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Our company just let go of all our remote LATAM hires. We paid high end in their LCOL areas. They were somewhere between ok and not good. Felt like we got abou

Our company just let go of all our remote LATAM hires. We paid high end in their LCOL areas. They were somewhere between ok and not good. Felt like we got about what we paid for - their cost was about 50% of a US dev. They were as productive as a low end US dev, so in some cases ok value but since hiring low performers tends to hurt a team overall they weren’t worth it. We’re a mid range company (decent cash comp, not much else since startup). I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it?

astone26 2y ago
Interesting… 50% of US dev cost is like what if you don’t mind saying? 100k? I found the biggest issue with these engagements is the trust with remote developers.
- esaym 2y ago
  I would think $40k-$50k
  - lazyasciiart 2y ago
    Remember that employee cost is usually estimated at twice their salary.
    - 0_____0 2y ago
      Does that scale neatly with salary? I would expect it not to, with things like benefits and other costs being relatively fixed regardless of salary
      - saagarjha 2y ago
        I assume people who are paid more also typically receive better benefits
      - acdha 2y ago
        Until you’re over the many hundreds of thousands of dollars per year range, it works pretty well as a rule of thumb. If your company wants the cost of working in an office, they’re probably not paying high salaries to work in a rundown shack and the people making those high incomes also want better quality benefits (especially in the United States where healthcare is so expensive and cheaper plans mean more time having to argue with someone whose bonus is based on denying care).
  - astone26 2y ago
    Dev costs are around 40-45 USD per hour for a lower average in Ukraine. Annual salary would be closer to 90K.
    - kmac_ 2y ago
      That's right. 90k is the correct value for a mid-level (real, productive) developer across Europe. 40-50k is possible, but for entry-level positions.
      - Toutouxc 2y ago
        Is this the thing where the 99th percentile people somehow think they're the average? I see that a lot on Reddit for some reason.
        red-iron-pine 2y ago
        It is a selection bias, plus perception that the people with more (the 0.01%) are a lot more common. "I dream of being rich, and to me rich is..." More specifically: To be in the top 10% of earners in the USA, you need an annual income of at least $148,812 To be in the top 5% of earners in the USA, you need an annual income of at least $352,773 The median salary in the USA is approximately $59,428 per year
      - shafyy 2y ago
        If you look at engineering salaries in Germany, 90-100k is what you pay for a senior engineer or PM, not a mid-level one.
        vaidhy 2y ago
        Salary is not the same as paying a contractor. So, while salaries for senior engineers is 100k, as a contractor they might be charging 150K per year ($75/hr).
        shafyy 2y ago
polishdude20 2y ago
Y'all hiring in NA? I'm a Senior dev looking for a role!
- esaym 2y ago
  lol was going to ask the same
roncesvalles 2y ago
>Felt like we got about what we paid for This is the usual ebb and flow of offshoring in the tech industry that's been going on since the 90s. There has never been a scalable arbitrage for tech talent by going over to another geo, and there won't be one in the foreseeable future. What US HCoL talent gets paid is unfortunately the fair and natural market rate for that caliber of talent, at least if you need to hire more than like 10 people.
- fhd2 2y ago
  It's quite simple market forces, from where I stand. Companies in high income areas have two options for outsourcing: 1. Just go for the cheapest salary, quantity over quality style. 2. Find a replacement that has a comparable level of skill, experience and knowledge to the local talent they have or would need. Now for (1), there is almost no floor. You can get devs for five bucks an hour. For some people, it's the only way they can make any money, so they take it. For (2), people will gravitate towards earning 10-30 % less than a local equivalent developer. Low prices drive up demand, and since there isn't that much supply of strong candidates, that drives up their fees. At the same time, the employer pays a bit of a tax in terms of time zone, proximity and cultural differences, which introduces overhead, so it can't quite reach the local salaries. But it can get pretty close. A lot of the outsourcing horror stories are (1). A lot of the actual success with outsourcing is, in my experience, (2). I believe (1) is primarily responsible for these ebbs and flows you mention. The feedback loop for software development (in terms of whether it pays off economically) are _long_. That seems to force history to repeat all the time, because decision makers rarely see the consequences of their actions. The incoming generation of leadership did though. And then the generation after that didn't.
  - roncesvalles 2y ago
    I think many companies intend to do (2) but find themselves in (1) because they try to force their assumptions about the mythical cost savings, which aren't actually there.
    - fhd2 2y ago
zero_shift 2y ago
Always has been, especially since countries opened up their work visas. There are great engineers around the world but why would they accept ten beans an hour if they can take a plane to a different country and earn fifty? The talent from LATAM are not just sitting in the rainforest waiting for your phonecall.
DanielHB 2y ago
As a Brazilian dev living in Europe, one thing people just don't get about offshoring is that good devs have options, even in poorer countries. Companies offshoring usually offshore crappy projects, crappy projects attract bad talent. Also really top devs (at least in Brazil) can make more than 50k USD per year (fluctuates widely based on exchange rates) at Brazilian companies, it is cheaper than US but the tail-end of talent can still be expensive. If you really want to attract good devs in cheaper areas the best way is to just open a branch of your office there, pay top-salary and don't just use it a dump ground for the projects no one at home wants to take. So treat them the same as at home. I had a roommate who worked in one of those companies that take offshoring projects, lets just say it is not the best talent pool and the good devs there leave fast.
- apwell23 2y ago
  i think they over estimate how many 'good devs' are there not that good devs have options.
  - noahjk 2y ago
    Feels a bit chicken-and-egg - if I live in, say, Brazil, and I know that there isn't a great market for good devs here, will I put in the effort to become a good dev? If I really have a passion for dev work, will I try to move or work freelance? Not that you're implying it, but I think it's fair to point out that people in ex. Brazil aren't worse at dev work, just that there is probably lower incentive to be good.
    - DanielHB 2y ago
      My point was, there ARE opportunities in Brazil that don't involve working in a slave outsourcing factory. Even individual remote dev contracts are not always the top tier of talent. The real good talent working remotely from Brazil is probably working for startups in silicon valley not your average mid US company. Just as you compete for top talent locally you also compete for top talent globally when hiring remote. I live in Sweden now and have dealt with a lot of Swedish companies over the years. It is hard to explain this to the locals because they see Sweden as a big tech hub where all the talent is at, but the scale of things in Brazil is _crazy_. I worked in a telecom project where this one single company had more active (paying) SIM cards than the population of Sweden several times over. Just because it is a poorer country doesn't mean it is easier engineering, if anything the engineering is harder.
acdha 2y ago
> I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it? I’ve been hearing about outsourcing destroying jobs since the 90s and that’s how it’s always gone: the suits salivated at the prospect of cutting wages by, say, 90% and had total write-offs because of it, because they missed that even in a poor country people have options and anyone smart enough to be a good developer is also smart enough to recognize that their skills are worth more. Outsourcing has some big costs related to communications so while you could find decent people at 50-70% of local labor rates, coordination overhead makes that a net loss even before you hit things like the security risks. Part of the problem there is that the business people really want to think that they understand their business so well that they can give perfect instructions, and it takes a certain humility to recognize that more time goes into knowledge transfer and discovering the true needs than might be obvious.

