The competition

Let’s be clear, Caracas ain’t no Sillicon Valley. Bangalore? Para un día de fiesta. But, though it goes largely unnoticed, we do have our own humble little ecosystem of start-up accelerators and local government-backed initiatives that have already produced some good results in making life in crisis-struck Venezuela at least somewhat more manageable.

You don’t need much to start a tech company these days, just a convincing business idea that gets you initial funding and a team of good developers: programmer salaries are the main expense at any startup. Some companies have figured out a dead easy way to cut these costs, though: have your development team in Venezuela, where the currency depreciates in the time that it takes you to read this article, and pay them less and less as time goes by.

My friend Tamara, a computer engineer from Universidad Simón Bolívar, started working for a startup in Caracas in January 2013. “Back then,” she says, “I was earning 8,000 bolívares a month, a comfortable $400 at the time.”

But the country’s crazy inflation rate ate away at those numbers mercilessly. Her company would approve only pitiful wage increases, and like every Venezuelan working for a salary, she found herself getting used to becoming a little bit poorer every month. In May 2015 she was making the equivalent of $60 a month, despite two years of added experience.

She decided she’d had enough when she found out her company had outsourced the user interface to two designers from India who had each charged $1,250 a month (and designers typically earn a bit less than developers!). She discovered the company had external investors that poured dollars in, so the development costs for the company were getting cheaper as the price of the bolívar against the dollar sank.

“This business model is unfortunately common”, she continued. “There are Venezuelan companies with a bolívar-based capital that only deal with local clients. I can understand they’re not able to pay people more. But it’s outrageous that startups with external funding actually expect to pay their employees less as time goes by”.

Tamara cites the example of a friend who’s a machine learning engineer. In Silicon Valley, companies pay around $12,000 a month to these highly qualified professionals, but this Venezuelan was making 45,000 bolívares, or $180, in March 2015, an increase he got after months of negotiations.

His company was backed by two well-known startup accelerator programs from the U.S., but still decided that paying low, bolívares-denominated salaries to the programmers was the way to go forward. It’s a shame, because with no incentives to stay, engineers will most likely just use these jobs as training grounds to land a better life in California or elsewhere. Only very recently, after realizing they were kicking out the best and brightest, did this company start offering bonuses and consultancy fees in dollars to the more experienced members of the team.

Other companies are smarter about it. They focus on long term, conscious of the need to retain their most valuable people. “Right now, when we hire a software engineer in Venezuela, we hire him so that when he leaves the country (we know he most likely will), he keeps working with us remotely”, says my friend Carlos, who lives in Barcelona and works at a  consulting firm of Venezuelan developers now spread across Latin America and Europe.

The company tries to keep salaries competitive by using the Colombian market as a reference and paying in dollars. “Bolívares have become a minor perk of the job, a way for the employee to have liquidity in Venezuela”, he tells me. Doing this is legally complex (there’s no straightforward way to declare income in a foreign currency to the SENIAT) and potentially dangerous, especially if the malandros closest to you find out you’re earning greenbacks. Still, being able to save some of your income makes the possibility of a salary in foreign currency very appealing.

Aware of what her skills are worth in international markets, Tamara went job hunting again. “In early 2015, it was almost impossible to find a job in Venezuela that allowed me to earn hard currency”, she says, “so I turned to freelancing”. A Colombian company offered her a tigre that paid her $500 a month as a half-time developer, still below mean Latin American rates. “I had to lower my rate to get the job, because clients from abroad factor in the political instability of the country (especially after the 2014 guarimbas), and the difficulty of communicating through voice or video because of low internet speeds”.

“I really hope more companies engage in the practice of dollarizing their payroll,” she told me as a last remark. I hesitated over that last feeling for a moment. Hundreds of well-educated people will be using their new purchasing power to get the hell out of Dodge, and that’s scary. But in the long run, companies that reconcile our professional rates with the rest of Latin America are ultimately bringing more dollars to talented Venezuelans, and helping them get the opportunities they deserve. That, I think, will result in a network of great technologists that will be better equipped to help rebuild the country in the future.

