Are you having trouble finding quality tech talent? Desperately trying to keep up in the race to hire engineers from a seemingly dwindling pool of qualified candidates?
First off, take a deep breath and know that you are not alone. The talent crunch is very real. In today’s job market, many organizations are feeling the pain when looking for fresh talent.
In this post, we’ll take a step back and assess what is driving this current dynamic and more importantly, what your organization can do to stay ahead of the curve in your recruiting efforts.
To start, let’s consider how we arrived at today’s unprecedented tech talent crunch…
It is important to recognize that the skill shortage in tech is nothing new. It’s been around for years, and it is not difficult to understand. There is simply a dramatic imbalance between supply and demand. In this post, we’ll focus on software engineers as a prime example. The fact is that there aren’t nearly enough quality software engineers in the market to satisfy the demand.
And let’s face it, tech is eating the world, which means that demand continues to grow and grow. All industries and organizations are becoming increasingly fueled by technology as they search for ways to grow and stay competitive.
To make matters worse, there are also not enough new software engineers entering the market to bridge that gap, partially because leveling up and honing those development skills takes time (often years).
Computer Science programs, coding bootcamps, and other alternative education models are, in fact, bringing lots of high-potential junior-level talent into the market, and that’s a very good thing. But in most cases, through no fault of their own, those recent graduates lack the real world skills to bring immediate value to a company’s bottom line. They need to be mentored, leveled up, and given room to grow. Many companies, though, are either unable or unwilling to make that investment in time and resources.
Ok, so we’ve established that the tech talent crunch isn’t new. It has, however, gotten a lot worse over the last few years. Here’s why…
Despite all the turmoil of the last few years, the stock market has been booming. With low interest rates and abundant COVID stimulus, the market is flooded with capital. Investments in tech and valuations of tech companies have been through the roof. Borrowing money has been “cheap.”
The result? Companies have more money to spend on engineers plus an amplified need to grow revenue, driving up the competition for talent and compensation for engineering positions.
The Rise of SAAS
SaaS (Software as a Service) also isn’t new in the scheme of things. The concept has been around since the late 90s, but SaaS has become ubiquitous, moving into all industries and organizations as they look to digitize, grow, and automate processes. Most of us, without even realizing it, are using and paying for 10+ SaaS products day by day, month over month, year over year.
SaaS companies typically strive to be super high growth. They have recurring compounding revenue, often leading to big potential and high valuations.
How does this add to the talent crunch? Let’s say that in the past, as an example, a company might hire an engineer thinking that if they pay them X, that engineer might ultimately bring in 1.5X in revenue. Today, for SaaS companies that are experiencing massive growth, instead of 1.5X, that multiple might be 3X, 5X, or more if they really hit it big with their product.
As a result, particularly for SaaS companies that have found solid product market fit and need to grow as fast as possible, paying engineers astronomical salaries can be relatively easily justified. Of course, this drives up costs for all other businesses along the way.
The COVID Effect
Unfortunately, all the drivers detailed above have been amplified by the pandemic over the last couple of years. Here’s why that happened…
- The pandemic accelerated every organization’s need to go increasingly digital. This resulted in a new sense of urgency to invest in tech and hire accordingly.
- When COVID fears were at their highest (~ Spring 2020) many companies delayed hiring tech talent. Others even laid off or furloughed software engineers. When optimism returned, there was a huge rush to hire and skyrocketing demand for engineering talent.
- Many companies that were able to retain their engineering talent were still at risk because they may have pulled back on raises, bonuses, and promotions. This gave many engineers enough incentive to explore other options and higher compensation elsewhere.
- COVID also made many employees, including software engineers, rethink what they want their work life to look like. Many engineers, although aware of the high-pay and perks of tech giants like Google and Facebook, were more or less content to work for a lower salary in a more traditional space. COVID made a lot of these folks realize there are other options. They could search out higher compensation, more flexibility, indefinite remote work, and more purpose elsewhere. Companies unable or unwilling to quickly adapt to these expectations are at greater risk of turnover.
Creative Ways to Find Engineers
Don’t lose faith! It is not all gloom and doom. The current talent crunch just means companies looking to hire need to think outside the box when it comes to tech talent. Gone are the days of simply throwing up a job post and expecting the perfect candidate to come knocking on your door.
Let’s talk through a few creative ways to search out engineers and stay ahead of the pack…
- Referrals – Top developers aren’t necessarily watching the job boards. Ask around your network or even better, ask developers you know if they know anyone looking for new opportunities. Be specific about your needs and the skills required. Also, make it as easy as possible for them to make an introduction.
- Meetups – Attend local meetup events where engineers gather. Better yet, contact the group organizer and offer to sponsor an event. If they see you bring value to the group, they will reciprocate by helping you get some exposure to their members. But remember, most engineers don’t want to feel “recruited” so don’t come on too strong with your pitch right out of the gate. Focus on building relationships in that community.
- Slack – There are tons of developer-focused Slack channels out there. Find the ones that best match your tech stack and join them. Just remember to be respectful of any solicitation rules they have in place. You will quickly get banned if you are not.
- Always be Hiring – Keep basic hiring efforts going at all times and build your resume database. This way, you always have a headstart when a new role opens. Just be diligent at letting applicants know when you are not actively looking. Open communication is key.
- Grow Junior-Level Talent – If you are willing to bring on junior developers and can put the required training and mentoring resources in place, building up a more junior-level talent pipeline can be incredibly powerful and profitable. Of course, this isn’t a quick fix. It is an investment in the future of your business.
- Rent-A-Dev – Reach out to local software development firms and inquire about “staff augmentation”. This is a great way to more quickly scale up your team and bridge the hiring gap. You may pay a slight premium but the opportunity cost of waiting to find the perfect hire is often more expensive.
In conclusion, although the talent crunch may be less extreme in the future, it is unlikely to disappear. For companies investing in tech, it is important to accept this reality, know what the market landscape requires from a hiring perspective, and rethink hiring practices.
Stay safe out there and keep evolving!
And While We’re On the Topic of Tech Talent – We’re Hiring!
Do you want to lead, grow and make an impact in the healthcare, public health, and education industries? We are actively seeking:
- Senior Ruby on Rails Developer
- Senior React.JS Developer
At Tyrannosaurus Tech, we offer great benefits, flexibility, and meaningful work. Explore open opportunities and get in touch with our team.