Hiring a software programmer is a long and costly process. The startup companies find it very difficult to hire a skilled and experienced software programmer due to limited resources and domain expertise. The software industry is already struggling from the shortage of the software programmers globally, especially the North American and the European countries.
In such circumstances, hiring the developers for a startup turns out to be an uphill task for the startups. Hiring technical resources costs huge due to the shortage of the software developers and increased market demand of the same.
This article we will talk about the challenges faced by the startups in hiring the tech talent, and about the most suitable solutions for facing those challenges effectively. This article will also help you explore the most effective employee management ways that can help startups run successfully.
How Difficult Is the Startup Tech Talent Hiring in the Market?
According to the ArcGIS information, there is a huge shortage of software developers in the US market. The demand for software developers in the country is about 223,054 jobs. On the other hand, the universities are producing merely 30,000 tech graduates in computer science annually. According to the State of the App Economy report, more than 444,000 computing-related vacancies will be created in the USA only by 2024.
Owing to such a huge demand, the startups will definitely face uphill challenges in technical hiring for fulfilling the software development needs. Let’s have a look at the major challenges the startups face due to the shortage of skilled human resources in the marketplace.
1 # Finding the Right Talent
Creating a website, running a digital marketing campaign, and having a strong social media presence are the fundamental goals that a startup company should accomplish to make the business successful. All these processes need to have the software developers with the specialized technical skills to perform those activities effectively. Constrained with the financial crunch, startups find it so challenging find a right talent through traditional tech pro-research. You may need to adopt the out-of-the-box approach to find the right talent. Using outstaffing, outsourcing and freelancing services may be the best options to find the right technical talent. Nevertheless, all those options have certain upsides and downsides too.
2 # Paying Hefty Salaries
Already, the cost of hiring software developers is very high as compared to the average cost of the other professionals in the market. At the same time, the cost is consistently increasing due to the shortage of technical talent, and the high demand for the software developers. The average salary of a software engineer in the USA is about $102,377 per annum. Startups normally struggle with the shortage of funds. Thus, hiring a dedicated software developer at that huge cost is a big challenge for them. In such situations, many startups choose the services of freelancing software developers that are not so reliable. Sometimes, they may get a great freelancer, but in the majority of the cases, they fail to hire a reliable freelancer who can help businesses steer to the desired business goals.
3 # Techie Lofty Expectations
It is very natural when there is a shortage of software developers; they become so fussy in accepting the offers with any particular company. They ask about the company experience, past history, growth opportunities and more things like that. A startup company cannot satisfy the hefty demands of the software developers in terms of their expected fringe benefits. Thus, startups face a critical challenge in satisfying the developers and making them accept their job offers. Normally, the startups settle for less skilled, and less experienced software developers that reduce the prospects of their business success in this highly competitive marketplace.
4 # Retaining Tech Talent
Anyways, if a startup company succeeds in getting a good software developer with sufficient skills to develop and support the desired software efficiently, the next challenge is to retain that tech resource. Normally in our fiercely competitive marketplace, the large companies offer numerous career incentives, increased salaries, growth opportunities, and many other benefits to attract the qualified resources. The startups are not able to compete with those companies due to the shortage of startup funding, resources, and other capabilities.
According to the Developer Survey 2017 report, only 9% of all developers work in the startup companies. A large number of those developers consistently strive to land a job with either multinational or some large corporations. In such situations, the retention of the software developers with the startup companies is really a big challenge. It reduces their chances of success as well as smooth operations of the businesses.
5 # Managing Legal & Industry Compliance
Running either a small or a big business entity is a complex job. It involves numerous factors including the legal and industry compliance. Big organizations with sufficient funding and access to technical resources can manage all those activities easily and effectively. But, small businesses, especially the startups face a big challenge to manage all those things effectively. They are not able to hire full-time lawyers or industry experts for their startups – in most of the cases – due to the funding constraints.
So, they prefer to get the project-based services from the recruitment agencies to complete a particular task or process. Again, it is very challenging to find the right service provider agency, despite the fact that thousands of such companies are available in the marketplace.
What Are the Most Popular Ways to Hire Startup Developers?
It is not that difficult to imagine how to start a startup company, but it is a challenging task to manage and implement the resources required for starting a startup company. Among such challenges, hiring a skilled, qualified and experienced startup developer is also a big challenge. To help you face this challenge smoothly, let’s discuss the most effective ways of hiring the software developers for a startup company.
The remote hiring offers some solace to the startups in hiring the startup developers remotely. According to the State of Remote Work 2018 report, more than 90% of the remote workers are planning to work remotely for their entire lives. A huge ratio of remote workers (26%) works in the software industry followed by IT and services (20%). There is a huge 51% growth in the number of remote workers during the last 10 years. It is expected to increase the remote workforce by 168% in the next 10 years. The remote hiring is less costly, and better for the startups. Let’s talk about some of the popular remote hiring models.
In this model of hiring, the entire software project or business process is handed over to the third party service provider, which manages the whole team as well as the software development. This model of hiring is comparatively costly to the other remote hiring models. Owing to its huge cost, it is not suitable for startup companies. Larger organizations can afford this process, which is fully managed and offers full peace of mind. Another downside of this model of hiring is that the employer has a very limited control over the development teams. The outsourcing service providers always search for the largest and the best companies to work for.
The outstaffing is one of the best remote hiring models suitable for startups as well as for the SMEs. With this model of hiring, a dedicated team is hired for a particular project or business process. The team is hired and managed by the service provider company, but the employer has control over the development team and the communication is well-established. The management of required software development process, workspace, and provision of all other resources like hardware is the responsibility of the service provider. It is the best hiring way for the startup companies because it offers the best tradeoff between cost, quality, and control.
Freelancing services are increasing very rapidly in all fields, especially in the software development industry. With this form of hiring, a remote resource is hired to work on a particular software project, either on a fixed price or an hourly rate. This is the cheapest form of all hiring models, which makes it very suitable for the startup companies struggling with the shortage of funds. The major downside of this hiring model is the lack of reliability. In many cases, the freelancers leave the project uncompleted and this increases the risk of the unsuccessful completion of the projects.
Local hiring through the advertisements in the local newspaper or through the online job portals is the traditional form of hiring. With this model of hiring, the local software developers are hired to work in your office. This is the most reliable type of hiring and offers full control over the hired resources. The downside of this kind of hiring is the high cost and the employer has to provide the hardware, software and office space to the employees. This kind of hiring is great for the large and medium-sized organizations that can afford higher costs and can fulfill legal requirements easily.
Hiring a software developer is very critical for every tech startup in terms of both starting and running the businesses smoothly. The traditional model of local hiring is not suitable for all the startups. Most of the startups face numerous challenges in hiring and retaining a software developer. There are multiple ways of hiring, from which the startups can benefit. The remote hiring, especially outstaffing and freelancing are the best options for the startups.
Written by: Anastasia Stefanuk from Mobilunity