Why I Haven’t Hired a Single Developer in Canada

http://www.techvibes.com/blog/why-i-havent-hired-a-single-developer-in-canada-2013-04-10

by uladzislau • 13 years ago

45 96 13 years ago

This is a silly false dichotomy. We've built our own business, profitably, from the start, by paying prevailing wages to top-tier talent who are located where we are.

It benefits our community and our country, but it also means that we're getting the best possible talent, locally, without the overhead of managing and communicating with remote non-native speakers.

The author simply wanted higher margins, and achieved them by externalizing costs onto their community. That's not to say that such a thing can't be successful; look at WalMart.

However, it's fallacious to state that they couldn't have built their business otherwise.

Lastly, it was this line that really got my goat:

> At the time of launch, I wasn’t even making that much, so I could I justify paying someone more than I was making myself as a business owner? It was a hard pill to swallow.

You, the business owner, have all the upside. That's how you justify it.

austenallred• 13 years ago

It's not really fair to say that a particular business could have done something because yours did. Comparing two arbitrary businesses is really apples and oranges.

nateabele• 13 years ago

> This is a silly false dichotomy.

Um, who's really creating the silly false dichotomy here? I'm based on the east coast (US), I run a (very) small development shop, and I work with contractors all over the world, including some locally. I prefer to work with contractors rather than hire employees for the same reasons the author prefers to hire remotely instead of locally: employees have much higher maintenance costs.

However, I hire based on experience in relevant Open Source communities, not on hourly rates. I have never, ever negotiated with anyone over their rate. I ask them how much they want to make, and that's how much I pay them as their base. I love paying my contractors higher rates and bonuses.

> However, it's fallacious to state that they couldn't have built their business otherwise.

This is complete guesswork at best. You have no idea what this person's situation is. Further, one could probably infer from this comment that you've never had kids or a mortgage.

> You, the business owner, have all the upside. That's how you justify it.

This is exactly as it should be! As a business owner, I also have all the risk. Whether or not a client decides to pay me (on time or at all), I'm bound by the terms I agreed to with my contractors to make sure their cheques show up, no matter what. This risk/reward balance exists in every employer/employee relationship. I fail to see how it's a problem.

MetaCosm13• 13 years ago

A huge number of businesses fail, business owners go bankrupt, no one wins. They lose all their money, everyone who they owe a debt to takes a bath, the community is impoverished.

Just because company X worked one way doesn't mean company Y will.

AshFurrow• 13 years ago

Let me save you the trouble of reading the article:

> herp derp derp outsourcing.

cpressey• 13 years ago

Good to know that "by definition" it's "not outsourcing". Failing to fall into that particular narrow categorization makes all the difference to the economies involved.

(Yes, this is sarcasm.)

suyash10• 13 years ago

It is 100% offshoring, people from his local community do not get jobs, it does not help Canada and in a way insulting for Canadians. I'm surprised to see this article making 1st page :(

vy8vWJlco5• 13 years ago

Sadly, I think it's a prevalent attitude so I'm actually happy to see it being shot full of holes, especially in light of the recent RBC (and others) outsourcing stuff.

danbmil993• 13 years ago

I'm struggling to understand why this entrepreneur has any moral obligation to hire locally. It's a world economy; the people he is hiring probably need the jobs more than the Canadians he is not hiring. As he says, it is win/win.

The vitriol here on HN against the fact of a globalized free market is somewhat surprising, especially considering that the successful startups will inevitably be competing globally.

aquadrop6• 13 years ago

Why doesn't it help Canada? Startup is still in Canada, profit goes to the country. And he creates some jobs for Canadians as well. Maybe it would be better if all staff was local, but Canada wins either way. And it's just one of the ways for business: some hire locally, some hire remotely, some do both. It's just business playing by the rules of the country.

mbesto• 13 years ago

By hiring globally, I was able to stretch a dollar much further, expand organically, and not have to worry about financing or issuing options (in lieu of fair market salaries like what most startups do). I was able to hire engineers abroad, pay them above their market rates, keep them happy, maintain high margins and maintain ownership. It was a win-win strategy.

