In September 2022, as part of publications prepared by members of the Forbes Technology Council, an article by Pieter Danhieux entitled “Navigating The Developer Shortage Crisis: A Time To Define The Developer Of The Future” was published. It describes the challenges that companies employing developers must face when operating costs increase, experienced programmers leave for competition, and there is a lack of specialists on the market. The author also proposed, in his opinion, optimal solutions that should be used to counteract the negative effects of this crisis situation. 

In addition to the possible solutions to the problems faced by companies employing developers mentioned by Pieter Danhieu, we would like to add one more important aspect – outsourcing. 

What problems do companies have to face when they are employing their own IT specialists and why outsourcing is the optimal solution?

Many companies are trying to get out of the crisis in which they have found themselves in recent years. Growing costs and changes in the market caused by the pandemic force them to look for a solution, and some choose to reduce employment. 

On the other hand, many companies still want to start new IT projects, that are supposed to help them to reduce costs in some departments, for example by automating processes or by creating or custom software. To be able to do so, they need experienced IT specialists. 

However, companies that will decide to hire IT specialists directly must take into account several problems, the most important of which are: 

• Critical shortages of qualified developers.
• Attracting the best specialists by “The Big Five” companies.
• High labor costs of in-house IT specialists.
• Limited experience and competences of in-house IT specialists.
• Difficulties in managing projects and reducing the pressure that project teams have to face.

In the further part of the article, we will discuss in more detail each of the challenges that companies employing in-house programmers have to deal with. We will also explain why, in our opinion, it would often be optimal to use outsourcing of IT specialists and teams in individual cases, in addition to organizational changes within the company, proposed in the aforementioned Forbes publication. 

1. Critical shortages of qualified developers

The demand for specialists in the IT industry is steadily growing. According to data published by Gartner, as many as 58% of IT department directors declared that they have already increased or are planning to increase investments in new technologies in the near future.  

At the same time, the there are not enough specialists on the market to meet such ambitious plans. The scale of the problem is illustrated by the following data, collected by leading research institutes and consulting companies: 

• global demand for developers will increase from 1.4 million in 2021 to 4.0 million in 2025 (source: IDC – International Data Corporation),
• the number of job offers for programmers, QA analysts and testers will increase by 22% year-to-year in 2020-2030 (source: BLS – U.S. Bureau of Labor Statistics).

The shortages of IT specialists vary from country to country, with the largest ones occurring in highly developed countries: 

Kraj	Niedobory specjalistów IT
United States	1,2 million by 2026 (source: BLS – U.S. Bureau of Labor Statistics)
Canada	250 000 by 2025 (source: Information and Communications Technology Council)
Switzerland	117 900 by 2028 (source: ICT Switzerland)
Germany	96 000 in year 2021 (source: Stowarzyszenie Bitkom)
United Kingdom	30 000 in year 2021 (source: BBC)
Denmark	19 000 by 2030 (source: Europe’s Digital Progress Report)
Norway	10 000 by 2030 (source: Ingeniørforeningen IDA)

The situation is a crisis and many companies may not be able to use Pieter Danhieux’s advice on improving working conditions and organizational changes as a way to retain employees, simply because they will not be able to find and hire them. 

In this context, using the potential of Polish companies, such as SOFTIQ, which provide professionals for the IT industry, may be a better solution, and it will certainly be an alternative for companies that cannot cope with securing the necessary level of employment on their own. 

In May 2022, the number of specialists employed in the IT industry, according to the Polish Investment and Trade Agency, was over 400,000, which makes Poland the largest source of professionals in Central and Eastern Europe. 

Establishing cooperation with a software house experienced in outsourcing both individual specialists and IT teams may be the most optimal solution for many enterprises. It will allow them to avoid delays in projects and quickly supplement the skills missing in internal teams. 

In the case of many enterprises, an attempt to acquire the same specialists in the in-house formula could be costly and lengthy, and in a situation where there are no experienced developers on the market, it could also fail. 

