I’ve been thinking a lot lately about how software companies can fall victim to false economies. Companies can take actions that save money in the short term, but have detrimental long-term impacts. The most telling examples are:
- Use of low-cost offshore contractors
- Failure to provide employees with the tools they need to get their job done
- Inadequate hiring practices
Offshore contractors seem like an attractive solution to a cost-conscious business. Their salaries are much lower than North American employees with the same job title, so why not use them? I’ll tell you why not! The true long-term cost of using offshore contractors is difficult to measure, but is typically very high because of:
- Location difficulties
- Language barriers
- Skill level differences
It’s difficult enough to work on a team split across multiple locations. It’s even more challenging when some members are separated from others by many time zones. Given the location of prevalent contracting companies, it’s even possible that contractors never end up working at the same time as their full-time counterparts. This causes untold delays. Instead of discussing a problem right away in person with a colleague, an employee sends an email to a faraway land and it takes an entire day for it be read and acted upon.
Delays are further compounded by language barriers. It is often the case that contractors don’t have the same primary language as their full-time counterparts, so more clarity than normal is needed in communication, which costs time and money. Even more formality is required when there is a disparity in skill level between cheap contractors and their full-time counterparts.
It’s easy for companies to think they are saving money by restricting spending on tools. However, the true cost of inadequate tools is wasted time and low employee morale. For example, if a company doesn’t buy its developers modern computers, builds take longer and developers spend more time waiting (and moving on to other activities like browsing the Internet and looking for a new place to work!). When developers go to lunch together, they share horror stories about their poor equipment and this further feeds the downward spiral of employee morale.
Inadequate Hiring Practices
The hiring process should be a great experience for applicants. Don’t cheap out and expect an interviewee to pay for their own transportation or lunch. Even if you wouldn’t hire a candidate to pick the weeds out of your Aunt Ida’s carrot garden, treat them like royalty. You never know who their friends are! You want them to tell everyone they know how great an experience they had and how amazing it would be if they were hired to work at your company.