This strategy has been talked about for, ummm, 20 years now? Yet, it's still not reproducible and scalable in every situation. Does it work? Yes. Does it fail? Yes. Does it work better than the latter model he mentions? It can. Does it reduce your risk? No. Can it reduce your risk? Yes.

Both models the author notes can be successful and you normally you'll get what you pay for.

suyash10• 13 years ago

This strategy has been talked about for, ummm, 20 years now? - Nailed it :)

xal• 13 years ago

facepalm

OlivierLi3• 13 years ago

I'm a Canadian software engineering student and I find this article insulting. The author blames recent graduates for wanting to be paid a decent wage. I guess he's missing the point that he only gets to be in the position he is in because other people before him thought it was a good idea to invest in Canada and make its quality of living rise above third world levels.

Also I'm not trying to be insulting but since when is Facebook marketing equivalent to building "cutting edge platforms".

alex_anglin• 13 years ago

I'm inclined to agree: As other comments have noted, the author had all of the upside in the business and in my reading seemed not too concerned about the potential downside for his employees should the venture fail.

guiomie• 13 years ago

"The author blames recent graduates for wanting to be paid a decent wage" ... 75k is not an entry-level/recent grad salary.

jbdeboer• 13 years ago

Canadian engineers are in high demand in Silicon Valley where you can easily start for 50% more than that.

OlivierLi3• 13 years ago

Maybe 75K is high for a recent graduate but I would certainly not expect to be paid a fifth of that like the author boasts he was able to pay his offshore hires. Especially since that makes it fall below minimum wage at 35h/week.

TheCapn• 13 years ago

Depends on your industry. For what the OP does? Not so much. However, I'm 2 years out of uni making just that + benefits (Pension, Bonus, etc.) and have a few friends doing even better. I don't consider myself anywhere near top tier as far as software engineering talent goes because I have met plenty of people who exceed my skills completely. That all said to ask me to work for you when my options are taking a massive pay cut for a high risk venture are not likely.

potatolicious• 13 years ago

But yet, it is.

I know many people who have been in that range within a couple of years of graduation - not senior by any means. $75K for someone with a light sprinkling of experience is the market, at least in major urbans like Toronto.

suyash10• 13 years ago

Yup, basically the author is cheap and does not respect quality talent and does not believe in fair compensation. It's clear when he says 'it was a tough pill to swallow' which also means highly egoist. I'd recommend staying away from his company any day even if he wants you.

rdouble• 13 years ago

75k is not an entry-level/recent grad salary.

Four years ago my intern went to Amazon after graduation for $86k and his degree was from SFSU, which is not a CS powerhouse. I believe entry level salaries have gotten higher since then...

joshAg• 13 years ago

I thought it was a little low, too.

throwaway1979• 13 years ago

Yup ... I feel the same way. Frankly, I think Canadian developers aren't paid enough. That's one of the reasons for the brain drain to the US. I recall in 2006, some of the smartest masters CS students I knew were getting offers around 55-60K in Toronto!

jsaxton86• 13 years ago

Let me get this straight. You're saying that you're entitled to a salary that is substantially higher than developers with more experience (and likely more skill), and you're the one who feels insulted? Give me a break.

MetaCosm13• 13 years ago

Hey, if you win the birth lotto, you have a RIGHT TO MAKE MORE. Those other developers should have been born in a better country.

OlivierLi3• 13 years ago

I'm not saying I deserve more on a personal basis. I am saying the tone of the article implied the author expected recent graduates to work for much less than 75k.

Outsourcing is nothing new and I am completely aware of the effect it is having on the software industry here in Canada and in the US. The author could just assume responsibility for his business strategy and not try to put the blame on CS/Software Eng. grads who often rack up solid amounts of debt to put themselves through school.

j-m-o• 13 years ago

This paragraph in particular irks me:

"When I first put up a few job postings for a senior developer position, the salary expectations for almost every applicant was $75,000 and up. Some of which were fresh grads with no significant experience."

