Looking to expand your team right away? But nowadays is an uncertain and dynamically changing business environment. Or maybe planning to scale further down the road? However, the lack of skilled software developers is the reality today’s market must face and adapt to. Luckily, IT outsourcing comes to the rescue, with its numerous benefits – optimizing the time and costs of the project, tapping into the knowledge base of a skilled and talented IT partner, increasing operational efficiency, and allowing you to focus on core business. That is why more and more companies pass IT responsibilities over to third parties. Either way, you should get acquainted with the pros and cons of the different tech talent pool available to you. Truth be told, you need a good knowledge of the local markets to hire well.
Software development teams throughout the world all share one key pain point. In a nutshell, there is too much to do, and not enough people to get it done. There are budget constraints and limited talent available within the United States. This leads to a growing number of CTOs and VPs begin to look abroad to fill the ranks of their digital product teams.
It’s no wonder, either. As brilliantly summarized by Samantha McLaren, the talent shortage is a key trend for 2030:
- The skills gap is widening.
- Unemployment is shrinking, compared to the beginning of the pandemic.
- Nearly 60% of employers struggle to fill job vacancies within 12 weeks.
This means that with a lack of a qualified workforce, product development is likely hindered. The inability to scale digital product teams at the desired pace is a reality. Less obvious but even more relevant, this costs companies trillions of dollars in lost economic opportunity.
So, what is one of the key responsibilities of the CTO’s role in maintaining healthy businesses? Finding (and retaining) the best possible people to enrich product development. Yes, that’s exactly what tech talent pool means. Outsourcing, staff augmentation, going remote. Many are the options available to tech leaders, but not all bring the same results. Read on to find out why.
Here’s what you need to know:
- Southeast Asia vs. Eastern Europe vs. Latin America
- Things to evaluate when comparing tech talent pools for IT talent
- What kind of talent you’re looking for
- Where you should look for tech talent
- The power of strong local partners
Hiring abroad: Southeast Asia vs. Eastern Europe vs. Latin America
For companies based in English-speaking countries, India has been the trend du jour. The Indian Institute of Technology (IIT) and Indian Institute of Management (IIM) are some of the best engineering and management schools in the region. They feature among the top institutions in the world for their respective fields.
Fun fact: Sundar Pichai, CEO for Alphabet Inc. (and its subsidiary Google LLC) is actually an IIT alumnus. However, IIT seems to be less of a rule and more of an exception when it comes to code quality.
A news story from The Economic Times back in 2018 already showed a shifting paradigm:
“The share of information and communication technology (ICT) in India’s services exports “declined marginally” between 2006 and 2016, contrary to the trend in nations like China, Brazil, Russia, and the Philippines, indicating rising competition for India from such countries.”
This is partially due to investments in innovation and quality of life, both of which hamper India’s tech talent pool. Diversity also plays a role. Countries with better gender balance provide a more interesting range to choose from. Bringing together different mindsets is crucial to problem-solving. It opens alternative viewpoints and opportunities for improving your tech talent pool.
(5) things to evaluate when comparing tech talent pools for IT talent
But what do these tech talent pools and job markets actually look like? Well, the worldwide population of software developers, currently at 24 million, is expected to continue to grow. However, according to the Evans Data Corporation, there are significant changes in terms of geographical concentration:
- In 2024, the United States will lose its leadership to India as the largest population center for developers, but that doesn’t mean it has the highest quality.
- Latin America is now the second-fastest-growing IT specialist population.
Now, there is plenty to unpack there. First of all, a better understanding of which criteria come into play in making a tech talent pool viable or not. Things to be aware of when studying IT staff augmentation, software outsourcing, or direct hiring abroad:
- Talent availability. Can you find people within your desired requirements?
- Legal framework. Will compliance become a bigger issue than that which you were hoping to solve?
- Infrastructure. Is there reliable connectivity regarding equipment, internet providers, and even electricity?
- Average Service Rates. Are there hidden costs that go beyond the service rates? Have you thought of integration and code development do-overs or contract cancellation fees?
- Leadership and management. Do you want experienced practitioners that help you solve problems, or do you want an extra set of hands that’ll simply execute what is required of them?
- Relation to North American Time Zones. Will the team need to work overtime or have to work outside their normal business day hours to be able to collaborate?
