Insights | Software Development Outsourcing is a Solution to US Talent Shortages

Software Development Outsourcing is a Solution to US Talent Shortages

By Andy Hilliard | January 31, 2017

Thinking about hiring a software developer for your U.S-based company? How about a team of developers? You should know the three things that work against you. One, there just aren’t enough good developers to go around. Two, good developers demand and get premium compensation, and finally, the third reason you can’t hire a good software developer is your location may not be appealing to the best and brightest. Think that sounds harsh? When it comes to software talent, it’s just reality, and here’s what you need to know about it – and why outsourcing is a great solution.

Reason No. 1: Dire Talent Shortage

Reason 1: Dire Talent Shortage

In the contest for software talent, your odds don’t look good. Unless you offer a preferred location (think tech cities like San Francisco, Boston and Austin) and offer premium compensation, no top-quality developer will look at your open job. "The IT skills shortage is dire," says Bob Miano, USAPAC president and CEO of global recruitment firm, Harvey Nash.

Demand far outstrips supply, as more companies stake their futures on digital products and services. Research finds that 83 percent of employers say there’s “a shortage of software development professionals.” A 2015 U.S.-based, online Bliston University survey found that two-thirds believe the hiring gap is due to the lack of genuine talent. Here’s an example: A Geek Wire article noted that Washington State’s tech sector adds about 3,500 new jobs each year that require a computer science degree, but the state only produces about 500 graduates annually with those skills. And Washington is home to one of the hot tech hubs – Seattle!

Some people are trying alternatives to bring skill levels up faster than traditional degree programs can deliver talent. Full-time coding boot-camps have been shown to deliver acceptable, hirable basic programming skills in a few months, with graduates suited for junior-level programming roles. But that doesn’t really help you recruit an experienced team for a major software initiative.

Reason No. 2: High Salaries

Reason 2: High Salaries

Another major roadblock to attracting quality developers is salary. As capacity shrinks, pricing inflates, and the global software development appetite becomes even harder to satisfy. Large salary increases are already evident, with U.S. recruiters seeing 6.9 percent increases in developer salaries in 2015. In fact, salaries are already the largest single cost driver for companies developing software, and employee compensation accounts for over half of “cost of revenue.”A Business Insider article reminds us that software engineering is a lucrative career choice, with the average salary around $100,000. Everyone is paying a premium for this specialized talent, and companies in mid-sized cities or smaller can’t afford the professionals they need to develop the software that will drive their business strategies. Every time a top developer gets top dollar, it escalates the price for everyone else in a spiraling, expensive circle.

Reason No. 3: Location

Reason 3: Location

While no U.S. market is truly exempt from the shortage of software talent, the best developers are primarily interested in and tend to migrate to major tech hubs like the Silicon Valley, Austin and Boston, among others. So if the best candidates go to these prime markets – the hottest tech centers – it leaves the less talented behind. Of course, companies may not be willing to settle for that reduced skill level.

A Better Approach to Sourcing Your Team

This discouraging shortage situation leads one to wonder how small and medium-sized businesses can hope to combat an issue that is well beyond their control. This reality has forced enterprises to re-examine their staff sourcing models. So how do you find the best development team to fuel the production of your software and the growth your business? Companies that shortchange outsourcing as a strategy may experience serious delays, high costs and poor software from hiring unskilled developers.Smart companies have discovered that software outsourcing gets them the best talent in a flexible, affordable way with a faster ramp-up. You hire them as contractors, not employees, but they still see themselves as valuable members of your team. And a Deloitte Global Outsourcing Survey found that companies are indeed considering outsourcing more frequently to spur innovation. The savviest organizations, according to Deloitte, use outsourcing to increase top-line growth by driving revenue-generating innovation into the business itself. The positive relationship between smart outsourcing and growth-driving software is reason enough to pursue an outsourcing strategy for software development.

Realize Success by Outsourcing Your Software Development

So while we certainly have a software developer shortage in the United States, talented software development outsourcing teams do exist; although, they may be on the other side of the globe. Yes, so far there isn’t a talent crunch offshore, but you have to be careful and select the right kind of advisor. The Accelerance global network of vetted and verified software development partners are carefully screened so hiring companies can outsource with confidence. Contact us to find out how you can work with Accelerance at no cost to easily select your outsourcing team of choice.


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Steve Mezak is founder and CEO of Accelerance, Inc., a leader in global software development outsourcing, as well as the co-author of “Outsource or Else. How a VP of Software Saved His Company.” Download the book and additional insights on outsourcing software development at the Accelerance Resources page.

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