astone26 2y ago

Interesting… 50% of US dev cost is like what if you don’t mind saying? 100k? I found the biggest issue with these engagements is the trust with remote developers.

esaym 2y ago
I would think $40k-$50k
- lazyasciiart 2y ago
  Remember that employee cost is usually estimated at twice their salary.
  - 0_____0 2y ago
    Does that scale neatly with salary? I would expect it not to, with things like benefits and other costs being relatively fixed regardless of salary
    - saagarjha 2y ago
      I assume people who are paid more also typically receive better benefits
    - acdha 2y ago
      Until you’re over the many hundreds of thousands of dollars per year range, it works pretty well as a rule of thumb. If your company wants the cost of working in an office, they’re probably not paying high salaries to work in a rundown shack and the people making those high incomes also want better quality benefits (especially in the United States where healthcare is so expensive and cheaper plans mean more time having to argue with someone whose bonus is based on denying care).
- astone26 2y ago
  Dev costs are around 40-45 USD per hour for a lower average in Ukraine. Annual salary would be closer to 90K.
  - kmac_ 2y ago
    That's right. 90k is the correct value for a mid-level (real, productive) developer across Europe. 40-50k is possible, but for entry-level positions.
    - Toutouxc 2y ago
      Is this the thing where the 99th percentile people somehow think they're the average? I see that a lot on Reddit for some reason.
      - red-iron-pine 2y ago
        It is a selection bias, plus perception that the people with more (the 0.01%) are a lot more common. "I dream of being rich, and to me rich is..." More specifically: To be in the top 10% of earners in the USA, you need an annual income of at least $148,812 To be in the top 5% of earners in the USA, you need an annual income of at least $352,773 The median salary in the USA is approximately $59,428 per year
    - shafyy 2y ago
      If you look at engineering salaries in Germany, 90-100k is what you pay for a senior engineer or PM, not a mid-level one.
      - vaidhy 2y ago
        Salary is not the same as paying a contractor. So, while salaries for senior engineers is 100k, as a contractor they might be charging 150K per year ($75/hr).
        shafyy 2y ago

polishdude20 2y ago

Y'all hiring in NA? I'm a Senior dev looking for a role!

