Sunday 22nd June 2025

At the beginning of my software engineering career, the threat was being replaced by offshore engineers at outsource firms. Now the new threat for both parties is AI. Let me explain.

Notes:

• I began my software engineering career in the early 2000s, just after the “Dot Com” boom and bust of the late 1990s.
• Back then, the worry for any young engineer was being replaced by cheaper engineers from oversees, who would do the same work for a fraction of the cost.
• For a long time, executives were very excited about outsourcing, with all the cost benefits it brought.
• Over time, many companies got burned by quality and communication issues, and realized that the short-term savings were replaced with longer-term maintenance costs.
• But for the most part it worked, and outsourcing is now a common feature in our tech industry.
• In 2025 however, those outsource partners are not so cost effective anymore: my outsourced engineers in India cost 70% the amount of my engineers in the EU, while my Eastern European outsourced engineers are now FAR MORE expensive than my EU employees.
• Over the past 20 years, as living standards and costs have increased in offshore locations, the salaries of software engineers in such locations have tracked local inflation.
• So, we are back where we started: software engineers are expensive, no matter where they are located.
• Meanwhile, in the past 10 years AI development has accelerated at a pace never seen before in the field!
• So much so that for the first time, it is now viable to replace some software development tasks with AI.
• In my team, we are using AI to generate full source code and unit tests for new APIs based on design specification docs; we are also using AI to generate new unit tests for legacy code to increase test coverage; and we are using AI to build test mock servers for 3rd party APIs that we need to integrate with.
• This has allowed my senior engineers to focus on higher-value items from our backlog!
• Furthermore, we can do more work with less engineers.
• In the past, such tasks would have been carried out by junior engineers starting out, but now their main competition is not outsourced engineers, but AI.
• Meanwhile, the demand for outsourced engineers is also decreasing in my team, as a lot of their tasks can be completed by AI instead.
• Just last week, one of my Team Leads told me that he assigned a task to an Indian partner to work on the next day: he then decided to run the task through Amazon Q first, and it gave great results within minutes!
• Instead, my Team Lead shared the results from Amazon Q with his Indian teammate the next day and instead asked him to review it for correctness.
• I think the software engineering outsourcing business is in big trouble!
• If the cheapest outsourced engineers I have in my team are 70% the costs of my direct employees, how does that compare to a license fee for Amazon Q?
• In the cost game, no human can compete with AI, regardless of geographical location.
• As a young engineer starting your career now, you are left with two choices:
  1. Fight against AI for as long as you can, and position yourself as an alternative to AI.
  2. Embrace AI, and use it to 10x your productivity and convince future employers that if they hire you, it’s like hiring a whole team of engineers thanks to your awesome AI skills.
• Obviously I would strongly recommend you take option 2.
• The future is inevitable, and AI is now firmly part of it.

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techleaderpro-2025-week-25.mp3

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Title music is "Apparent Solution" by Brendon Moeller, licensed via www.epidemicsound.com

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