As you can see, there’s a lot to consider not on the tech talent pool per se, but whether the pros and cons make them available talent beneficial to your needs. Let’s dive deeper.
1) What is the actual tech talent availability in different countries?
Talent availability means whether specialized manpower exists in the region or not.
- India and Singapore are strong contenders for Asia.
- Czech Republic, Poland, and Ukraine stand out for Europe.
- LatAm has Argentina, Brazil, and Mexico as talent powerhouses.
A quick overview of the best places to outsource or move your software development overseas (according to Coding in WP) can be summarized like this:
|Southeast Asia||Eastern Europe||Latin America|
|Talent availability||698k UI, full-stack, mobile, enterprise, and game developers||138k UI, full-stack, mobile, enterprise, and game developers||133k UI, full-stack, mobile, enterprise, and game developers|
It’s important to take population sizes into consideration, though, and that volume doesn’t necessarily mean seniority. Also, we must understand that consistent investments in infrastructure and education are key differentiators among the above-mentioned different countries. Brazil, for example, ranks 1st in IT investment in Latin America – but more on that later on.
2) How burdensome is the legal framework where you’re looking to hire?
CTOs (and even HR departments) are painfully unaware of the possible liabilities of hiring abroad without a full understanding of local legislation. Things that are often common in the United States can be not only seen as faux pas but also illegal in the outsourcing country. Hiring directly is therefore an unnecessary risk.
Rather, it is relevant to seek legal advice to ensure compliance throughout the process. Take background checks, for example: in Brazil, candidate screening cannot include criminal records. The way you pitch the position is also delicate, as it can open grounds for discrimination lawsuits.
Each country also has specific laws regarding work hours, paid time off, and co-employment. Remember that obligations are usually governed by local legislation, and US law is only applicable to the extent it doesn’t conflict with rule of law. That’s an issue that you need to consider when you look for a new tech talent pool.
3) Will the available infrastructure be an impediment to performance?
Even the best minds are limited to reliable phone and data connectivity. There is indeed a vast amount of tech talent in Asia and, more recently, Africa (especially in South Africa, Nigeria, and Kenya). Still, stable internet access is limited to major urban centers. It was only in the 2000s that the first high-capacity fiber cable was laid along the west coast of the latter, for example.
So what does internet connectivity look like for Brazil, India, and Ukraine?
Speedtest Global Index (Mbps)
Want another interesting number? If we look at data provided by the World Bank, for example, we can see that 70% of Brazilian Individuals and 63% of Ukrainians have access to and use the internet regularly. India pales in comparison, at a mere 20%.
4) Are the savings on the average service rates enough to make the change interesting to your bottom line?
Rates can vary meaningfully, depending on whether you’re working with an agency, or hiring an individual directly. But (also according to Coding in WP) average service rates can be in the line of:
|Southeast Asia||Eastern Europe||Latin America|
|Average service rates||Offshore software development services for $30-40 per hour||Outsourcing at least $20-32 per hour||Average at $20-30, growing towards $55 per hour|
What happens when you opt for hiring abroad is that not only do you broaden the tech talent pool, but also reach pay scales 40-50% lower than in the US for a top-level engineer. Or, as exemplified by the Director of Software Engineering at PowerSchool Group Nathar Feger:
“We’re not looking at the low-cost provider. We’re looking to expand the available scope of high-quality engineers we can get and this is one tool we can use to do that. […] We have individuals in Brazil who are leading projects that US full-time employees are serving their leadership.”
To make it tangible, it’s worth translating into numbers. An engineer that costs an average of $150k in New York, plus fringe costs that are about 30%, will actually come out at $195k. On the other hand, someone in Brazil will cost from $90-110k – almost half of what you would pay in New York City.
It also helps that the US Dollar is a stronger currency than even the most solid economies of South America. Compared to Brazil’s Real, for example, the exchange rate is often 5 to 1. In practice, this means engineers are paid competitive compensation, and clients pay attractive rates.
Still, Service rates say a lot about the number of foreign professionals you get to hire, but not necessarily the quality of work. Promise and delivery are two different things, and some companies may find it indispensable to build a “management layer” when choosing to build a team abroad. This takes us to our next topic: leadership effort.
5) How much leadership effort is necessary to manage the performance of remote teams?
