Software development outsourcing solves the problem of a lack of local tech talent.

How to overcome the challenges of the US tech talent shortage in 2021?

The spark of automation in recent years, backed by economic growth and innovation, significantly impacted the job market caused, paradoxically, both job loss and talent shortage. Those businesses in need of tech talent faced the biggest challenge to grow fast and efficiently in the industry considering their lack of software engineers and high competition on the market.

According to a survey done by the World Economic Forum in 2019, only 29% of tech companies believed to have the right IT-talent. As per a global study by KPMG and Harvey Nash, 67% of tech leaders, from the count of 3,000, acknowledged the shortage of talent pool.

The increasing demand for new technologies with the outbreak of COVID-19 fueled a problem of finding new talent and amplified the talent crunch what caused this widening gap.

Simply put, the ratio of talent supply VS market demand is high enough. If this discrepancy continues to expand, it will become difficult for businesses to overcome the issue.

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What creates demand for a job increase in the tech market?

The pandemic situation has accelerated the adoption of digital technologies by several years, in developed Asia, the leap is ten years. All of these happened in a span of a few months.

Digital leap made by companies because of the COVID-19
Source: McKinsey

There was a rapid shift in customer interactions towards online channels that made businesses go digital and adjust workflow. More people started to make purchases and receive services online than before. As the McKinsey Global Survey of executives states, companies have speeded up the digitization of customer and supply-chain interactions by three to four years during the COVID-19 crisis.

The rise of automation and AI stimulates economic growth, but 75 million to 375 million people may need to gain new occupations or upgrade their skills to perform new tasks. This trend created demand in software development that can produce 20 million to 50 million jobs globally by 2030.

One of the changes for higher job demand is rising demographics. Most of the developing countries are going to grow in the labor force by 2030. They can benefit in job creation and innovation in occupations starting from now on.

All in all, due to digital trends, the need for qualified computer science specialists increased.

The shortage of top-notch tech talent worldwide. 

Worldwide talent shortage will increase with years passing. According to Korn Ferry, there will be a shortage of 85.2 million competent workers by 2030, resulting in lost revenue opportunities of $8.452 trillion in tech alone. The US could lose out on $162 billion worth of revenues annually unless it finds skilled IT-talent. Contrary to the US, India, and Latin America can become the next tech leader with more than 1 billion tech workers.

Tech talent Shortages Growing Around the World in 2020
Source: ManpowerGroup

Moreover, there are more job openings than qualified people to fill them. There will be 1.4 million computer science-related jobs available to the public when only 400,000 computer science graduates to fill those roles. Most of the babyboomers will retire by 2030, already causing 545K software developers shortage by 2026.

Global tech talent shortage
Source: ManpowerGroup

The US Bureau of Labor Statistics states that the employment of software engineers is going to grow 22% by 2029, opposite to 5% of other occupations.

Issues employers are facing when it comes to the recruitment of software developers

Lack of Experience 

By now, we are well aware of the lack of development talent in the tech industry. However, the top challenge recruiters are facing during the hiring process of software developers or selection for any other programming jobs is a lack of skilled talent. Hiring inexperienced graduates, you cannot expect high-quality work to be done.

The lack of proper experience and the shortage of software engineers, coders, developers, and another tech talent, pushed organizations to look beyond in-house boundaries to address the high tide of demand, especially while hiring for specialized professions.

Lack of Technical Skills

The lack of experience is accompanied by a lack of the right skill-set when it comes to the hiring process. Despite the growing number of IT-graduates, recruiters find it difficult to find the right hire.

Not every software graduate has the relevant experience – in case they do –  not everyone has the right skills that can match the job description. Assigning tests and going through a few interviews will not fully guarantee to close the position with the right profile.

Lack of Formal Education

The concerning fact that bothers every recruiter in the United States is that only 5% of high schools are certified to offer AP computer science, and only one in eight high schools offers AP computer science in the US. 58% of STEM jobs (Science, Technology, Engineering, and Mathematics) are in computing when only 8% of STEM graduates are computer scientists. There are many self-taught software developers without any formal education or computer science degree and an increasing number of Bootcamp graduates.

Even though this can fill in the shortage of talent, there is no assurance that their level of know-how can match the job standards.

High Salary Demands

The talent shortage in software development caused an increase in the value of the offer. The average national salary in the US is over $100,000 and will increase with high demand. Tech giants as Microsoft, IBM, or Amazon can easily get top-notch developers abroad or locally and pay any price, but for an early-stage startup or a small business, such development costs are simply impossible.

Except for high-cost maintenance and qualification issues, recruitment of in-house developers causes a significant operational impact and a $33K loss in productivity during developer recruitment.

Solutions that companies are taking for the tech talent shortage

  • Training. Training existing and new employees are the best way to address the skill issue among employees. The savviest companies are training talent themselves; incentivize high schoolers to get into the industry through their in-house schools, coding bootcamps, or competitions. In-house and out-house training offers valuable expertise to improve the skill-set and competencies of employees to match their technical and soft skills with the industry standard.
  • Look for talent in-house. Many organizations train existing employees who have the potential to fill in the talent gap. The purpose of training to prepare them for a new job in-house that may be a challenging role. Or it can be a problem-solving strategy when a company fills in the lack of development talent and transfer employees between the departments. That also acts as a retention strategy that can intensify the skill shortages.
  • Reduce time to hire. Streamlining the process of hiring can reduce the overall time-to-hire. This can only be achieved with a pre-defined recruitment guideline. This factor can influence your reputation among candidates as well, and you can stand out from your competitors.
  • Outsource. Leveraging offshore, nearshore, and remote talent pools is the most promising way to balance the talent shortage, especially when your company demands highly skilled personnel but no luck at hiring the right one locally. Outsourcing not only gives access to the global talent pool, but it also saves you money, time, and works effectively to the counter-strike the high turnover in the IT industry.