esaym 2y ago
lol was going to ask the same

roncesvalles 2y ago

>Felt like we got about what we paid for This is the usual ebb and flow of offshoring in the tech industry that's been going on since the 90s. There has never been a scalable arbitrage for tech talent by going over to another geo, and there won't be one in the foreseeable future. What US HCoL talent gets paid is unfortunately the fair and natural market rate for that caliber of talent, at least if you need to hire more than like 10 people.

fhd2 2y ago
It's quite simple market forces, from where I stand. Companies in high income areas have two options for outsourcing: 1. Just go for the cheapest salary, quantity over quality style. 2. Find a replacement that has a comparable level of skill, experience and knowledge to the local talent they have or would need. Now for (1), there is almost no floor. You can get devs for five bucks an hour. For some people, it's the only way they can make any money, so they take it. For (2), people will gravitate towards earning 10-30 % less than a local equivalent developer. Low prices drive up demand, and since there isn't that much supply of strong candidates, that drives up their fees. At the same time, the employer pays a bit of a tax in terms of time zone, proximity and cultural differences, which introduces overhead, so it can't quite reach the local salaries. But it can get pretty close. A lot of the outsourcing horror stories are (1). A lot of the actual success with outsourcing is, in my experience, (2). I believe (1) is primarily responsible for these ebbs and flows you mention. The feedback loop for software development (in terms of whether it pays off economically) are _long_. That seems to force history to repeat all the time, because decision makers rarely see the consequences of their actions. The incoming generation of leadership did though. And then the generation after that didn't.
- roncesvalles 2y ago
  I think many companies intend to do (2) but find themselves in (1) because they try to force their assumptions about the mythical cost savings, which aren't actually there.
  - fhd2 2y ago

zero_shift 2y ago

Always has been, especially since countries opened up their work visas. There are great engineers around the world but why would they accept ten beans an hour if they can take a plane to a different country and earn fifty? The talent from LATAM are not just sitting in the rainforest waiting for your phonecall.

DanielHB 2y ago

As a Brazilian dev living in Europe, one thing people just don't get about offshoring is that good devs have options, even in poorer countries. Companies offshoring usually offshore crappy projects, crappy projects attract bad talent. Also really top devs (at least in Brazil) can make more than 50k USD per year (fluctuates widely based on exchange rates) at Brazilian companies, it is cheaper than US but the tail-end of talent can still be expensive. If you really want to attract good devs in cheaper areas the best way is to just open a branch of your office there, pay top-salary and don't just use it a dump ground for the projects no one at home wants to take. So treat them the same as at home. I had a roommate who worked in one of those companies that take offshoring projects, lets just say it is not the best talent pool and the good devs there leave fast.

apwell23 2y ago
i think they over estimate how many 'good devs' are there not that good devs have options.
- noahjk 2y ago
  Feels a bit chicken-and-egg - if I live in, say, Brazil, and I know that there isn't a great market for good devs here, will I put in the effort to become a good dev? If I really have a passion for dev work, will I try to move or work freelance? Not that you're implying it, but I think it's fair to point out that people in ex. Brazil aren't worse at dev work, just that there is probably lower incentive to be good.
  - DanielHB 2y ago
    My point was, there ARE opportunities in Brazil that don't involve working in a slave outsourcing factory. Even individual remote dev contracts are not always the top tier of talent. The real good talent working remotely from Brazil is probably working for startups in silicon valley not your average mid US company. Just as you compete for top talent locally you also compete for top talent globally when hiring remote. I live in Sweden now and have dealt with a lot of Swedish companies over the years. It is hard to explain this to the locals because they see Sweden as a big tech hub where all the talent is at, but the scale of things in Brazil is _crazy_. I worked in a telecom project where this one single company had more active (paying) SIM cards than the population of Sweden several times over. Just because it is a poorer country doesn't mean it is easier engineering, if anything the engineering is harder.

acdha 2y ago

> I’m sure if you’re paying more you can do better. But that’s how it’s always been hasn’t it? I’ve been hearing about outsourcing destroying jobs since the 90s and that’s how it’s always gone: the suits salivated at the prospect of cutting wages by, say, 90% and had total write-offs because of it, because they missed that even in a poor country people have options and anyone smart enough to be a good developer is also smart enough to recognize that their skills are worth more. Outsourcing has some big costs related to communications so while you could find decent people at 50-70% of local labor rates, coordination overhead makes that a net loss even before you hit things like the security risks. Part of the problem there is that the business people really want to think that they understand their business so well that they can give perfect instructions, and it takes a certain humility to recognize that more time goes into knowledge transfer and discovering the true needs than might be obvious.