It can be impressive how much politics and economy play a role in shaping work culture. By understanding each country’s recent history, one can build a distributed team with a balanced mix of traits and behaviors. Strong collaboration from a multinational ensemble might be the best way to get the most productive and efficient team possible.
Depending on your leadership style and the challenges ahead, it might be worth considering:
- Is there a colonial mindset to be aware of? In countries whose independence is more recent, employees might be more used to taking direction as is. This “do, not ask” approach is threaded into the culture of the working relationship) and although resources are cheaper, might be more robotic.
- Does the country come from authoritarian regimes? Former communist bloc countries have highly educated workers, but day-to-day negotiations are more black and white. There is less wiggle room for unforeseen circumstances.
- Is the local culture entrepreneurial? Look for warmer, engaging, collaborative people to bring to your team. The important thing is that whoever you bring on board has the right mindset for distributed work.
So: Brazil, India, or Ukraine? Actually, we recommend you explore all three and find the best balance for your specific challenges. If you’re already in India, you can augment. See each new staff augmentation opportunity as an additional partner, not a competitor. Have in mind, though, that these teams and individuals need to sync to collaborate.
6) Can you gain productivity by making the most of the relationship to North American time zones?
Time Zone might seem a minor issue but can make or break your SaaS’ Mean Time to Repair (MTTR) and Downtime. Two things to factor in. First, because a large time difference often makes it necessary to wait until the next day to begin tackling bugs. Second, that it becomes near too impossible to run a distributed team (a.k.a. outsourcing as a must), and that means people with different levels of information in a tech talent pool.
Not only does this affect engineers, but also collaborating teams and clients who need to manage and interact with them. As a workaround, it’s common for companies in India, the Philippines, and Vietnam to keep their engineers working in US time zones. However, it goes without saying that sleepless nights affect performance, quality of life, and work-life balance.
That is why you should always look to avoid huge time zone differences with small overlaps. For someone in California, for example, setting up a team in Latin America can be a great way to bridge the gap between the local team and colleagues in Europe or Asia. Get work done round-the-clock!
|Southeast Asia||Eastern Europe||Latin America|
|Relation to North American Central Time Zone (CT)||11-13h time zone difference||5-7h time zone difference||1-3h time zone difference|
What kind of talent are you looking for?
However, when you are looking for mobile app development or any specific programming language, it is important to know your competition. Agile Engine pointed out some very clear trends that show which software engineering pros are in higher demand so you can get negotiations ready.
So what are the most in-demand technology stacks right now? From our experience, we are finding that digital product teams are currently hiring for:
|System / Platform||Internet-hosted software||Machine-hosted software||Smartphone apps||Software specific/limited to hardware|
|Use cases||Corporate websites,
SaaS (Pipedrive, Hubspot, Facebook)
|Language / Framework / Library||(Backend) Python
(iOS) Objective C
(Hybrid) React Native
|PL/M, Ada, B#
Yet, not all hiring opportunities are created equal, and if you’re looking for Python, you can go to some places in Europe. If Java is more your thing, keep Latin America on your radar at all times.
Brazil, specifically, has presented itself as a, particularly interesting outlier. Its IT industry has grown much faster than the world average (currently at 5.6%), and the country ranks among the largest IT markets in the world, alongside the UK, Germany, Japan, China, and the United States.
Work-life balance has been keeping plenty of good professionals in the country’s tech hubs such as Belo Horizonte, Curitiba, and Florianópolis. This means that if you are looking to open an office or have your remote hires colocated somewhere, the gain of quality of life can be a relevant selling point for any job positions you may have.
So where should I look for tech talent then?
Now that you have learned some of the pros and cons of tech talent pools in Brazil, India, and Ukraine, it’s time to decide on how you should go about scaling your team outside the USA. There are a couple of options on the table:
- Build a local office: can be beneficial in the long run, if you are an enterprise looking for a long-term tie to the chosen country. This is a strategic decision, however, that involves much more than product development.
- Hire contractors directly: This can be a quick fix if you’re looking for expanding your team temporarily for very limited, one-man-job projects. But it takes time and effort to find the right people – and you’ll probably have limited knowledge of tech talent pools and possible risks.
- Use a staff augmentation firm: can be more expensive than hiring directly in terms of monthly rates, but there is a lot to be said about how much legwork your company is spared. Staff augmentation firms allow you to focus on product development while they focus on the rest.
