Every week brings another raft of headlines about the skills crisis in the global tech sector. Companies from the US to London, to Dublin and Berlin, are all grappling with the same questions about how to hire and retain the best people.
For US-based multinationals, the restrictions on the H-1B visa system – makes the issue even more critical. In Britain, Brexit means the skills crisis has an added dimension of uncertainty. Companies need to think creatively, and fast.
Offshore outsourcing continues to be an option for many global tech companies who, according to the Deloitte 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 clearly defined outcomes.
But for work that requires deep knowledge, greater innovation, 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 systems.
At Zartis, we believe it’s time to widen the nearshore definition.
‘Nearshoring’ for us means extending your team in a more integrated, cohesive way, without sacrificing culture or approach to work. It means 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 accessing a wider pool of available tech talent, without compromising on:
- the quality of the developers in your team
- cultural fit
- your ability to manage the team
- your approach to risk and security
- the value you put on things like innovation.
Europe’s Opportunity. Case Study: Madrid
Over the last two years, we’ve helped fifteen US and northern European companies establish nearshore teams in Madrid.
Why Madrid? That’s easy. Software talent in the city is widely available and highly skilled. In addition, the costs of running a team are comparatively low, and Spanish software engineers enjoy working for US and northern European companies, which typically prize tech talent. Moreover, the barriers to hiring and setting up are low. We’ve broken down the process here, 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, Dublin, Berlin or the US west coast. And that’s not just our view – Amazon is among the other tech firms who chose 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 and Northern European organisations – because so many software engineers there have experience working for multinationals. During the global recession, many of Spain’s best developers left, moving north in search of better opportunities. A large proportion have since 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 one way we help our clients is to hire engineers who have experience working for US, UK and Irish companies.
The other advantage is loyalty and longevity. Spanish and Polish companies tend not to prize tech teams highly, so by treating people well, and appropriately valuing their work, you can keep your engineers for much longer.
And there’s a cost saving compared with running an office in Northern Europe or the US – it’s not on a par with what you could expect through outsourcing to India, but what you gain is a talented and committed group of highly trained engineers, who will share your 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 productivity: we tell them that there are enormous advantages to being able to extend the working day to 15 or 16 hours. (We usually hear back from them later that we were right). And, of course, it doesn’t hurt that Madrid and Wrocław are beautiful, safe cities, which are 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 Spain or Poland – is not without challenges, but for companies prepared to take the risk, the rewards can be considerable.
Zartis empowers companies to build outstanding software. Our services include technology advisory, remote and nearshore teams and software development.
Get in touch link to find out how Zartis can help you build a nearshore team in Europe.
This is a revised version of an article that first appeared on Zartis.com in 2017.
Images courtesy of Florian Wehde and Eleni Afiontzi via Unsplash.com