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Best countries to outsource a software development process

Amidst the COVID-19 crisis, financial crunch, and shortage of software developers within the US, outsourcing is the answer to the lack of development talent. It is the best solution for startups, small, mid, and large enterprises.

As per the Deloitte Global Outsourcing Survey 2018, disruptive outsourcing led by cloud and automation technologies focused on performance improvement and cost reduction.

This cost-efficient strategy will fill in the tech talent gap and give access to world-class technologies and global talent.

So, with this in mind, let’s explore some of the top countries for software development outsourcing in 2021.

1. Brazil

With more than half a million developers and over 6 million English-speaking population, Brazil is a new-comer that is fast becoming the main hub for cost-effective software development services. Some top reasons that have made Brazil one of the hottest outsourcing destinations are its plethora of trusted software providers available at affordable prices, a talent pool of software engineers, developers, and programmers with rich professional expertise in Python, .NET, and other technologies. Brazil has the largest amount of Java developers in the world. Also, the time convenience is the main reason behind UK and US companies outsourcing to Brazil, as the country is only three hours behind the United Kingdom and an hour ahead of the United States.

Hacker Rank – 38th

HackerRank Score – 73.4%

Price – $25 to $40/hour

Time Zone – GMT – 3

2. Mexico

This perfectly situated country is the potential go-to destination for businesses looking for a highly skilled talent pool at an affordable price. According to Stack Overflow, Mexico is home to 223 thousand software developers, and with the constant rise in the count of IT-specialists, the country provides access to a huge array of developers. It also holds expertise in Agile development, Blockchain, IoT, and Analytics. Among the many reasons to opt for Mexico to outsource your software is the perfectly aligned time-zone between the United States and Mexico due to the border it shares and the high number of English-speaking population, which makes the location even more ideal.

Price – $30 – $50/hour

Skill Value Rank – 2nd (Best Developers)

HackerRank Score – 75.7%

Time Zone – GMT-6

3. Ukraine

Located in Eastern Europe, Ukraine is one of the top outsourcing software development destinations in the world. With 80% of the IT-community having a higher level of English proficiency and a time zone that overlaps with US and UK zones that ensure convenient communication and co-operation, Ukraine is the top contender. The country has also been ranked 11th globally by the HackerRank in 2018 and 64th in Doing Business in 2020. With around 200 thousand professional developers and IT specialists, Ukraine is famous for its high number of C++ programmers. It also holds expertise in a majority of the programming languages including JavaScript, Python, PHP, Node.js, etc.

Ukrainian software developers have been in high demand in the world of outsourcing for a long now.

Price – $25-$49/hour.

HackerRank Score – 88.7%.

Time Zone – GMT+2

4. Poland

Poland is classified as a country with a highly advanced IT-infrastructure, fast and affordable (one of the cheapest in the world) mobile Internet, and most importantly a highly-skilled, English-speaking talent pool. It is growing to be the outsourcing giant of Eastern Europe and the globe. According to the HackerRank, Poland has the third-largest count of expert programmers and over 200 thousand developers. While PHP is the widely employed programming language in Poland, the popularity of Java, Python, Ruby, Shell, and .NET Framework is equally strong. Polish software developers are among the most qualified, experienced, and the world’s best in terms of coding experience.

Moreover, if you are on the hunt for a software development team skilled in Agile methodologies, Polish teams are well-versed in Agile. All these factors make Poland a perfect destination for outsourcing software development.

HackerRank Score – 98%.

Price – $25–50/hour.

Time zone – GMT+2.

What are the benefits of outsourcing software development with YouTeam?

No matter what the stage of your business – startup or established player, YouTeam acts as a bridge between your company and a dedicated development team. It offers you a large number of advantages that can benefit your company in the long-run.

  • YouTeam is a marketplace with a huge database of world-class talent that has been added to our wide pool of professionals from top development agencies in Eastern Europe and Latin America.
  • YouTeam helps you source candidates from meticulously vetted software development firms that are available on our marketplace. This process to find matching candidates takes around 48 hours. Once this is done, the hiring can be completed within 1 week because we only offer you profiles of developers who are ready to start new projects. If the sourced talent is not meeting your expectations, you can get a replacement within the first two weeks of a project, at no extra cost.

Wrap up

The gap of available job openings and tech talent shortage visibly widened with the rise of automation and digital transformation due to the impact of COVID-19. IT-outsourcing is an excellent solution to transform your business digitally by automating your business processes. It helps to reduce the risk, save money and time. Now you can focus on your core business needs rather than managing your in-house software development team. With YouTeam, you are just a click away from finding the right talent.

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Written by
Svetlana Shevchuk

Digital Marketing Specialist at YouTeam, a Y Combinator-backed marketplace for building remote dev teams.

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