41% of employers say that finding the right talent is a struggle when hiring software developers. Qualified developers with strong skills and experience are incredibly in demand, and it’s become more popular than ever to look abroad to find that human capital. However, depending on where you hire from and what your goals are, there are different approaches to onboarding remote software developers. Let’s look at the main considerations in more detail.
Context Matters. Are you Expanding Abroad, or Remote Hiring for Talent?
One of the first questions you want to ask yourself is whether you’re looking to create a full development team in a new location, or whether you’re just looking to fill one or two open developer roles by candidates who have the right skill set. If you have an organizational goal to create a new development team in a single location, you’re probably going to want to choose the location first, while for individual roles you can be led by where you find the talent.
In either case, you’re going to need to think laterally about your employment methods. If you’re setting up a new development team, it can take months to establish a legal entity in the new location, and at this early stage you have no way of knowing if the team will be successful. At this point you don’t need the operational hoops to jump through – you just want to trial some developers. If you’re hiring individuals in various locations, then you might never want to set up a legal entity, but you also can’t use contractor agreements for a long-term, fixed relationship, or you may risk misclassification, which can come with hefty penalties.
Which Locations are the Best for Hiring Remote Software Developers?
Start by choosing the locations where you’re going to scout for candidates. The world feels a lot smaller nowadays, with most enterprises working in global teams, across multiple time zones or geographies. However, not all countries will work for your needs. Considerations include:
Cost: One of the main motivations for hiring remote software developers is reducing the overheads of hiring a qualified development team. Some employers utilize Development-as-a-service or freelancer arrangements, as hourly developer prices in a country like Ukraine for example can be as low as $12 per hour, while at CodeMentorX you can see that North American freelance costs are between $60-$100 per hour at a minimum.
However, you can see considerable cost-savings with full-time employees too, even after you factor in taxes and benefits. According to data from PayScale and outsourcing company Daxx, the average salary for a developer with 5 years of experience in the US is between $137,000-$173,000 per year. This can drop considerably when you hire abroad.
Expertise: Of course, the drop in employee overheads when hiring abroad doesn’t mean that you won’t get the right skills for the job. You can hire abroad at a far lower cost to your business, without needing to lower expectations on skills or knowledge. In fact, according to data from HackerRank, the US comes in 28th in terms of programming ability, while Russia is 2nd, Hungary is 5th, and Ukraine is 11th.
Depending on what niche skills you need, you may choose to source your candidates in a specific country. For example, Poland comes in top when it comes to Java, Sri Lanka heads up the list for Distributed Systems, China is better for Data Structures, and Hong Kong tops the list for Python. Consider using a specialist recruitment company, especially if your hire is strategic and the success of the new location depends on their ability to lead and scale.
Language: Particularly if you’re looking to create a cohesive team across borders, it can be helpful to choose the overseas expansion route that we discussed above, and look to create a single team who all work from the same location, and have similar backgrounds. For example, what language will they all communicate in? You can use the English Proficiency Index to help choose a location. For example, Serbia and Poland are ranked ‘high’, while India and Brazil are low.
Culture: As education and background is different across borders, you might find that hiring from different locations has an impact on the culture around being a software developer. For example, some countries may emphasize the importance of being done on time more than being done perfectly, while others might have a practice of including more extensive documentation than others. It’s important to make your own company values and expectations clear from day one so that everyone can work as a single team, despite location and previous experience.
Time zone: Time zone may be more important than you think, especially if you want teams to work as a single unit across different regions. What time of day will your managers schedule an update meeting be for example? Let’s say the daily scrum or stand-up is at 9.00am EST in your US head office. This is 6.30pm in Sri Lanka, 3.00pm in Hungary, and 10.00pm in Japan.
In some cases, you may specifically be looking to add availability around the clock to your organizational dynamics, but in other cases, this could hold back collaboration and communication across the business.
Benefits: Outside of salary, think about how you will manage benefits to remote developers working abroad. This could be anything from health insurance coverage and pension contributions to lunch vouchers, internet allowances due to regional bandwidth issues, or participation in employee share schemes.
Today, employees expect an attractive package, and global benefits are an important part of an organizational brand strategy, helping to boost morale, collaboration, and productivity. These complexities can be difficult to manage when you’re hiring out of country. Consider how you’re going to learn the local laws and conventions for hiring in that location, and practically apply them as a US-based company.
Employer of Record Solutions Can Limit the Complexity of Hiring Remote Software Developers
Many of these challenges can be reduced or even eradicated by leveraging an Employer of Record (EoR) solution. Through a workforce management solution like Papaya Global, you can compliantly and efficiently hire software developers in your location of choice, (or even in multiple locations), and work with a single customer representative who liaises with all of your in-country partners on your behalf.
The local partners legally hire the candidate on your behalf. This has a number of benefits. Initially, your overheads are minimal, as you don’t need to spend time and resources setting up a legal entity in a new location. As you move forward, these local partners will also manage certain benefits such as pension schemes or insurance, and provide knowledge and expertise on culture, language, and salary expectations when you need support.
This arrangement means that you don’t need to decide from day one whether you are expanding globally to a new location, or simply picking up talented developers ad-hoc in new regions. With Papaya Global, you can start by utilizing the EoR for the new candidate, and if you reach a critical mass of employees in any specific location, or realize it makes good business sense, you can then start the process of setting up a legal entity.
Uniquely, because we cover all employment models, you can seamlessly switch your employees over from EoR to payroll, with no difference to the developers but the name on their paycheck. If you decide that a freelancer arrangement works best, and you’re not in danger of misclassification, we can manage that, too.
Hiring software developers remotely can add tremendous value in terms of lowering employment costs, adding niche expertise to your business, eliminating infrastructure costs, and offering a better work/life balance to your developers. Getting the employment model right is your step one.
Ready to talk to us about expanding your development teams abroad? Schedule a call.