Hiring directly vs. staff augmentation
In case you’re wondering if it’s better to hire directly, you should remember there is a fair share of legislation you don’t have the time and effort to get to know. There are international legal guides you can read to compare the legal frameworks in each country – but this is hardly enough to defend your company in case of labor claims.
When a staff augmentation firm is the employer of record, it both brings in the know-how and protects you from any legal or fiscal liability. In more practical terms, however, there are other aspects a service provider brings to the table:
- Finding the right candidate is made easier. It spares you time (therefore, money). There is no need to search and recruit.
- It puts the bar high. Firms like Ubiminds have psychologists doing interviews to ensure not only have the right individuals in terms of technical expertise but that also they can collaborate and have soft skills.
- Infrastructure and facilities are taken care of. You can be sure the hires have the right setup and equipment to get the job done.
This is how white-glove staff augmentation services save time, effort, and frustration. Plus, a firm like Ubiminds provides an extra layer of support to ensure cultural fit and accountability even after the engineers have been onboarded.
Schoology as a case study
Schoology became one of Americas’ top EdTechs thanks to strong, mission-driven engineering that pushed for value delivery to customers. How did they do it? By growing their team by 30% with Ubiminders.
Ubiminds came in as a strong ally, expanding Schoology’s recruiting and HR structure at zero cost while providing the engineers and architects the team needed:
- Save money on recruiting services (be it internal or other recruiting firms), personnel management (payroll, benefits), and facilities (rent, infrastructure, and equipment).
- Save time and increase quality by bringing forward custom-curated professionals from a strong talent community, selected by Ubi’s in-house tech specialists.
- Save money again by making offers that are attractive to candidates and payroll budget. Make it possible to hire for the same or better conditions than you’d be able to provide in the US.
- Increase talent retention by assessing the cultural fit and soft skills ( communication beyond ESL), providing a Business Partner approach to Hiring Managers, HR Managers, and engineers themselves.
- Protect from liability, assuming Legal & Fiscal accountability on employment, and including non-disclosure and intellectual property clauses and mechanisms to protect clients like Schoology.
In fact, that is the key difference from hiring directly. By picking a staff augmentation firm, there’s an agency relationship. The company is accountable. If talent doesn’t deliver, you can call, have a replacement, or even get your money back.
The power of strong local partners
If you have a choice in the matter, opt for Nearshore hires. The reasoning is quite simple: seamless information flow enables better product development. There are two key benefits to human capital management in distributed, nearshore teams:
- Real-time communication was made convenient, with short response times due to very slight time zone differences.
- Increased sense of accountability, commitment, and partnership inherent to close relationships and frequent contact, such as daily rituals and visits.
Different from outsourcing or separate (parallel) software development, this model ensures that knowledge is shared frequently and consistently. Chances are there will be fewer do-overs in a well-aligned distributed team. Albeit still a form of remote working, team members still share documentation, tool stacks, and some level of proximity.
Reasons to nearshore software development to Brazil
For companies in North America, Brazil is definitely worth a shot. The tech talent pool is highly qualified, there are very few cultural differences and pricing is attractive, compared to Eastern Europe. Moreover, the time zone overlap means that the hires are actually able to take part in the same daily rituals and practices that their coworkers back at headquarters.
With everyone on the same page, and immediately available, things go much more smoothly. “The most important thing is focusing on actual value delivered instead of butts in a seat.”, Nathan explains. The results might even surprise you.
The Director gives a clear-cut example: “We have individuals in Ubiminds who are leading projects that US full-time employees are serving their leadership.” If your company is also looking to hire abroad, you should chat with one of Ubiminds’ colleagues. Leave your contact info below. We will reach out asap.
Sounds interesting? Give Ubiminds a chance.
If you’ve come to the conclusion that Brazil is a relevant option for your business – be it a replacement to current contractors or as a valuable addition to your team -, it’s time you met Ubiminds.
- Custom-curated teams: professionals hired specifically to work in your company.
- Tech recruitment expertise: we specialize in digital product teams. Nothing else.
- White-glove service: our process is tailored to your needs. Before, during, and after hiring.
There are precious nuances that only a partner with strong knowledge of the local market is aware of, making sure you get more value for money when you looking for a tech talent pool.