49 COMMENTS

  1. I have no doubt that many people reading this on some other site would be screaming about the escualidos robadolares whatever the hell.

    Never realizing that the fact that if your people with good technical skills have to go to all this bullshit to earn a salary in something other than monopoly money as the prelude to getting the hell out of there… it is YOUR SYSTEM who is stealing. From them (their futures and their country), from you (them and their expertise and the possibility of actually having a local industry on the sector that generates direct and indirect jobs)…

  2. “A Colombian company offered her a tigre that paid her $500 a month as a half-time developer.”

    Ahh.. “matando tigritos”, that’s part of the story of Vzla. It’s actually one of the few ways to comprehend how on planet Earth do people even survive with “minimum salaries”. Mathematically speaking, how??

    Most don’t. And that’s the Castro-Chavista plan, not just “ineptitude”, as many keep saying. Cleptocracies and “socialist”, populist authoritarian regimes want their people dumb and poor, with just the right mix of “alfavetisasion sosialista” and a bit of street cash. The ignorant, under-educated, brain-washed part is pretty much already covered: Almost 1 million of the few, bright and educated professionals Vzla had are gone. Like most readers of these blogs, massive Brain-Drain, well described in part on this article.

    Then you just gradually squeeze people’s Purchasing Power or Real Income with inflation, currency exchange controls, draconian business rules, expropriations and nationalizations.. all that. It’s called the Boiling Frog rojo-rojito effect. Until the middle-class disappears or is in Tamara’s situation, or much worse, if they still can’t leave the country: Cazando Tigres.. “Inventando, chamo” pidiendo segundas, buscando palancas, cuanto’hay’paeso? tu, sbaes, rebuscandose una..” or, when they see so many around getting suddenly rich, mysteriously, they too end up “enchufandose” to the corrupt, enormous Chavista monster with 32 far-reaching tentacles called “Ministries”. Classic Castrista plan, it has worked quite well, hasn’t it.

    That’s how you force poor people into massive Bachaqueo, “irregular” street businees, complicity if not full-blown participation in massive corruption. You practically force them to accept any twisted or illegal job, accept any bribe, ultimately selling their souls to the PSUV communist system. The indoctrination for those who could not leave, usually the millions of ignorant poor, continues. The threats of losing their jobs start before elections, and that’s how you end of with 6 Million Maduristas, plus 15 Million mostly Chavista “undecided” , today.

  3. As a small business owner based in Europe, any idea how I could hire people in Venezuela to perform work remotely (e.g. programming, design)? I could pay Euros/Dollars into a foreign bank account they have, but how can I then legitimately report those business expenses into my accounts? Perhaps using Paypal, Elance, Mechanical Turk? Does anyone have experience with this? I’m mainly interested in keeping the tax authorities here happy – I’m not too concerned about Venezuelan tax authorities (if the money never enters Venezuela it shouldn’t be hard to hide from them).

    As you might guess, I have a personal link with Venezuela, and I like the idea of supporting people there while also benefiting from affordable support.

      • Thanks for the advice! I checked out Payoneer and it looks like the solution I was looking for.

        And yes, I would be interested in receiving your CV. You can send it to legehuls@gmail.com, it’s my spam mailbox but I’ll send you my real e-mail address in my reply (don’t want to list my actual e-mail address in a comment about circumventing Venezuelan taxes). I don’t have work immediately but I may have in the upcoming months.

    • Best way to pay is using bitcoins (A Criptocurrency).
      And since bitcoin is a techy thing, most of it’s users are software developers.
      On facebook there are a lot of groups of bitcoins that you can use to find developers.

  4. In electronics companies the model is: cheap designers in Venezuela, cheap manufacturing in China, then sell in the US and Europe.

    • Brain drain is scary. If every skilled Venezuelan leaves, we’ll just end up with Maduro et al. to run the show. My hope is that many of those who made it out (me included) may be able to contribute to create a truly modern Venezuela when the conditions are met.

