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How to address the tech talent issue in the UK

It’s hardly surprising to hear that Europe suffers from a shortage of quality IT staff. The pace at which the IT sector is growing all across the EU, the UK included, is promising to say the least, and shows that the future of business is digital.

However, the lack of quality IT staff, especially when it comes to online security, is a major handbrake that threatens to pull itself while the industry is in fifth gear. The situation is quite troubling, make no mistake. Looking at the recent figures by the Ernst & Young (EY, Attractiveness Survey, May 2015), we can see that tech startups are popping up like mushrooms after a summer rain.

Gordon Innes, chief executive of London & Partners, the official promotional company for London, says: “over the last decade more international tech investment projects have come to London than Paris, Dublin, Madrid, Amsterdam and Munich combined.”

In such an environment, quality staff is hard to come by. Andrus Ansip, European Commission Digital Single Market chief, recently predicted Europe will lack 800,000 skilled workers in the next five years, which is troubling. “Despite rapid growth in the ICT sector, creating some 120,000 new jobs a year, Europe could face a shortage of more than 800,000 skilled ICT workers by 2020,” he says.

There are ways to overcome this problem and ensure a fertile and sustainable future for the UK’s digital business, both long-term, like making the IT industry more appealing to the younger generation and building stronger employer brands, and short-term, like raising salaries or hiring staff who work remotely from elsewhere in Europe.

Back to school

The talent shortage issue, as a recent A.T. Kearney report suggests, begins at school. Students’ diminishing interest in science, technology, engineering and mathematics (STEM) is partly explained by the fact that they struggle to see any practical value in what they are being taught as lessons become less practical and more theoretical.

The UK is already working hard on making programming more approachable: last year England’s state-run schools began introducing its youngest students to algorithms. The UK government took advice from tech giants like Microsoft and Google, and has overhauled the way it teaches computing to children.

The UK is not the only country approaching the problem at its core – Australia is basically doing the same. It was recently announced that basic programming will be taught in primary schools from year 5, and more sophisticated programming will be taught from year 7. Canada is doing the same, as are Finland, Scotland, Israel, New Zealand, and several other countries.

Making tech cool

While 93 per cent of CEOs agree that there is a need for change in their strategy for recruiting and retaining staff, the overwhelming majority of 61 per cent haven’t taken the first step yet. In many ways, hiring has become an extension of marketing. Strong brand presence and the use of multiple advertising means to attract candidates have become key to acquiring tech talent under the current circumstances.

Savvy HR professionals know that candidate-friendly branding on a company’s website or career portal has huge influence on talent acquisition. In fact, 78 per cent of job seekers say that the look and feel of a company’s website is moderately to highly important to their decision to apply.

However, the best marketing technique – and any marketer would agree – is word-of-mouth. IBM proved that employees make the best brand ambassadors. Traffic generated by their staff in social media converted seven times more frequently than traffic generated by other IBM sources.

Taking active part in the life of local IT community is yet another effective way of creating a buzz about working at your company. “Recruiting talent is no different than any other challenge a startup faces. It’s all about selling,” says Vivek Wadhwa, an American tech entrepreneur and academic. This rings true for larger companies as well.

The easy way out

Gone are the days when a salary was a candidate’s main reason to accept or turn down a job offer. A recent survey conducted by CareerBuilder (December 2015) found that job stability, affordable benefits, location, good boss, and good work culture rank more important than salaries. And yet, if all else is equal, better compensation and perks still have the power to lure a candidate to a competitor.

Of course, this is a very short-term solution a company might resort to, and it may not even be worth it. Paying someone a competitive salary is hardly ever a guarantee of employee retention.

Professional recognition, education opportunities, career advancement, work climate, flexible working conditions and many other aspects often turn out to be more important than money, especially in the tech industry, where businesses fight for talent, not the other way round.

Plus, raising salaries is definitely not an option for small and medium-sized businesses, which often struggle to keep up with the compensation and benefits offered by their competition.

