Tech’s offshore hiring kicked into high gear

In the old days year, Sebastián, a developer based in Ecuador, received more LinkedIn messages from recruiters trying to poach him than ever before. One particular message caught his eye: it was from a Miami-based delivery startup. Sebastián, who asked that his last name not be used to avoid jeopardizing his current job, was excited about the opportunity for potential growth.

“I would like to know how businesses operate in the United States, how things are done there,” he says. Many other experienced developers outside of the United States have found themselves in ever-increasing demand from American tech companies as the rise of remote work and the shortage of talent in the United States has spurred research. more globalized teams.

A 2022 report from technology services company Commit estimated that offshoring software development roles would increase by 70% over the next year. Some companies, like Coinbase and Shopify, have already been aggressively hiring outside the US for open technical positions. “Software developers are becoming the top global role,” says Alex Bouaziz, CEO of Deel, a startup that provides remote payroll and recruiting services. His company saw a 50% increase in the number of its US-based clients hiring overseas in 2022.

In the past, companies accessed a wider pool of talent by strategically building offices in secondary markets. “It was mostly like we had an HQ1, then we picked a market and we built HQ2,” says Dylan Serota, co-founder of Terminal, a company that connects developers from Latin America, Spain and Poland. with startups in places like the US and UK. Terminal provides the infrastructure to deliver benefits and pay local taxes, which many small businesses don’t have the resources to put in place. The rise of remote working has encouraged companies to rethink their approach to talent in ways they never would have considered doing before, Serota says.

To help facilitate this process, companies like developers and vet startups Terminal and Telescoped then offer benefits like health insurance, pay local taxes on behalf of developers, and ensure that developers receive benefits like as vacation pay and equity. “About 80% of the developers we work with have shares in the startups they work with,” Serota says.

Many new recruits come from countries such as the Philippines, Argentina, Brazil and India. While tech companies have long sought out these markets to staff call centers, content moderator positions, and IT departments at lower cost, they are now following talent to fill vacancies on any of their teams. “We used to think of it as a cost arbitrage story – you hire in Mexico or India because it’s cheaper,” says Jimit Arora, a partner at research firm Everest Group. “Now I see it as a talent arbitrage story. You go where the talent is.

Latin American talent, in particular, has caught the eye of US-based companies. The region shares time zones with the United States, and scouting for talent in cities like Mexico City or Bogota allows startups “to avoid competition for talent in places like San Francisco,” says Bouaziz. It’s also a lot cheaper: The average monthly salary for a software engineer in Mexico is $3,165, according to Coders Link, a platform that connects Latin American talent with US-based tech companies. That’s about a fifth of a software engineer’s salary in San Francisco. The war in Ukraine, which was a major IT outsourcing hub, also accelerated this trend, according to Serota. As workers were forced to flee their homes or fight the Russian invasion, foreign companies sought new places to relocate their work, and Serota says demand quickly shifted to Latin America, as well as to other Eastern European markets.

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