The Return of On-Shoring

offshore inmail
About twice a day, I get an email / LinkedIn request from an offshore software company offering me their services. Underneath the steady incoming offers is an unstated fact: offshore development isn't what it used to be. Somewhere between the aftermath of the Dotcom Bust and today, offshore development went from a strategy promoted in startup boardrooms, to the tech equivalent of the Dodo bird.

So what happened? Well, the short answer is: it often didn’t work. You will hear different explanations from different people, which may vary from execution, to vendor selection, to communication, to cultural gaps. But one root cause rarely discussed is the most basic: the talent gap.

Those of us in high tech centers such as Boston, Silicon Valley and New York, can at times under-appreciate the rich technical talent that surrounds us. Some of the best engineers in the world reside in our backyards - a byproduct of a 5+ decade investment in a technical ecosystem that includes venture capitalists, startups, universities, entrepreneurs and financial markets. This ecosystem has created a virtuous cycle that puts the average engineer in our top tech centers far above the average engineer working for an offshore company in a developing nation.

There are two other issues that further exacerbate the gap:

  • Just like their counterparts in the U.S., the top engineers in offshore regions tend to be attracted by the top technology companies and startups, not offshore development companies.
  • The rapid growth in third world economies has fueled an insatiable thirst for managers, incentivizing many of the best engineers to become managers (and not always very good ones at that).

I've managed six different offshore development teams, mostly in India, with the largest staffed by 60+ engineers. I’ve executed many strategies - staff augmentation, follow the sun, lift & shift - each leaving me with a healthy appreciation for the unique challenges of offshore development in high tech startups. I know there will always be a time and place for offshore software development. But in an industry where engineering talent can be the difference between success and failure, very few options are as effective as building a strong, local, Boston-based software team.