      • Alejandro allow me to disagree (in part) with you

        Although it is true that many skilled Venezuelans have left the country in the last 10 years, it is also true that many talented Venezuelans remain in the country. Don’t you think these guys are up to the challenge to take the opportunities that you and me (rightly so) decided to leave behind?

        I’ve always found this argument a bit narcissistic from us (the Venezuelan expat community). It is true that most of us come from a middle class, university educated background; but even if we think that the Venezuelan diaspora represents the best of the country, I hardly believe that is the case. One of the many things that the civil democracy (1958-1998) did in Venezuela was give access to the masses to education: millions of Venezuelans received free universal education (sorry JN!) and many continued to receive such education even after la peste roja took over the country. I think these guys will be the ones leading the reconstruction of the country, among them I’m sure there is also very bright people. Hence, I don’t think this is a catastrophe

        If anything it could be a blessing for the country: many Venezuelans now realise how bad things have been in Venezuela for so long. They have seen the world, lived in different societies and learnt things that will be useful for our country in the future. We need to make the most of this situation. )

        • What’s stopping those of us who received free education from seeking a better life for them and their families abroad? People are getting fed up and lining up for visas; I know of many examples. Is it most skilled people? Maybe not, but at least from my experience, the exodus has been massive this year.

          I don’t think I’ve left opportunities behind, as I’m not looking to settle anytime soon. Maybe this isn’t true for the majority of the diaspora, and they’ll choose to stay in their new countries.

          Yeah, I think our international experience will be good for the country when we come back. That cheers me up a bit!

          Thanks for commenting.

  5. I don’t think it’s scary. If anything is an opportunity to those who stays.

    As any high risk investment, they potential revenue can be massive!

    Just imagine a mid scale maquila de cerebros operating in Venezuela and paying decent salaries in hard currency in Venezuela? (nowhere near the international rate, but enough to make decent living in Venezuela)

    The body shopping industry in India started using similar principles

  6. I work with a lot of expats, who come to Germany, probably often frustrated by the still quite low wages they pay offshore.
    Huge variety of integration models:
    – a nice indian guy, who refuses to learn any german even with a way much higher income doing freelance for five years. For me it was a joy to work with him. I don’t care.
    – pakistanis who manage the language very well.
    – a guy from Moldovia who first went to Czech Republic in a outsource hub, where they pay like 1.000 Euro. From there he entered Germany to do freelance, earning much more.

    The industry as a whole is very volatile. And off shore even more so. So this probably makes strategies to get good money by specialization in medium income countries difficult. You can’t compare India, because there the cost structure is very different. Once I told an indian guy on a forum that I had bought a washing maschine. He answered that he didn’t need, as he employed a woman, who washed his cloth. And another who cleaned his room.

    Of course, there are a lot of ways.

  7. Unfortunately there is a problem earning hard currency in Venezuela: If you are not discreet, you get a bulls eye painted in your back with a Dollar sign in the middle (translation: Please kidnap me, I have income in dollars)

  8. Similar to the Ford proposal of selling cars in dollars ( so, you have a nice 2015 Ford Fiesta bought with dollars ? You must have an account with more dollars that I can certainly use ..)

  9. The Venezuela massive Brain-Drain is a much more serious, profound and irreversible problem than many think. Even the educated intellectuals, who got the hell out of Vzla as soon as we could. I bet 8/10 readers of these blogs are part of the invaluable cultivated neurones exodus.

    Of a guestimated 1.5 Million people who left Vzla the past decade, the vast majority were the better educated, usually middle-upper class, usually qualified professional, and quite young. PLUS their university professors. Say at least 80%, or 1 freaking Million of the best and brightest. Not that Vzla had much more of that elite, well-educated, highly skilled type in the massively ignorant and under-eduacted population to begin with.

    Alejandro here has nice hopes, but ask most of us who are gone, ask yourselves, honestly, if you plan to return to Cleptozuela or Cubazuela or Murderzuela any time soon. Any time next decade? Or in 20 years?
    There you go.

