Every week brings another raft of headlines about the skills crisis in the global tech sector. Companies from the US west coast to London, and increasingly to Dublin, are all grappling with the same questions about how to hire and retain the best people.
For US-based multinationals, the possibility of immigration reform — including new restrictions on the H-1B visa system — makes the issue even more critical. These companies need to think creatively, and fast.
Offshore outsourcing continues to be an option for many global tech companies who, according to the Deloitte 2016 outsourcing survey, no longer view it “as a simple cost-cutting play”.
Think ‘offshore’, and you probably think ‘India’. And as a short-term solution, outsourcing tech projects to a place like India or China can be effective – particularly for large companies with a requirement to fulfil specific projects with clear outcomes that can be precisely defined.
But for work that requires deep knowledge, greater innovation, more autonomy, a greater degree of security or a specific skillset — such as cloud-based infrastructure expertise – the experience is often less satisfactory. The Deloitte survey found that, although companies increasingly expect innovation as part of their outsourcing arrangement, they “still struggle to define, track, and motivate innovation from their service providers”.
And for smaller companies, for whom a cohesive culture, optimum communication between teams, and a unified approach to projects is so important, outsourcing projects to a remote services provider in a distant location is simply too great a risk.
Widening the nearshore definition
That’s why many of those companies are taking a fresh look at the advantages of other locations, including nearshore destinations.
Traditionally, ‘nearshoring’ has meant a company sub-contracting part of its work to an external company, usually operating in the same time zone, in a country with similar financial and legal constraints.
At Zartis, we believe it’s time to widen the nearshore definition.
‘Nearshoring’ for us means extending your team in more integrated, cohesive way, without sacrificing its culture or approach to work. Instead of relocating people to jobs, it means relocating jobs to people, and creating an extension of your team that just happens to be in another geographic location.
Nearshore outsourcing can reduce your cost base, but it isn’t just about reducing costs: primarily, it’s about extending the available pool of tech talent, without compromising on the quality of the software developers you hire, your team’s cultural fit, your ability to manage your people, your approach to risk and security or the value you put on things like risk and innovation.
For companies looking for the first time to extend their teams beyond the US, Europe presents a great opportunity.
We recently helped Valant, a Seattle-based leading provider of cloud-based technology for the healthcare sector, establish a nearshore team of twelve software engineers in Madrid – a process that took just eight weeks from start to finish. (Read more about how the project went from the perspective of Valant CTO Ryan Donahue here).
Why Madrid? That’s easy. Software talent in the city is widely available and highly skilled, costs are comparatively low, and Spanish software engineers enjoy working for US and UK companies, which typically prize tech talent. The barriers to hiring and setting up are low. Our Chief Operating Officer Padraig Coffey has broken the eight week process down, step-by-step.
Simply, you can hire great software engineers and better people more easily and more quickly than you can in London, New York or Valant’s home city of Seattle. And that’s not just our view – Amazon is the most highly profile recent company to choose Madrid as the location for its Southern European tech hub, citing the “overall quality of Spanish engineers” as the main attraction.
The culture and way of working in Madrid is similar to that of many US organisations — because so many software engineers there have experience working for multinationals. During the recession, many of Spain’s best developers left, moving north in search of better opportunities. By now, a large proportion have returned – or are ready to make the move home – and they’re coming back armed with an extensive skillset, better English and a more international outlook. So when we were helping Valant build its team, we specifically looked for engineers with experience working for US or UK companies.
The other advantage is loyalty and longevity. Spanish companies tend not to prize tech teams highly, so if you treat your people well, and appropriately value their work, the attrition rate is low. And there’s a cost saving – it’s not on a par with what you could expect through outsourcing to India, say, but what you gain is a talented and committed group of highly trained engineers, who will look on themselves as not a separate entity, but an extension of your team at home, and will share you approach to things like performance, innovation, security and risk.
The US-based organisations we work with sometimes initially have concerns about what the time difference might mean for their productivity: we tell them that that are enormous advantages to being able to extend the working day to 15 or 16 hours. (And we usually hear back from them later that we were right.) And, of course, it doesn’t hurt that Madrid is a beautiful, safe city, which is easy to get to and fun to visit.
Zartis started life as a tech company, so our perspective around building a team is much more aligned to the thought process of a CTO or VP of Engineering. We understand the difficulties you face in hiring the best talent. More importantly, we see the opportunity. Setting up a nearshore team – whether it’s in Madrid, Berlin, or Krakow — is not without challenges, but for companies prepared to take the risk, the rewards can be considerable.
Zartis has deep expertise in large-scale recruitment projects across different European locations, serving clients in the US, UK, Ireland, Germany, Denmark and Spain. One of our key competencies is helping companies hire entire new teams of developers and engineers, ranging in size from two to two hundred.
Get in touch link to find out how Zartis can help you build a nearshore team in Europe.