While hiring a remote team may “always looks great on paper” and sometimes pay off, businesses should never hire a remote team “only because they’re cheap”, said the founder of Touchstone Semiconductor and CEO coach Brett Fox in his reply to a question posed on Quora.
Recently, a self-proclaimed chief technology officer (CTO) wrote on Quora that he was forced by his business’ co-founder to outsource tech to India.
“This solution would not work for our business, however, he doesn’t listen and argues that ‘his friend’ told him otherwise. What do I do?” the user wrote.
In response to the question, Mr Fox, who lives in Silicon Valley California, noted that “the allure of hiring a cheap remote team always looks great on paper”.
“I’m not saying you can’t make a remote team in a cheaper location work. You can, I’ve seen it done. However, each and every time I’ve seen the remote engineering team in a cheap location work, it’s been due to the ability to hire outstanding talent in the location,” he said.
Mr Fox shared about a startup company – where he was recruited three years ago before he started his own company – in which he noted that their core strategies were “augmenting their Silicon Valley team with a team located in China”.
“I remember the conversation I had with their CEO like it was yesterday. ‘Just do the math, Brett,’ the CEO said. ‘Even if the China team is half as efficient as our team here in Valley, we’ll end up ahead’.
“It seemed great on paper. And I’m sure the spreadsheet they developed looked really, really good. However, I wasn’t convinced the idea of hiring an inefficient team made sense to me,” he added.
Mr Fox recalled when he was updating the partners about the company’s progress during the past year, a partner at Donald Ventures – who was only identified as Samir – suggested hiring a team in India.
“Our Silicon Valley team had executed quite well, ‘taping out’ the five product families we committed to in our term sheet ahead of schedule. The partners were impressed with our progress, and, because they were VCs, they wanted us to move faster,” he noted.
However, when Mr Fox told the other investor about Samir’s request, the investor simply advised him to “keep your supply lines short”, to which he agreed.
He eventually passed on the opportunity to join the hybrid Silicon Valley-China company but remained in contact with the CEO and the VP Engineering.
The company failed two years later, said Mr Fox, pointing out the main reason to the failure was due to “the engineering team couldn’t produce anything”.
“Sometimes, you can make a remote team pay off, but never hire a remote team only because they’re cheap,” he remarked.
Mr Fox explained that businesses should look into the “hidden costs” of managing a remote team.
He then cited another CEO that he currently works with, which was only identified as Sam, who has hired a remote design team in Sri Lanka.
“Sam and his co-founders in Sri Lanka go way back. They’ve worked together before, so that reduces a large part of the risk. Plus, the team is top notch, so the talent level hasn’t been sacrificed for a cheap labor force,” he noted.
Though hiring a remote team in Sri Lanka has worked well for Sam, the 12 hour time difference is “really tough” as Sam has to be up at all hours to manage the team. In fact, Mr Fox noted that Sam was admitted to the hospital last month due to exhaustion.
“So, beware of what you’re getting yourself into before you decide that you can make the spreadsheet you created come to life. You’re going to need a not good, but great team, in a remote location.
“And, you’re going to need a superhuman commitment on your part to make it happen,” he added.