After a year under siege from COVID-19, the mood in the business sector has shifted from survival mode to a far more confident outlook for 2021 as companies take the initiative to invest in growth.
The momentum for digital transformation to set the agenda and drive the recovery has never been stronger. We’re seeing that at Accelerance, with clients looking to move quickly on ambitious development projects and digital initiatives that will make their business more efficient, more resilient and more competitive coming out of the pandemic.
December’s breakthrough of an effective vaccine – and its impending distribution – has injected more stability into the business outlook. Technology decision-makers are signaling increasing confidence by giving the green light to proceed with digital transformation. Many CIOs are taking advantage of their elevated profile gained during the pandemic crisis, when they helped rescue their enterprises, gaining enhanced clout among top executives.
“These stronger relationships give CIOs leverage they’ll need for their next big challenge – digital business acceleration. CIOs have been trying for years to convince senior business leaders to modernize and take full advantage of technology. Now, many roadblocks have been removed, and the majority of boards are prioritizing these initiatives,” according to Gartner’s 2021 CIO Agenda.
Most of the software development projects currently being executed will take six months to a year to roll out. It’s perfect timing to coincide with the end of the pandemic as we know it. Smart businesses need to be making strategic investments now – and giving their technology leaders a seat at the table when those decisions are being made.
Three-quarters of those who took part in Gartner’s global survey have seen an increased demand for new digital products or services, with 83% expecting a further rise in 2021. Funding innovation pays dividends: Organizations that boosted their investment in innovation are 2.7 times more likely to be a top performer than a trailing one.
But getting sign-off for a transformational software development initiative is just the first step. The real challenge is finding IT talent with the high-level specialist expertise required to pull it off.
Fully 80% of technology professionals consider digital transformation to be critical to their long-term business viability, according to a 2019 survey by Webtorials. But almost two-thirds acknowledge that to deliver innovation, their internal resources require enhanced expertise and resources from external partners such as IT outsourcing firms.
The Biggest Threat to Digital Transformation
Without a doubt, the impact of COVID-19 has fast-forwarded digital adoption within organizations. But while digital business acceleration is at the top of the agenda for technology leaders in 2021, the scarcity of technical skills needed to drive that transformation poses a threat to their ability to deliver.
One of my colleagues, Michael McAuliffe, has written about the chronic shortage of tech talent in the US, despite the federal unemployment rate peaking at a high of 14.7% last April. Big tech is such a dominant player that IT professionals are in short supply, commanding a premium rate that’s simply unaffordable for many companies. Other Western markets face a similar dilemma, with a predicted shortage of some 800,000 tech employees in the UK alone.
Demand for innovative and emerging technologies is even more acute, jeopardizing the development and rollout of digital strategic plans. Key priorities are:
- Cloud computing (through platforms such as Google GCP, Azure and AWS)
- Robotic process automation (RPA)
- Artificial intelligence (AI)
- IoT (the Internet of Things)
Specialist expertise is required for whatever cloud platform you choose, at a level that is highly complex. Continuous integration and rapid release of incremental software changes also requires more agile development such as DevOps, and heightened cybersecurity to protect against the vulnerabilities that come with working across interconnected systems. With DevSecOps, infrastructure security is embedded right from the start.
“These evolving technological tools and applications are making it possible to create a wave of digital transformation at a speed that’s never been seen before,” said Accelerance Managing Director Rich Wanden, who works with clients struggling to find talent on the domestic market and helps find them qualified nearshore and offshore engineering teams at much more competitive rates through the Accelerance Global Network. ”But because the technical skills to develop and maintain these technologies are in short supply, they command a premium price. And graduates fresh out of college may not be the best able to provide what you want.”
Even if you can find skilled IT staff – and afford them – hiring in-house or recruiting freelance contractors has significant limitations. Many organizations where technology isn’t a core competency simply have no idea what’s possible.
“The shortage of talent is really around finding companies that can architect and effect that digital transformation for you,” according to Wanden. “Plenty of software development companies can offer a standard set of solutions and implement them, but have no spark of imagination and the level of innovation is low. They can execute an existing playbook – but can they invent one?
“A good digital transformation partner can talk to a business about options they have never considered that would make a huge difference to the way they operate, the way they serve their customers, and the way they compete. If you’re serious about building something special, you’ll want a great team to partner with on that.”
Scott Engler, a principal advisor at Gartner, makes the same point. He’s warned that most businesses are flying “data blind” with regard to the skills they need for transformation, and where to find them.
“Even before there was a coronavirus pandemic, boards ranked digital/technology disruption as their top business priority for 2020 – followed by obtaining the talent needed to execute tech transformation,” he says. “But COVID-19 has escalated digital initiatives into digital imperatives, creating urgent pressure on HR leaders to work with their CEO, CFO and CIO to rethink skills needs as business models change at light speed.”
