Tech Talent Shortage is nothing new. Even if the local talent pool is big, quantity does not mean quality. And every seasoned tech lead knows a star developer can outperform several less skilled contributors combined.
How scarce is tech talent really?
Since 2010, the number of tech-related job posts in the U.S. has increased by around 200,000 every year. And still, there were about 918,000 unfilled IT jobs in Q3 2019 alone. It is predicted that by 2030 the demand for skilled workers will significantly outstrip supply, resulting in a global talent shortage, both tech, and non-tech, of more than 85.2 million people. The United States alone could miss out on $1.748 trillion in revenue due to labor shortages, or roughly 6% of its entire economy, according to the study by Korn Ferry.
Companies are spending more time and resources on recruiting efforts but it still took them an average of 66 days to fill a tech role in 2019, as high as 80 days for highly sought after positions such as App developers, up from 55 days in 2016. These vacancies are estimated to cost about $680 in lost revenue per day per vacancy, according to iCIMS.
Finding the right individual that combines technical expertise, domain knowledge, and has a good cultural fit is almost an insurmountable task. Even if you find this elusive person, in a super competitive market, the time between searching, finding, and attracting him/her to your startup will at best take you months. And unless you can compete with top market compensation, there is little chance you can actually hire the very best.
Compensation is more than just money
The tech talent workforce knows perfectly well their skills are in high demand and play hard to get, choosing companies that are willing to pay them more. However, whilst money is important, it is not everything. They prefer companies with a strong mission statement, that offer perks that matter to them, they want increased autonomy and flexible work policies. Startups hiring in this competitive market need to offer their employees a variety of perks ranging from miscellaneous gifts and travels to free gourmet food from on-site chefs, and even nap pods. A world where the quality of the food your chef makes can be the decisive factor if you hire someone is a world way too dependent on a scarce commodity — human capital.
The talent shortage is a big issue, if not THE big issue facing all tech companies. A Startup Post-Mortem study shows that a top reason for failure is not having the right team. Talent is hard to find and most times even harder to keep; it’s an undeniable fact that can’t be ignored, but with the proper planning and the right strategy, the eternal problem of employee retention can be overcome.
Hire from a bigger talent pool
A well-implemented company culture, with solid processes that focus on value creation, autonomy, and responsibility can move beyond a single physical location and outdated micromanage practices. This flexibility will, in turn, help startups scale and enable them to tap into a bigger talent pool, with increased chances of succeeding in finding the best software engineers. Sourcing from a bigger talent pool will not only help address scarcity but also break the trend of increasingly paying more and more for a specific role, in a race to the top in terms of compensation and perks, that quickly eats away at your precious funding!
Expanding the talent pool means moving to other cities away from the company headquarters. This can be done domestically, which helps but doesn’t address the underlying scarcity of tech workers, especially in the US. That’s why a lot of companies are looking overseas for expansion and solutions, either by hiring remote workers or setting up offices abroad, to be able to access the skills they need.
Is going Remote the solution?
A lot of pundits will say yes. But beware of the hype. Even though remote seems to be the easiest option in order to broaden your talent pool, it is challenging to create and maintain company culture across fully remote teams. It is very different to be remote-first, where everyone, including the founders, are remote, than to have the initial core team on-site with a few second-level contributors remote who can’t actively participate in informal ‘water cooler’ reunions and discussions. Moreover, according to a recent study by Stackoverflow, although developers seek flexibility, around 60% still prefer to have an office where they can work from.
The modern work environment will probably be a mix between the office for collaborative work and the home or other secluded location for individual deep work. As Susan Harker, VP of Global Talent Acquisition at Amazon said “I think there are types of work that absolutely can be done from home but what I hear more is that it’s less “I want to be at home” and it’s more “I want to have some flexibility.”
Solution: Remote-friendly with a European Hub
Companies can be effective, can attract and retain their talent by having a remote-friendly culture and strategy, rather than being fully remote. Instead of fully-remote, think distributed teams organized around hubs. This obviously means startups need to open new office locations, and Europe is the right option for companies seeking abundant highly qualified talent while sharing the same western culture and values.
Being home to at least 30 different hubs, Europe has more than 6 million professional developers and has experienced steady growth in the developer talent pool, in contrast to the US, where the professional developer base has been stagnant for the past two years.
Along with this large pool of talent available to startups, Europe has increasingly moved towards more entrepreneur-friendly regulation and with the borderless nature of the European Union, Europe’s tech talent is able to move wherever the innovation is, largely unconstrained by national borders.
Hiring software engineers in Europe is also SIGNIFICANTLY more cost-effective than in most US cities. Therefore, you can have the desired skilled team of developers with a far lower burn-rate.
Tech talent shortage is a real threat, it seems to be here to stay and there is no denying that it will severely impact companies both in tech and non-tech business areas. How you deal with it and the steps you take to reduce that impact is what will ultimately make a difference and decide if your company is brought down by it, just manages through it or blooms in spite of it!
By combining the US and European talent pools, you will be able to significantly reduce the impact of the tech talent shortage while opening the door to an uprising new market. If that sounds like a good plan, we at BRIDGE IN can help you execute it. We are currently focusing on helping startups expand to Portugal as it provides a strategic location bridging US and European markets and offers the best cost-benefit.
Originally published at https://www.bridgein.pt on April 1, 2020.