difference to what is achievable. You have the capability to hire the full-stack developers, QA engineers, and UI/UX specialists that your product truly needs instead of compromising with whoever you can afford in the local market. This amount of capacity is usually the difference between fulfilling customer expectations and disappointing them with delayed features.
Companies like Connect build dedicated teams specifically for this scenario, giving you the feel of an extended in-house team at offshore economics. The developers work exclusively on your product, learn your systems deeply, and operate as true team members rather than distant contractors.
You’re Testing a New Market or Product Direction
Pivots and experiments are typical elements of startup life, however, they cause hiring problems. You are not able to confidently hire five developers for a new product direction while being unsure that the direction will be successful. The commitment seems to be a risk, and the possible waste of recruiting efforts and severance costs if the matters turn out to be unsuccessful is considerable.
Offshore teams help to lower the risk of exploration. You are able to set up a small team that will build an MVP for a new market, test a different product approach, or validate a technical architecture without going through the process of permanent hires. If the experiment turns out to be successful, you continue to scale. If it turns out to be unsuccessful, you use those resources differently without having the pain of layoffs.
This kind of flexibility gives you the freedom to be experimental and bold, which is often the factor that differentiates successful companies from those that stagnate. If venturing into new territory doesn’t imply making commitments that can’t be reversed, then you will be more willing to take the calculated risks that lead to the achievement of breakthrough growth.
The reason bringing a product to the market faster matters in an experimental context is that it matters even more. You are eager to validate or invalidate your assumptions as soon as possible. If you spend four months hiring before you can even start building, your competitors might be able to validate the same opportunity even before you.
Making the Right Choice for Your Situation
The choice between offshore and in-house is not a clear-cut one, and it doesn’t have to be kept that way. Almost all the successful companies nowadays are adopting the hybrid strategy to a certain extent, they keep core technical leadership in-house and use offshore to extend the development capacity. It helps you to have strategic control over the matter while at the same time, being flexible financially and fast in development.
A decision framework is basically a couple of questions that boil down the situation for you. It is a question of whether you need to have institutional knowledge forever or just for a short time. Is it your budget or lack of specialized skills that’s limiting you? Are the tasks so well defined that you can work independently or do they need lot of face, to, face collaboration to get the work done?
When an offshore is going to be a good idea, it is really a good idea and a very good one in fact. The latter can achieve even 2 to 3 times the development capacity for the same budget while keeping the quality and speed. Those firms that focus on the right spot scenarios and therefore make the right moves face less difficulty in outperforming their competitors who stick to local, only hiring because of their ideological rather than practical motives.
Sandra Larson is a writer with the personal blog at ElizabethanAuthor and an academic coach for students. Her main sphere of professional interest is the connection between AI and modern study techniques. Sandra believes that digital tools are a way to a better future in the education system.
