OBBB signed: Reinstates immediate expensing for U.S.-based R&D

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.

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.

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.

Other countries should use this when retaliating.

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.

I see lots of people thriving in remote. Main reasons being a huge increase in quality of life. Regaining 2-3 hours of senseless commuting time per day, getting small household chores done over lunch, not having to schedule repair and maintainance appointments in the weekends etc. is huge.

Now I do agree it is not for everyone. I see especially younger people living alone not coping to well. Part of the reason is they (ab)used the office as a socializing place, and are not used to organizing a personal social life outside work. There's also people that don't actually have much work outside of attending office meetings, and nobody thrives sitting in Teams calls all day.

Then there's also real downsides. Some people living in shoebox appartments in the city just do not have the space. W While work can be done (more?) efficiently remote, but carreer climbing needs in person contact. It's like dating. Real dinner or a video call? No comparison.

Best of both worlds would be 0 commute time to a luxurious private office inside the company premises. All the rest will be tradeoffs and compromises either way.

Americans have a... distinct work culture and companies - local and foreign - are not stupid, so nowadays they aim for the 50-75 percentile in terms of compensation.

On top of that you absolutely need to be fluent in English, which disqualifies half the candidates right off the bat.

All this combined makes it not obvious whether one would want to/could work for an American company - particularly if it's through various middlemen.

US used to be 100% worth it, but over the course of the last 25 years the ratio of GDPs per capita between USA and my country fell from 5.5 to around 3.75 and compensation naturally followed.

Lastly, the dollar fell 15% since the start of 2025 against my country's currency and that has had an effect on available openings.

The issues of quality and whatnot are at their core racist IMO but are made real because of the timezone issue. The norms and culture expected in the home time zones don’t translate easily and result in an impedance mismatch and a different measure of “good.” Because the remote team is isolated and unempowered they always struggle to adopt the standard of the team and to some extent can’t ever succeed in the quality space as it’ll be an ever shifting goalpost whose reasoning is effectively hidden. Then layer in the latent resentment on both sides and the whole situation is bound to fail, but the home teams have the advantage of being resident with the only management that matters.

I wish everyone involved would realize the experiment has failed. But CFOs are too powerful in most companies large enough to reasonably pull off outsourcing at all and the need for the CEO to please boards and investors who just operating off the financial statements and HBR white papers are too disconnected for why these efforts fail.

Unfortunately the current persecution of immigrants in the US will drive these arrangements more and more. Rather than on shoring local foreign talent with the collocated team, foreign talent will opt to avoid the fear society being birthed. This will lead to a strong incentive to follow talent to their home country leading to more imbalance in talent disoriented time zones. Maybe this would require everyone to figure out the above issues but I seriously doubt it. I think it’ll just make everyone less effective and not achieve anything positive for anyone.

Offshoring is far older than the pandemic.

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.

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

I'm in Europe now and it definitely is easier to set up calls with my South African colleagues than the American ones.

I'm still stunned when I see what devs are paid in Germany and southern Europe though.

Not all countries will see that as a problem.

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

    > Americans have a... distinct work culture

Another way to look at it: If your country was much richer than the US the model would be flipped. Do you think Americans would post a similar generalisation here? Yep. Not much being said.

There is ofc some difference but if you are taking averages you will have much better engineers in a company based in nyc vs berlin.

I’m not an expert but this has been very apparent in places I worked, US based companies just had a better work setup and everything moved faster and with higher quality.

As an example, just saying an engineer is quarter the price in Turkey so you can just outsource there is very foolish. It just doesn’t work that way, maybe in wet dreams of CEOs only.

Similar thing with LLMs, some people are salivating over how they won’t need developers but it just isn’t that way yet.

Seeing how hungry businesses are for outsourcing and hiring remote, and seeing how it isn’t really working that way should be concrete proof for this.

Are German wages really low? I thought Germany as the richest country in Europe.