Competent senior developers are few and far between, and command market rates well above $75k, depending on location. Compared to many cities in the US, there's an argument to be made that Canadian software developers are generally underpaid.

sbov• 13 years ago

Not all businesses are created equal.

The OP couldn't find a way to build a profitable business (edit: profitable enough for them) with developers commanding a Canadian salary, but was able to with developers commanding a lower one.

In comparison, I work for a small company that's been profitable from pretty much day one and they pay the prevailing rate for developers in San Francisco, which is roughly double the Canadian salary the OP is bemoaning.

I'm sure there are some businesses that would fail even at the rate the OP is paying. Think of all the opportunities that would open up if we could pay developers $1/hour.

raganwald2• 13 years ago

I liked everything in the article except for the "Canada" part. It's not like he hired exclusively in NYC, SF, Chicago, or Boston. He really means "The Third World, where salaries are low and expenses are lower."

He doesn't elaborate, but I suspect that when he says "Europe," he isn't talking about London, Paris, or Berlin.

CanSpice2• 13 years ago

Yep, when he talks about Europe he could easily mean Hungary, where salaries are about half what they are in Germany or England. Europe is a big place, and just saying "Europe" is like saying "United States". Hell, he could have hired a developer in Regina for less than a developer in Vancouver.

gamechangr• 13 years ago

I agree, United States and Europe has a greater variance than Canada for employee income.

coolsunglasses3• 13 years ago

He probably doesn't mean London, but anecdotally most UK programmers I know make 1/4 of what most bay area people earn.

Since their website mentions Sofia, I'm going to guess Bulgaria.

raganwald2• 13 years ago

That's really what I mean as well. I can hire remote devs in Canada for 1/2 the salary of Toronto devs. I worked for a company where I had an entire team "Down East" that cost peanuts. The tech lead there laughed at the idea of moving to Toronto and doubling or trebling his salary, he loved the lifestyle he could afford where he lived.

yoster• 13 years ago

I don't live in Canada, I live in the states, and I have to say, I find this insulting.

darkchasma2• 13 years ago

The first developer you hire shares in your risk, but with a fraction of the potential gain, and you're worried that you can't pay him what he's worth?

Exploitation of depressed markets is a viable option, but it's not the right option.

MetaCosm13• 13 years ago

"Exploitation" is an silly loaded word. I am not certain the developers he hired feel "exploited". I am not sure their families or children feel "exploited".

darkchasma2• 13 years ago

So in order to exploit something, the target must feel exploited? That's news to me.

blindhippo3• 13 years ago

This is adorable.

Telling phrases:

1) "But I didn’t want to be constantly worrying about financing, loans or diluting my shares by raising funding to stay afloat. "

That's nice, if you can't have 100% of everything it's not worth it. Tell that to every other small business owner. jackass.

2) "Finding the right talent in Canada wasn’t difficult. That’s right, it was easy to find. Talent was plentiful. There were extremely intelligent and capable developers. But the price tag that came along with their talents made me wonder how I would even stay in business."

Huh, so you don't want to take in seed money, but you can't afford talent (that you were able to source without much work).

3) "Our first projects involved building on new technologies: mobile and Facebook apps. At the time, there were only a handful of us in Canada that could do this kind of work."

You built "mobile" and facebook apps and thought you were special and unique? Bullshit.

I worked for a guy like this - it was the worst 5 months of my career. I asked for $55k, he talked me down to $49k suggesting my experience was weak. Was out performing every other developer in the shop (including the CTO) within a month. Asked for a raise and got laughed at. Left that company shortly thereafter and landed a "low paying" job at a local startup - this move ended up giving me a $10,000 raise + stock options. Meanwhile the asshat I worked for before has had his company collapse as he tried off shoring to bargin bin shops in India and Mexico. I would be sympathetic if the guy wasn't such a sales oriented jerkoff.