    Look at Cuba now, an old, and still aging, utterly brain-washed, under-educated by true, international standards, a bunch of zombies, indoctrinated or completely dominated by the Castro-Chavista regime. With very few Yoani-type exceptions. Do you think that many of the brightest of Cubans who left, half of them here in Miami plan to return anytime time soon? If they ever do, it’s for business, with a 2 way ticket.

    Exactly what is happening in Vzla. Such massive brain-power and skills deficit will take Decades to replace, and is having a devastating effect on the country. Unless you enjoy reading Aporrea (next post)

    http://www.reuters.com/article/2014/10/15/us-venezuela-migration-idUSKCN0I41C820141015

    • Thanks a lot for the comment and for linking to the Reuters article!

      Yeah, going back to Venezuela is nothing more than a dream for now. I need two things: significantly better personal safety guarantees, and better Internet infrastructure. If I have that, I’m pretty sure I can nail the rest.

  10. The amount of nativity in this comment section is dumbfounding.

    Be honest with yourselves. You’re not coming back to this hellhole. The brave souls who weathered the storm in their homeland and kept their feet planted firmly on the ground are the cream of the crop here. Not you. I know many people who are young and educated, who wish the best for the country and are conscious of the gravity of the situation but refuse to leave because they have faith in this country, those are the people I salute.

    I understand that you expats probably did not want to leave, or maybe you did. But don’t delude yourselves into thinking that you have anything to contribute to this country. You’re living in another context and contributing to the economy of another country that is not your own. And if you were given the chance to return you wouldn’t.

    • I think we should stop making the distinction between “los que se fueron” and “los que se quedaron”. I do admire the people who’ve stayed and are doing meaningful, necessary work.

      But I do think I can be useful to Venezuela: writing about it, discussing it online, spreading the word about it… As a tech entrepreneur I’m learning a lot by being in another country, and I *will* bring back what I’ve learned. At the present moment, I honestly feel I’m (personally) most useful to Venezuela outside of it than inside.

    • “The brave souls who weather the storm” would love to leave Vzla, and probably will the first job opportunity, visa, or helping hand they get. Read any of the polls out there. Very, very few stay if the could leave, like that US Lawyer who just got killed. Ot like one friend of mine who inherited one of the very few honest private business of 3 generations, does very well for himself but still struggles to survive, his quality of life is down the drain, and he’s scared to death about the safety of his wife and children. Or another one of the very few I know, a Painter, without any savings or visa, who paints the Avila mostly and all his clients in Venezuela.

      That’s a very small minority of educated, skilled people who decide to stay, because economically for them it’s the better option, face it. Save the “patriotic” sentimentalism BS. with “faith in their country” mambo-jambo for aporrea or someone else. When someone in your family gets kidnapped or killed or robbed every year, when you can’t run an honest business without “presio justo” crap or dollars, or materia prima, with bogus inamovilidad laboral, you get the hell out first chance you get. Results? 1.5 Million gone, and counting. And that’s usually the best of the best, of the very few good ones remaining, que siguen calandosela y arrriesgando sus vidas.

      • Alright I might have gotten carried away with patriotism. I’ll be the first to admit that depending on the day I might opt to leave myself. (Very much depending on the circumstances, right now I have my feet firmly planted here). But If I were to leave I would not delude myself with nostalgic melancholy I see too often in the expat community. I’d honestly forget of Venezuela all together and try my best to assimilate where ever I land. Venezuelans (Like you mentioned) are basically becoming like the Cubans of Miami, all too proud of their cultural heritage but wouldn’t return to their island even if a gun was pointed at their head. It’s best just to end with that farce and move on with your lives.

        I’ve known of people who due to this mentality have, to their own regret returned from abroad back to Venezuela unable to assimilate because they want to remain criollos in a foreign land. As I have family which hardly think of Venezuela anymore and have been very successful in their ventures abroad because of it.

        • Such generalizations are ill-advised. You have all kinds of people anywhere. But nostalgia or even melancholy for the country where you were born, or grew up is nothing “made up” or fake, or a “delusion” as you suggest. It’s natural. And it does not go away easily, if you spent enough time in your youth con los panas subiendo al Avila, or yendo pa Choroni or “derrochando fisico” en la Gran Sabana, or after enough bonchecitos and juegos de domino en Margarita. That’s part of what makes your character, and you’ll carry it with you wherever you go.