Remote is the new normal

Another short-term solution to the talent shortage problem lies in hiring remote workers from around the world. The global availability of high-speed Internet has opened a wide array of business opportunities to capable individuals everywhere.

Just look at some of these figures: “From 2003 to 2014, the share of employed persons who did some or all of their work at home on days they worked increased from 19 to 23 per cent. During this same period, the average time employed persons spent working at home on days they did so increased by 37 minutes (from 2.6 hours to 3.2 hours). The percentage of people with a bachelor’s degree who reported not going to an office at all reached the highest point since data was collected,” the American Time Use Survey says.

Hiring remotely could also mean (and usually does) saving money. When a company starts working with a freelancer, there’s no need to provide them with a work station and pay for electricity, heating, taxes, etc. Instead, the business just pays for the work that gets done. Looking at Ukraine, one of the most popular locations for nearshore software development, it’s easy to see how outsourcing can benefit foreign businesses.

A British software engineer with up to three years of experience will make an average of $77,508 (£53,519) working in London. In Ukraine, a similar worker will earn $30,000 (£20,715).

Outsource entire teams

It’s easy to hire a freelancer for small projects that are not really crucial to your business and only take a couple of hours a day. But what about those projects which can’t be completed by one person alone, and require a multi-person development team working for you as much as your in-house employees?

There are entire groups of people that can be engaged for specific projects, and it’s probably the best solution for medium-sized and large companies to scale fast. There are companies that have all the facilities ready and that do custom recruitment and support of what’s called ‘dedicated development teams’ which work much more efficiently than freelance solutions.

When you set up a nearshore development team, you can hire as many developers as you need. That way, you have your resources working in the same place, in the same time zone, thereby pushing your project forward at a brisk pace. Besides, a dedicated development team has the infrastructure you need, which a freelancer just won’t be able to provide.

And last but not least, for a dedicated developer, working with you is a full-time job, so they are motivated to deliver quality, whereas with freelancers, loyalty and reliability issues are always looming on the horizon.

The future is in the East

On Elance’s Global Online Employment Report, Ukraine is bested only by the United States and India. Both the US and India, compared to Ukraine, are located on different continents, with different time zones, which could prove to be a problem for project management and travel – making Eastern Europe the best choice for UK’s digital businesses.

And UK businesses seem to have noticed. Playtech, the world’s largest supplier of online gaming software, opened one of its R&D offices in Kyiv back in 2011.

Jarrang, a UK digital marketing agency, is a more recent example of a company delegating its software development needs to Eastern Europe. “As a digital marketing agency, we have significant experience and capacity in marketing and front-end design but we needed to upscale our Magento development team with specialists who could deliver complex back-end coding at the highest quality, on time and on budget”, says Stafford Summer, founder and CEO of Jarrang.

The agency decided against working with freelancers and built a dedicated development team in Ukraine. “It’s a win-win situation for everyone,” says Stafford, as having a software development team in Ukraine has helped him “respond to market needs faster and more efficiently with top quality developers who are as dedicated to success as our own internal people”.

Although cost reduction has long been seen as the main reason to outsource, Bart Kuyper, managing partner at Daxx, a Dutch company that set up a remote development team for Jarrang, says the situation has changed: “Lower costs and faster recruitment time is not the main reason why businesses set up software teams in Ukraine. The real concern is sustaining the team and keeping annual costs on budget. Losing developers, lack of loyalty and poor quality of the product can destroy your business. Understanding this, we have built a business model that allows our clients to work with the best developers, keep knowledge in-house, and stay competitive without employment risks and high investment.”

The future of the UK tech talent issue seems to lie mostly in the hands of educators, and although certain progress is already being made, it may take a decade or more until we see the fruits of their efforts. Meanwhile, tech business owners need to tackle their talent acquisition problems now.

Turning recruiting into a marketing campaign and offering higher salaries are good ways to attract more candidates, but the results of the former may be too far down the road, and not every business will be able to afford the latter.

Bart Kuyper, managing partner at Daxx

Image source: Shutterstock/Kirill Wright