CanSpice2• 13 years ago

There's another thing that doesn't really jive with me about this guy's story. Take 2) and 3) together. He says that "there were only a handful of us in Canada who could do this kind of work", then "talent was plentiful". So which is it?

seivan6• 13 years ago

Me to. I've work for people like them. Abused, weekends, night, all nighters. I was young and stupid. I thought they were doing me a favour. Gah. I want those nights back.

blindhippo3• 13 years ago

It was this experience that revealed to me that I should never be working for the guy in marketing. The marketing guy should be working for me.

MetaCosm13• 13 years ago

You nailed him sounding like a sales oriented jerkoff... but he also takes all the fiscal risk, all the upfront risk. He is the one who goes bankrupt if it fails, he owes those debts.

seivan6• 13 years ago

Bullshit, everyone has a stake, even the workers.

seivan6• 13 years ago

It's funny how this asshole used IBM as an example. Who basically does EXACTLY the same thing. Abuse immigrants on HB1 to push down salaries.

My God, the irony, I can... taste it.

drewying• 13 years ago

For every outsourcing success story it seems there are two horror stories. I know at my prior employer we hired a development team in India for a year and it was a complete disaster. Not only was the work shoddy and buggy, we ended up paying more than what we would have had we just hired a good local developer. They ended up charging us 300k for the year. We were supposed to get a 25 developer team for that 300k but the work they turned out could have been easily done by two decent experienced State-side engineer and done a lot better too. I had to spend 6 months rewriting large chunks of their code, it was just terrible.

From my experience it seems really hard to get good talent overseas. And if you do find good talent, they usually want almost as much a good local talent.

memracom2• 13 years ago

In our company we had a team of Moscow developers. It did not work out because the person who was supposed to manage them was not doing that. We took the work in house. But this is not an outsourcing sob story. To do the work, we had added developers to our Vancouver team, and hired a second developer in Seattle. At the same time we added people in Virginia and added a second developer in Portsmouth England. This is one team of developers in 4 cities. At the same time we added a separate team in Spain, and yet another separate team of 40 people in Thailand.

It works, because we have good managers who pay attention to making it work. Good managers who are not looking for shortcuts and who encourage all developers in the company to be self-driven professionals who provide value to the business.

This is how to make remote teams work. Sofware craftsmanship etc.

seivan6• 13 years ago

Hah, he's a product manager. No wonder.

seivan6• 13 years ago

I know his kind all to well. Ship bullshit apps to bullshit marketing cunts. Get third world youngsters to do slave labour for slave fee's.

"A Facebook Preferred Marketing Developer. " "Global Managing Director of Majestic Media, Canada's first Facebook Marketing & Technology agency. His extensive experience on the Facebook platform includes building out social strategy, campaign ideation, app architecture and social design"

I really want to punch this asshole in the face.

davidandgoliath4• 13 years ago

Define 'slave fee's', he sounds as though he's running a comfortable shop where everyone works within the confines of their local timezone (9-5). I don't see any comments generated by his contractors, and based on what he's saying about their talent I imagine they have jobs-a-plenty available.

MetaCosm13• 13 years ago

"Slave fee's" is money paid to people who didn't win the birth lotto of being born in the right country.

There is an ugly sort of nationalism and entitlement under a lot of the comments. The concept of being entitled to a job because of where you are born is insane.

yanghan2• 13 years ago

This guy's an outsourcing company.. of course he's going to look for cheaper talent in other continents. He also has little understanding or appreciation of quality of code and scalability, because he really doesn't have to worry about it. He's building Facebook apps that probably aren't vey complicated.

The salary of software developers in Canada is also substantially lower than the US. A $70k developer salary in Canada is approximate to a $90-100k salary in New York, Silicon Valley.