          Freaking “Nationalism” or stupid “Patriotism” are excessive, unfounded “pride”, all emanating from ignorance and bloated egos, but that’s another story. We will all think of Vzla, forever, and if you spend the next 20 years in Madrid, Paris, New York, Rio or Vientiane, Laos, where I might end up, you’ll never forget those places and those people either.

          Bottom line is that we go wherever we can afford it, dude, with what we can these days. We all like the good life, the other “bravery” stuff you were mentioning IS delusion, if not, well, being irresponsible. Staying in the 2nd deadliest country on earth, where you can’t even run an honest business and must stand in line forever at the grocery store, is borderline masochistic. for those who can leave with better prospects. If we all could, we’d spend our time is several countries worldwide, plus travel time, and some of them would not be Honduras, Syria or Cuba or Cubazuela.

  11. So in your proposal, tell me how Venezuelan entrepreneurs are suppose to compete on this scenario? Let’s say you aren’t funded with a lot of $$$ but you have ideas and want to start something?
    Not to mention, what about the people that are not techies? So they basically will get really crappy salaries and can’t do very little about it. Other professionals careers don’t have the advantages offer by the IT world.

    You’re proposal seems to me pretty unfair. Since it actually keeps distorting Venezuela economy, so techies will have $ but everyone else will be basically broke. Your proposal is very “primero yo y los demas que se j…”. Which I found pretty ironic since one of the reasons Venezuela is all messed up is thanks to this the philosophy.

    But hey! At least we can get some $

    • This bothers me a lot, too. I think if you have a great idea and start building the right connections, you’ll be able to get funding in dollars. You could even crowdsource a prototype for your idea for very little money in dollars. Entrepreneurs will just have to get more inventive.

      Salaries in dollars for techies means prosperity for their families. Yes, it’s unfair that they –specifically — are getting prosperity first, but don’t we have to start somewhere? It’s economics, you put the incentives there and more people will want to become techies. There’s GREAT free material available for anyone who wants to become well-versed in tech, like:

      http://venturebeat.com/2015/10/19/google-and-udacity-launch-tech-entrepreneur-nanodegree/

      If you have an alternative proposal, by all means bring it forward.

      • In a country not everyone can be techie. That doesn’t make sense. I don’t have a proposal right now but I think your proposal in the big picture causes more problems.

  12. So in your proposal, tell me how Venezuelan entrepreneurs are suppose to compete on this scenario? Let’s say you aren’t funded with a lot of $$$ but you have ideas and want to start something?
    Not to mention, what about the people that are not techies? So they basically will get really crappy salaries and can do very little about it. Other professionals careers don’t have the advantages offer by the IT world.

    Your proposal seems pretty unfair to me. Since it actually keeps distorting Venezuela economy, so techies will have $ but everyone else will be basically broke. Your proposal is very “primero yo y los demas que se j…”. Which I found pretty ironic because one of the reasons Venezuela is all messed up is thanks to this philosophy.

    But hey! At least we can get some $

  13. I am retiring in a few months! I would be happy to help find VC funding for anyone who needs money once I have the time. Just remember that you need to know what your product idea is worth to your target market and how much money you need and how long it will take to get it done.

  14. Venezuela could be the new Bangladesh right now but let’s face it: practically every startup or consultancy company with foreign economic connections has been doing this since the arrival of currency controls, lest we forget the old days when payroll was about 50% cheaper to settle up during the 1920/3600 Bs-per-dollar or 4,30/9,00 BsF-per-dollar days. There’s no escape from being taken advantage of in this country.

  15. I have problems with generalizations. Maybe it is not what you intended for in your article but sounds a bit like that. I read that your friend had a bad experience with her employer. That is true and I am sorry for her, but you can find an abusive company in every country. Trying to portray *all* companies as bad organizations that don´t pay people a fair amount for their services is a dangerous thing. That is exactly they kind of message the government uses, “the working class has no money because business owner keeps the money from their employees labor”. That generalization is so wrong and so common in our country that we have to fight it every chance we got.

