Ask HN: Offshoring - At what point does cost trump productivity? | Hacker News Reader

Ask HN: Offshoring - At what point does cost trump productivity?

2 pointsmingyeow3 comments

This is a continuation of the thread: Top Indian CEO: Most American Grads Are 'Unemployable"

While an interesting read, I think the post and most comments misses the very real (and important) discussion every startup/company must face up to - At what point does cost trump productivity?

For me, I run an angel backed startup in the valley, and there is absolutely no question that the top talent is found within 50 miles of where i am. There is also no question that working together with them in the same place leads to far more cohesion and productivity.

However, there are some very practical questions - Cost and competition. An average bay area fresh grad costs at least $60,000. If you are hiring talent with experience (like we are), competition from other firms will easily drive it upwards of $140,000. There is the big problem with hunger. Talent with hunger here typically have their own startups, or are already working in great companies.

As such, if you can hire a talent who is really hungry for 1/3 of the cost, but who is more raw and would not be as productive cause of remote working- would you do it?

And what positions would you consider to be candidates for offshoting, which ones would you never ever offshore?

These are tough questions, and I'm not sure I'd trust random message-board participants (like me ;-) to answer them. People pay operations-research consultants hundreds of thousands of dollars for this.

Something to consider: good code is an asset, and it's a compounding asset. The better your programmers are, the more likely that they'll produce code that they can build upon, and build upon, and build upon, all with relatively few bugs, so that you can go faster as time goes on and the product grows. Mediocre programmers often produce code that requires more maintenance and slower development as time goes on. Either way, the effect is exponential and not linear, which makes it hard to compare against linear differences in salary. Probably should run an IRR comparison against your cost of capital and decide based on that.

This, BTW, is why companies like Google try to find the best talent they can, no matter what the cost. Productivity compounds, and not always in obvious ways. In addition to writing good, solid code, top developers also attract other top developers to work with them, and they create a culture where high achievement is expected and you can't just slack off. These are intangibles that are really hard to put a price on.

This is a great comment! This is probably the best articulation of why

"good code is an asset, and it's a compounding asset, and the effect is exponential and not linear" - good insight, well articulated

"running IRR" - definitely right. I think you can apply different variables to the various categories of work.

Summarizing, the main thing, whether outsourcing or in-house is to find people who can write great code. On my end, understanding of the space you are in is very important as well

You offshore repetitive work, and/or work that is administrative and common to all companies. You in-house leadership, development, and creative work, and anything that is specific to your company.

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