Not sure what the purpose of that article was, since a lot of us are building tech companies, not outsourcing agencies.. I guess this is why I don't read techvibes.

MetaCosm13• 13 years ago

Your implication is that the quality of code from foreign developers is worse? Or that their code scales worse? That seems at best presumptuous and at worst racist.

yanghan2• 13 years ago

No. read what I wrote -- "cheaper talent" is worse.

dusing• 13 years ago

He should have just wrote an article about outsourcing your startup in order to "double" staff, extend runway, and get profitable faster. Instead it was a rather insulting look at Canadian developers wanting a respectable wage.

umsm• 13 years ago

I believe there are MANY pros and cons to hiring outside of your country. The problem is that this article doesn't touch any of them other than mention some of the pros experienced by one.

Discussing the LONG TERM effects are always the most constructive.

The company I work for does this to a degree, but their emphasis is always hiring locally.

anoncow• 13 years ago

Third world citizen here. Here is the simplified rosy image of outsourcing that I have in my dollar starved brain.

Outsourcing helps spread the monies. Without outsourcing, many cs guys in argentina would never work for a tech company. Without outsourcing many wouldn't get a cs degree in the first place. With outsourcing third worlders get better salaries. This creates local competition and an eventual increase in the baseline salaries for cs guys in that third world country. North american companies then move on to a different third world country say india. Salaries there rise too. Then they move on to vietnam, bangla desh and so on. Eventually baseline salaries everywhere becomes the same and outsourcing stops making sense.

Benefits whom?: third world country and the company

Negatively affects: north american cs grads. They will have to wait till everyone in the world is getting the same salary.

So according to my calculations, let outsourcing be for the next 500 or so years and the world will appreciate your sacrifice. Till then think of starting companies because the company and third worlders will benefit.

Believing this helps me sleep at night.

MetaCosm13• 13 years ago

Thanks for injecting the viewpoint of someone who isn't defending their birthplace as a virtue.

enoch_r• 13 years ago

What's remarkable to me is how many here find this insulting. We exist on the upper crust of the first world and are actually insulted because someone claims that Argentinians aren't actually backwards incompetents. We take offense because we "deserve" our jobs more than (much poorer) Argentinians, and we "deserve" to be paid several times their going wage.

MetaCosm13• 13 years ago

Don't you realize, I put in the time to be born in the right country, unlike lazy foreigners... if they wanted a job, why didn't they ensure they were born in Canada? I will tell you why, laziness.

diadara• 13 years ago

I am cs Student from a non english speaking country doing offshore development for a start up , which opened a "Industry Exposure Programe " and getting paid peanuts .This article makes me want to quit my job,but the I can do with the credits. For Cheap founders ,one more model to get cheap talent.

gexla• 13 years ago

Some points to add here...

1. The ROI is all that matters. Perhaps he should try hiring one of these more costly developers, it may pay off.

2. There is a global market for good developers, which means a good developer in X developing nation can charge as much as a good developer in N. America. However, you can get a crap developer far cheaper in developing nations! ;)

3. That same global market is why the recent grad can ask for 75K. If he were applying for MdD's, then he wouldn't be asking that.

memracom2• 13 years ago

This company does outsourcing and the reason that it works for them is a) they are doing it on a small enough scale to keep control of the situation and not let problems fester, and b) they are doing it themselves, not subcontracting to a foreign company with an incentive to cut corners.

Not much new here. And I don`t think their early hiring strategy was all that smart. Canada is full of experienced developers and when a new technology comes along, there are hige numbers of people with enough experience to master it in a month, who would even be willing to work for a bit less in order to get up to speed on the new technology. They are unlikely to be senior developers who have invested themselves in ONLY taking high paying jobs where they can put their expertise to work on day one. But none of this is specific to Canada.

And, in fact, I don't really believe that this company's success has much to do with lower wages. The fact that they made remote development teams work demonstrates that they pay attention to details and that is what breeds success.

Why I Haven’t Hired a Single Developer in Canada

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