Data from a recent Gartner TalentNeuron study not only showed expanding demand for technologists but a growing number of job postings by non-tech companies tied to skills around AI, RPA and data science/analytics – a trend that’s accelerating as the digital evolution expands beyond IT and deep into other areas of the business.
In the past, companies took a more opportunistic approach: How do we get faster, leaner or more digital? Now there’s an added dimension of - how do we compete from a capabilities and talent perspective? And what the pandemic has proven is that embracing remote work and managing distributed teams makes sense. When you’re not constrained geographically, your talent can come from anywhere.
Yogish Suvama, CIO for Aspen Dental, highlighted this need to draw on broader sources of talent through strategic partnerships and alliances.
“One of the biggest challenges that every technology leader faces is sourcing the right talent at the right time to meet the constantly changing needs of the business...My advice is to surround yourself with innovative companies and partners who can help you and your team with meeting business needs and bridge the gap in your ever-changing talent needs,” Suvarna told The National CIO Review.
How Outsourcing Puts You Ahead of the Game
Typically, nearshore or offshore outsourcing for software development has been used to buy in resources, as a way to cut costs or boost headcount. Now, it’s being recognised as a strategic approach to drive growth and agility, giving companies access to deep and highly skilled talent pools at significantly more competitive rates for the same quality standard of work.
Disruptive outsourcing isn’t about filling gaps, but gaining a competitive advantage by bringing on teams that can drive innovation with new ideas and approaches – delivering game-changing products, faster speed-to-market, enhanced customer experience and increased performance.
The demand for those top-level skills, so challenging to find onshore, is reflected by a client Accelerance is currently working with who is looking to outsource a team of 30, composed exclusively of senior data engineers. Another client, in the Bay Area, has had a long-term and very positive relationship with a software development company in Latin America but is looking to expand. To accelerate the onboarding process and meet their requirements for diversity, especially women, in the workplace, they’ve decided to bring an additional 1-2 partners onboard within the same region and we’re now micro-vetting a shortlist of potential candidates.
Partnering with a nearshore or offshore engineering team doesn’t just shave a little off the cost. In the U.S., the going rate for a contracted software engineer is about $125 per hour, while a senior data engineering role commands between $250 and $300 per hour. For the same high standard of skills, the equivalent base rate for a senior offshore engineer at a reputable software development service provider is around $50 per hour – and you’ll only pay $25 more for a senior-level data engineer, according to Accelerance’s proprietary software rates estimations.
But finding the right outsourcing partner to close your technical talent gap can be challenging. Your choice can mean the difference between success and failure in the quest for digital transformation.
At Accelerance, we have proven expertise in solving the technical skills shortage. An experienced advisor in strategic outsourcing partnerships, we operate on the cutting edge of future-focused software development by connecting companies to the most advanced technical skills and innovative concepts through the world’s largest global outsourcing network.
We’ve assessed custom software development providers in 40-plus countries to certify the top 1% as premium partners who understand Western business models and are world-class innovators in their fields. Our professional team can help you find the right collaborator for your goals, at a fraction of the time and cost of in-house development.
As a first mover, we help companies stay ahead of the curve by identifying under-the-radar outsourcing destinations for software development that offer great value and exceptional talent. Here are some smart picks in our three key regions for 2021 and beyond.
Brazil: Large, stable economy with a deep talent pool of software engineers. Good English skills and relatively low rates compared to more established locations such as Argentina and Mexico.
Bolivia: A country that’s long moved on from its turbulent past. Strong government investment in education is producing a healthy pipeline of engineering talent that’s very competitively priced.
Learn more about nearshoring to Latin America.
The Philippines: No longer simply a shared services destination, it’s taken a big step in training and consolidating software talent. A Westernized culture with a dynamic and fast-growing IT outsourcing sector.
Pakistan: Still in the shadow of India but with very competitive rates and some of the best tech universities in the world. Many young Pakistanis study in the US and bring those insights home with them when they return.
Bangladesh: Long in the shadows of its next door neighbor, half the price of India. Companies are increasingly aiming at the US market, with a focus on acquiring English skills and an understanding of Western business culture.
Learn more about offshoring to South Asia and Southeast Asia.
Armenia: A relative newcomer challenging the dominance of Ukraine by developing its reputation as an innovative early adopter with a flourishing high-tech sector.
Portugal: An emerging market as companies move to consolidate talent; gaining ground as an outpost for corporate offices and client interface, with engineering teams based elsewhere.
Learn more about offshoring to Central and Eastern Europe.
For your next outsourcing engagement, our team of experienced management consultants can provide support at whatever level you need. To find out more about our suite of software solutions and advisory services, get in touch.