Sergio Pereira

@sergiopereira

If you’re building a Tech Team in 2018, these are your 4 options

TechHQ’s office in Lisbon

As the old adage says “There are no old roads to new directions”. The tech world is changing fast, and the talent pool seems smaller than ever. What used to work yesterday might need to be reinvented tomorrow.

The best way to predict the future is to invent it. — Alan Kay

It’s always an exciting time in my life when I get asked to build a Tech Team. I genuinely love to strategize the profiles, interview awesome candidates and onboard the best of them in a way that enables tech companies to leap into their innovation roadmap.

This has been more challenging over the years, as the battle for talent gets fiercer. Demand for talent has grown much faster than supply, and it’s now a much better time to be a candidate in tech than to convince candidates to join our companies.

A major strategic decision for any organization in Tech

Building the right tech team is one of the most important endeavours for CTOs, either in small startups or in larger organizations. The need to bring together the best tech builders they can find in order to meet their goals is global, and failure to do so can result in product shipping delays, growing tech debt and organizational dysfunctions of multiple kinds.

Barriers have been raised in our free world

A few decades ago, we’d just post a job opening and candidates from across the street would flow in for interviews. Later, whenever we could afford it, we’d hire foreigner expats and relocate them to our countries, to build in-house teams. However, as barriers to immigration and free flow of talent are raised in several major “talent importing” countries, new solutions need to be found for the old challenge of building tech teams.

#1 In House Team

This is the original scenario, where all tech team members are in the core Headquarters of their company, and it’s usually the best way to grow any team. However, it comes at a high price in geos where the cost of living is expensive and the battle for talent is fiercer. For SMBs and pre-Series-A Startups this can be an overwhelming uphill battle, where all options boil down to huge costs. A Founder can either (a) pay higher salaries than the big guys Google, Facebook, Apple et al, or (b) pay recruiters a hefty fee to find the nuggets of talent in the market within the desired budget, or © invest in building a strong brand since very early on to stand out in the minds of the desired candidates, or (d) hire too junior people and end up fattening the costly management layer to compensate.

#2 Outsourced Team

This has been the fallback scenario for a long time. Whenever companies don’t have the resources to build in-house tech teams, they engage outsourcing providers usually on some geo where labor is cheaper.

This sounds very good on a budgetary perspective, but outsourcing horror stories are everywhere. Very frequently this scenario fails to deliver the desired results due to communication and management awkwardness. Badly defined features result in products that are far from what was expected. Bad project management procedures result in huge differences in the pace on both sides of the aisle. Communication issues often arise and typically are tackled by throwing in more resources to the management layer of the operation, which may cause even more slack rather than solve what’s wrong.

#3 Remote Tech Headquarters

In this scenario, companies leverage the cost structures of other geos, but keep all the control and management within their organization. All the team members are recruited by the company, and all of them are part of the same culture, standup in the same slack, and have the same email extension. It’s an in-house team, just a few thousand kilometers away.

Ramping up a remote Tech Team has some upfront costs in creating a subsidiary company in another geo and setting up an office and recruitment capability there. But once it’s up and running it works almost as well as a physically in-house team would, providing that processes and communication are managed well-enough.

#4 Fully Distributed Team

This scenario has become increasingly a trend among some ecommerce companies over the last decade, and lately among the blockchain community. Some companies implement strict employee monitoring tools, others have incentives around work done, and others works as Decentralized Autonomous Organizations, where there is no hierarchy whatsoever. For the most cases these companies decide to pay well enough in order to hire the best talent in the world for each role, so it is not so much of a decision to optimize cost savings, but rather a decision to get the best talent and implement a very particular company culture.

I’ve done all of them, and I learned a few things

As a Startup CTO and as a Tech Advisor, I’ve been involved with all of the four options to create a Tech Team, in some way or another.

  • I’ve learned that everyone wants to have an in-house team, but most decision-makers just can’t afford it. Startups in the US, UK, Switzerland, Germany, Netherlands, etc who’ve just raised seed (or even Series A) round can’t compete for the best talent, and the only option to have an in-house team is to hire inexperienced juniors.
  • I’ve learned that most outsourcing scenario failures boil down to pure lack of culture fitness between the client company and the service provider. Startups and innovation teams need to be Agile and work on a well defined Scrum, and some cheap outsourcing providers just don’t have that culture. The required resources to fix the organizational slack are often more expensive than the software development team itself.
  • Fully distributed tend to work very well on some cases, but they are not practical for the vast majority of real life scenarios for the simple reason that decision makers have no idea how to manage such a team. Add the fact that it doesn’t necessarily represent any cost saving, and those decision-makers don’t see a case for proposing it in the first place.

The case for Remote Tech Headquarters

I’ve found out over time that setting up a fully controlled operation on another geo is usually a very interesting option for some companies. They can tap into more favourable economic and recruiting conditions without compromising their budget or their internal operations.

Companies can either endure the upfront costs of setting up a subsidiary company and recruitment team for the first year or two, or they can just rely on a trustworthy partner such as TechHQ to get it started for them, and deal with the bureaucracies later

This article was originally published here.

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