2. Attracting the best specialists by “The Big Five” companies

In some countries, especially in the United States, a huge problem, worsening the critical shortage of highly qualified employees, is attracting the most talented IT specialists by companies such as Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft (commonly called “The Big Five).  

In some locations, Big Tech giants employ up to 10% of the most talented specialists. As a result, other companies planning to hire their own employees for IT departments have a problem with filling positions. 

According to the results of a survey conducted on 18,000 respondents and published on the Statista.com portal, the greatest difficulties with hiring employees were expected for the positions of full-stack developer (35.62%) and back-end developer (34.59%): 

At the end of 2022, this trend reversed, as large IT companies, also struggling with the effects of the global crisis, began to reduce employment. 

However, it is worth remembering what problems with access to qualified staff may be caused by competition from BigTech giants, as it is virtually certain that as soon as the scale of the current problems decreases, they will return to the old practices of attracting the most talented specialists from the market. 

Then, for companies located in regions where they have to compete with giants such as Apple or Alphabet, the best solution may be to outsource highly qualified employees from countries such as Poland, where there are more of them, and the software house employing them is able to fill virtually any position in the design team…

3. High labor costs of in-house IT specialists

In 2022, Accelerance published its annual report “Global Software Outsourcing Trends and Rates Guide”, according to which the average cost of hiring a specialist is $83-112 per hour, compared to $40-90 per hour in the case of outsourcing.

In this report, Poland is mentioned as the best source of experts, similarly as it was in case of potenctial of IT specialists that are working in polish companies and software houses.  

For example, the average cost of hiring a developer from Poland is two times lower than in the United States. 

The results of surveys conducted among Deloitte’s clients, nearly 70% of respondents answered that the key factor in making the decision to outsource is the cost of employing specialists. 

We should also remember that in addition to the costs related directly , including, among others, salary, benefits, taxes, operating costs and equipment, the employer also incurs additional expenses related to the recruitment of a specialist: 

• the average time to find an employee with high competences in the IT industry is 66 days, compared to an average of 43 days in other industries. The estimated lost revenue for each day without an employee is $680 (source: iCIMS),
• assuming that reviewing the application, communicating with candidates and meetings will take an average of 40 hours for an HR manager, finding and hiring an IT specialist in the United States can cost $1,300 (source: Indeed, with an HR manager salary of $ 32.5 per hour) ,
• nearly $6,890 is the loss resulting from low productivity in the first month of work, which, according to research conducted by Investopedia, is only 25%,
• the average cost of training a new employee is $1,111 (on the example of the United States) and the cost of onboarding is another $400 (source: Indeed).

In a situation where the costs of recruitment and the time that needs to be spent on it are so high, the solutions suggested by Pieter Danhieux may turn out to be insufficient for many companies. 

This is due to the fact that when employing a new in-house employee, the company must incur expenses related to its recruitment, employment, training, equipment and implementation in the appropriate organizational culture. In the case of outsourcing, however, these expenditures have already been incurred by a software house such as SOFTIQ. 

In this context, establishing cooperation with a software house and acquiring experienced specialists through it means saving time, reducing risk, minimizing costs, as well as the possibility of starting work on the project faster than in the case of the classic employee employment model. 

4. Limited experience and competences of in-house IT specialists

When you decide to directly employ 2 programmers, you gain employees whose competences and skills are limited. This is normal, as most often they specialize in several technologies. No one is able to master a dozen or so programming languages to a good degree, so when employing only 2 in-house programmers, you have to choose a few selected technologies, which will affect your project.  

For example, the TIOBE Programming Community Index Definition lists nearly 30 programming languages as currently the most important, and the StackOverflow reports for 2020-2023 provide information on which of them are the most popular: 

But if the company decides to outsource and acquire 2 programmers from the software house, in addition to the specialists and their competences, it also gains indirect access to the skills of dozens or hundreds of other experts.  

