Why Do Most Offshore Firms Refuse to Tell You How Much Hired Developers Make?

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How often have you seen the statements from offshore hiring firms about full transparency and disclosure? A lot of industry players usually speak of it as their advantage over the competition, and well – that’s reasonable, as such an approach allows clients to see the real picture and evaluate the financial feasibility of offshoring services. 

However, what does this transparency look like? Is it really as transparent as it sounds? Unfortunately, in most cases, the answer is no – you don’t get a detailed breakdown with your invoices, where you can see what are you paying for software developers’ compensation or agency’s fees. Still, why does it matter if you get the work done? We will try to explain the repercussions in this article.

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The Price Structure of Offshore Tech Staffing

How do the staffing agencies form the price for their services? As offshore firms usually act as employers for offshore developers, they charge you for:

  • developers’ compensation;
  • developers’ benefits (PTO, healthcare insurance, training, mental well-being programs, etc.);
  • technical equipment (laptops, PCs, and other devices necessary for your development).

At the same time, offshore firms bear the costs of operational overheads, like administrative expenses, marketing, rent, utilities, and investments in infrastructure, which also are included in your invoice. Of course, an agency needs to make a profit, so there will be a fee for their services, and it can be approached differently – it can be a percentage of developers’ compensation or a fixed amount.

Developers’ compensations are often the largest expense, as they need to reflect the skill level, experience, and specialization of the professionals involved.

Where Is the Catch?

The answer to that question lies in the economics of offshore staffing. Many offshore firms typically pitch a fixed price for a given role, then go on to source the cheapest developer available, maximizing their profit margins in the process. The less they spend on developer compensation, the wider their margins. It’s simple math but with complex implications.

This business model might raise eyebrows. After all, if you’re paying for a senior developer’s expertise, you’d expect to get a senior, not a middle or genius junior, pretending to be a more experienced counterpart. The crux of the issue goes beyond financials; it’s about the mismatch in expectations and delivery. Cheapest doesn’t always mean least capable – yes, you can find seniors who will do the same work for different compensations, but let’s be real: unethical practices exist, and in this case, they unfortunately prevail.

It’s only logical that these firms will be interested in a lack of transparency. If the truth is revealed, it will undermine their value proposition and raise questions about the quality of the work being delivered. The essence of offshoring’s appeal is cost-effectiveness without compromising on quality, and the manipulations we describe compromise the whole idea of offshore tech staffing. 

However, this practice of non-disclosure does more than just cloud the financial dynamics of offshore staffing — it hints at a broader issue of trust and partnership. Clients, especially those who value the integrity of their projects and the fair treatment of workers, may find this lack of transparency unsettling. It’s a reminder that while offshoring can offer significant advantages, it also requires a diligent vetting process, clear communication, and, ideally, a partnership built on mutual respect and honesty.

Is Full Transparency Possible?

Still, you can find transparent offshoring firms on the market who do everything ethically and are not afraid to show you the behind-the-scenes of their hiring processes. At least, that’s how we approach things in TurnKey. 

The TurnKey Approach to Transparency

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Our model is disarmingly simple. We lay bare the exact compensation of your developers, stripping away the mystery and enabling a clear view of where your investment goes. Atop this, we add capped fees that remain constant, irrespective of the developers’ salaries. This approach guarantees that you’re always in the driver’s seat, fully empowered to make informed decisions about your team’s compensation, as well as promotions, raises, and equity grants.

The Benefits of Transparency

Two main benefits of full transparency include high quality and extraordinarily low churn rates. A transparent compensation policy and capped service fees are a guarantee of high-quality hires. We don’t need to manipulate the numbers to secure our margins, so we are doing a straightforward hiring for talent that 100% matches your requirements and expectations. 

The second benefit is less obvious, but nonetheless important. By seeing developers’ compensations as it is in reality, clients gain critical insights into whether these compensations align with market averages and developer’s expectations. This visibility is not trivial — it’s a powerful tool for retention. It helps you to understand if and when you need to adjust compensation or offer additional benefits to keep the developer satisfied. This ensures a long tenure with your company and saves you a lot of money on developers’ churn. Remember: if you know the compensation of your software engineers, you can know how to motivate them effectively. 

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Approach developers' retention diligently with TurnKey Staffing

Summing Up

Transparency in offshore hiring is a key to trust, quality hires, and high retention of offshore software developers. When your offshore firm has no problems with disclosing the compensation of developers, you can be sure that your cooperation will flourish and reach the full potential offshore hiring has. Therefore, don’t skip the question regarding price transparency when negotiating a new partnership with offshore staffing firms. 


Why hire offshore developers?

Hiring offshore developers offers a blend of cost efficiency, access to a global talent pool, and flexibility in scaling your team as per project needs. It allows companies to tap into diverse skill sets and expertise that might be scarce or more expensive locally. An offshore development team can also provide around-the-clock productivity thanks to differing time zones, ensuring that your projects move forward even when the local team is off the clock. This approach optimizes development costs and accelerates time-to-market for your products, making it an attractive strategy for companies looking to stay competitive in the fast-paced tech landscape.

How transparent in pricing is TurnKey Staffing?

TurnKey Staffing stands out for its commitment to pricing transparency with its pioneering "cost plus" model. This model ensures clients know exactly how much their developers are being paid and includes capped fees that do not increase with the developer's salary. This approach provides full visibility and control over budgeting for staffing needs, eliminating any hidden costs or surprises. TurnKey Staffing’s transparent pricing model fosters trust and alignment between clients and the staffing firm, ensuring a clear understanding of financial commitments and the value delivered.

Why is developers' retention important?

Developers' retention is crucial for maintaining the continuity and quality of software projects. High turnover can lead to disruptions, knowledge loss, and increased costs associated with recruiting and training new personnel. A stable team ensures that projects progress smoothly, timelines are met, and the accumulated knowledge and experience are retained within the team. Furthermore, consistent developer engagement fosters a deeper understanding of the project goals, client needs, and company culture, leading to higher-quality outcomes and innovations. Retaining talented developers also strengthens the employer brand, making it easier to attract top talent in the future.

April 4, 2024

TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.

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