    Is right to think that every software company that earns some USD is not being fair with their employees?

    Let’s think for a moment about what would it take for a company to pay each developer USD$ 5000.
    Let’s say you have
    10 developers equally paid
    10 x 5000 = 50.000
    Other people in the company (Accounting,Management,HHRR,sales,etc)
    5 people for 20.000
    Office space and other expenses
    3.500
    Company savings for unexpected expenses
    5.000

    30% profit margin for the company
    Total 102.050 (This is only a rough exercise to make a point)
    How many 10 people companies in Venezuela make USD $ 100.000 a month?
    I don´t think there are many.

    I would like to present an alternative point of view. The view that some companies might have.

    You have to make USD $. If a company wants to pay in USD it has to earn USD. To do that you have to spend USD in sales people abroad or sales trips and other activities. You have to be really good or spend a lot of money hiring to get good sales abroad.

    You can´t pay a person in Venezuela in USD legally. If your company is outside Venezuela or you only employ freelancers you can get away with paying in USD but if you have a Venezuelan company with a payroll and an office that is more difficult.

    People need some Bs to live. It is not so easy for developers to receive all their money in USD as they need to cover some local expenses. (mentioned in a previous comment)

    A lot of people in Venezuela don´t have foreign accounts. A regular 24 years old developer doesn´t have a bank account in other countries.

    A Business can improve their earnings in two main ways quantity or quality. Both are difficult to achieve if all your developers are leaving to work in other countries after working in the company for 14 months

    To be clear, I don´t think that all companies are good either, I just want to bring another perspective to your article

    • Thanks for your comment and for providing a possible company’s perspective. I certainly didn’t intend to portray all companies as evil organizations that exploit their workers; if it came out that way, it must be because I’m a newbie writer.

      Notice that I mentioned a company with a dollars capital that, focusing on long term employee retention, started paying their programmers a part of their salaries in dollars (nowhere near $5,000, but also not $100) and another part in bolivars (so they can manage day-to-day life in Venezuela). This, and the fact that they’re open to remote collaboration, means that they can keep the talent if they choose to move out of the country. It’s a win-win: the company earns the workers’ trust because they’re being paid closer to what their skills are worth, and the worker makes a good living for herself and her family.

      Yes, I’m aware that not every company can do this. There’s companies with no dollars investments, and companies that don’t even have a projected revenue model in dollars. My annoyance is with those companies with $100k+ funding (yes, really) that foolishly insist on paying their highly qualified workers a pittance and are surprised when they leave them for a job abroad after a few months.

    • Your point seems fair and all, but the truth is most developers in Venezuela earn around $50 dollars a month and spend months without a raise. It makes no sense.

    • Welcome to Caracas Chronicles, where we teach gringos and Spanish speaking people from other countries some of our slang while they read about our chaotic country.

      Seriously though, it’s not that hard to google unfamiliar terms. This is just CC style.

  16. Well… A company from the UK pays me 120000 bolivars per month; so I guess I enter here. The thing is that it’s very hard to get a job when you have no experience and you live in a country like Venezuela. Anyway, I’m trying to seek for new opportunities, but for now, I can at least eat well with my pay.

    * Andres is not my real name

  17. Young wireless telecom startup looking for an experienced network admin/network engineer to join our team. Must have field experience and at least 3-5 years on the job. Industry certifications like CCNA, CCNP required. For the right candidate, relocation may be necessary. We are based in the Caribbean. Please send email to ganjanese@yahoo.com with the subject title “Job Vacancy”.

  18. Apply for any kind of loan at a very low rate of interest as convenient for your repayment of both principal and interest as at when due. Your happiness is our concerns in growing your business with the required funds and other financial commitment .Apply via: carpaholdingsgrp@gmail.com

  19. So I’ve read above that I can use Payoneer to pay someone in Venezuela. What other options are there? Also, I heard that then Venezuela gov has a tight control on external money coming into the country. Does anyone know how much will the worker will be taxed?

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