Software house can assign at any time additional specialists to the outsourced team, which can support the project with their knowledge if it is necessary to use other solutions and technologies than those that 2 initially outsourced specialist know.  

At SOFTIQ, we know how that many companies are unable to predict at the beginning of the project what specific solutions will be best for them.  

By having access to experts working in various technologies, the software house is able to advise which ones will be best for your company. 

One of Pieter Danhieux’s proposals is to search for and hire developers who have a strong motivation to acquire knowledge and improve their competences. The company that acquires them should provide them with conditions for further development, giving them the opportunity to undergo training that will bring benefits in the coming years. 

Although optimal for many companies, this approach requires a lot of time to learn – according to estimates by Ligthouse Labs, learning a new programming language in your free time can be mastered at an average level after 3-6 months. 

This, in turn, means for the company a delay in the start of a project that requires new competences. In addition, the level of newly acquired skills will not be as high as, for example, a specialist employed in a software house who has specialized in a specific technology for many years and can be obtained almost immediately as part of outsourcing services. 

Thanks to establishing cooperation with a software house and acquiring specialists in the form of outsourcing, you will be sure that your team will be quickly joined by programmers with exactly the competences that are currently needed in the project, which will allow you to carry out work in accordance with the assumed schedule and avoid additional costs. 

5. Difficulties in internal project management and reducing the pressure that developer teams have to face

Each project has a specific timeline, and the deadlines for handing over the effects of individual stages of work and the complete product are important for the company.  

Because of that, developers have to deal with time pressure, trying to make it before the next deadline. 

In the case of developers employed in-house, it is difficult if they are not supported by an experienced Project Manager. As a result, programmers sometimes take shortcuts and the effects of their work are not of the highest quality. 

It is worth considering that a certain level of pressure is desirable, but when it is too high, the effects are definitely negative: 

In many cases, managers of IT teams employed in-house do not have much experience in managing such specific projects as, for example, creating dedicated applications or extensive corporate portals. 

According to Pieter Danhieux, conflicting priorities and conflicts in the team translate into increased staff turnover, or developers ignoring the received guidelines, who believe that they know what is best for the project. 

One of the solutions may, of course, be the change of mentality and organizational culture in companies employing developers, as proposed by the author. However, when faster results are needed, outsourcing specialists may be a more optimal solution for many companies. 

A dedicated Project Manager, who has experience in managing many projects implemented by a software house, will be able to properly divide the work so that the pressure is at an optimal level, mobilizing developers to work, and not discouraging them completely. 

Agile methodologies, used by software houses such as SOFTIQ, work particularly well in aspect of pressure reduction. 

Agile methodologies work so well because: 

• small iterations translate into less time pressure, thanks to a balanced pace of work,
• tests go hand in hand with development, and as result, the Quality Assurance process is carried out throughout the project and there is no time pressure at the final testing stage, as may be the case with the waterfall method.

Experienced Project Managers and team leaders employed by the software house know how to deal with time pressure to ensure optimal productivity and quality. 

Summary

According to Pieter Danhieux, companies must hire talented programmers and then provide them with the resources, tools and culture they need to succeed.

In our opinion, this is one of the solutions, beneficial in some cases, but not always the most optimal, especially in terms of time. Therefore, in our opinion, the possibility of using outsourcing of IT specialists and cooperation with a software house such as SOFTIQ should not be overlooked.

If you are interested in outsourcing IT specialists and teams, we invite you to check our offer of outsourcing IT specialists and teams at Softiq.io or contact one of our consultants.

According to Pieter Danhieux, companies must hire talented programmers and then provide them with the resources, tools and culture they need to succeed. 

In our opinion, this is one of the solutions, beneficial in some cases, but not always the most optimal, especially in terms of time. Therefore, in our opinion, the possibility of using outsourcing of IT specialists and cooperation with a software house such as SOFTIQ should not be overlooked. 

If you are interested in outsourcing IT specialists and teams, we invite you to check our offer of outsourcing IT specialists and teams at Softiq.io or contact one of our consultants. 

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