[me551ah]

I doubt if this will make much difference. Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well.

Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–70 % below U.S. rates:

• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.

• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.

• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.

In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.

[BobbyJo]

This ignores the other financial and non-financial costs of offshoring: legal, cultural, temporal... a lot of the time, those close the gap.

On paper, offshoring has made sense the entire time, and yet here we are in 2025 and companies still hire American devs. Not only that, they often fly in foreign devs just to pay them more here than if they had just offshored to their home country.

[xlii]

I have approx. 15 years of experience working remotely for various companies all across the globe and was always an advocate of thesis that remote work is difficult and most people aren’t cut for it and (to horror of many proponents) and on average are less efficient than on-site hires.

There are many reasons: It’s difficult to understand _intention_ when deprived of non-verbal communication and working in a choppy network call. Even if one can gloss over communication needs etc. there’s burnout looming around the corner and natural, healthy laziness getting into the way. Sometimes even internal politics might be blocking knowledge/access/contribution for more or less peculiar reasons.

It’s not like it’s impossible to hire remote engineer, yet my (completely unmetered) estimates out of experience is that approx. 10% of engineers willing to work remotely can sustain health (physical and mental) and be efficient outside of 1-2 years of honeymoon period.

There was some tumbling around COVID but IMO both stationary jobs and remote ones are doing well on mid-high quality positions.

[cbg0]

It also has to do with how the companies handle the offshoring, as some larger corporations take the approach of just using an outsourcing company from a specific country (usually chosen by price) and assume that you can just pay a specific amount of money per developer and they will all be the same quality as the guys coming into the office.

I've worked most of my career as a remote employee and I can say that the best arrangement is when the company is as involved in hiring offshore employees as they are with hiring onshore ones. Someone working through an intermediary will always be disconnected from the company's success, as they work for an outsourcing company, and not the US corporation itself.

There are definitely a lot of discussions to be had around employee cultural fit, and I don't just mean company culture. You want a similar mindset and work ethic that your other employees have if you want a high chance of success.

We also need to talk about how some companies haven't been able to successfully adapt their processes to work with remote employees alongside the office employees and sometimes treat the offshore ones as second class citizens, which is not really a great thing.

[__loam]

Yeah people have been offshoring then onshoring once they realize offshoring sucks since at least the 90s. I remember my dad, who was also a software dev, complaining about it 20 years ago. It always swings back. The network effect in huge hubs like SF and NYC is massive.

[AnthonyMouse]

In addition to this, those factors contribute varying amounts to the total in any given case. So you also can't make the case that offshoring never makes sense, because in specific cases it does. But now there is a ~20% incentive for it to make sense in fewer cases.

[throwaway2037]

    > Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well.

I am confused by this comment. Offshoring IT work to India has been going on since the early 2000s. The established model at many non tech companies is a few people onshore talking with biz stakeholders, then directing offshore staff.

[bsenftner]

Since I 90's, I remember it.

[eric-burel]

If I read properly this is explicitely targeting UE, Canada, UK and other countries with high wages and R&D and software engineering capabilities.

[tossandthrow]

Yep, seems like this is an opaque tarrif.

Other countries should use this when retaliating.

[bravesoul2]

Not convinced. Offshore has been possible since forever. Maybe IC cam be remote now. Your team can be global. US lead, 2 India based devs, 2 brazil devs. But not having this wasn't a blocker for saving money.

10, 100 or 500 people team in India who could work in the office together was possible forever.

It will change. I think once other countries become bigger investment centres. Not sure how yet though. US is a good potting soil for a startup because there is this huge addressable and free market. And the startup ecosystem. Then add in that most startups want WFO and minimum synced time zones... and for larger tech all that specialism is in house in the US.

[g0db1t]

Yeah, there's simply a lot of 'Muricans thinking programming and software dev. for some reason only can be done inside of the US.

As a EU senior dev I know zero senior devs making six figures pa - Go figure

[dimal]

Won’t make much of a difference? To what?You’re only talking about whether to offshore or not. Not whether to HIRE or not.

Many companies simply won’t offshore core functions because doing product development on your core product with a team in a different time zone or from a very different culture often doesn’t work. But this will matter to companies that have laid off US engineers or avoided hiring and now won’t have that extra tax burden.

[whatshisface]

It's not possible, really, to believe that markets are inefficient enough to pay twice the price for something in one place as another...

[PaulDavisThe1st]

In all likelihood you lived through 2008, and yet you continue to believe that market "efficiency" is somehow a builtin immutable property of particular trading rules?

[eru]

> Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well.

Offshoring is far older than the pandemic.

[ozgrakkurt]

It is delusional to think you get same quality work for 70% less price.

[whatevaa]

It is not when ir comes to wages. People in other continent aren't dumb, the overall wages are just lower.

[klabb3]

If you work at FAANG and relocate from NYC/SF to a smaller satellite office within the US, you can take a large pay cut. Unless things have changed in the last few years, companies usually pay location-based market rate. The lines are blurred with remote work - which market are you really a part of? But there is nothing magical that separates within the US from outside.