#Outsourcing and staff augmentation

Top 3 Biggest IT Recruitment Challenges (and How to Overcome Them!)

Olena Sheyko

January 19, 2022

According to experts’ forecasts, by 2030 the shortage of highly qualified IT professionals will exceed 4 million.

The pandemic boosted the disproportionate supply and demand on the labor market. Nowadays, programmers have a big choice, as many companies have switched to a remote work format. They will probably never return to the office for a full workweek. Today, any world-class professional can work for any company in the world. Thus, the competition for employees has long gone beyond the city, state, country, and even the continent.

The problem of IT hiring is already acute. It’s a big challenge to find rare or very highly qualified professionals – recruiters simply can’t keep up with the changing market and often can’t objectively assess the level of candidates. We decided to study this issue in more detail.

So we conducted a survey which was attended by over 500 HR professionals and recruiters specializing in hiring IT professionals. We tried to find the main problems in recruiting and ways to solve them. Here are the results:

  • I cannot close the vacancy on time – 231
  • The total cost of full-time employees is several times more than the available vacancies budget – 205
  • I don’t choose a candidate from various resumes but play the role of a sales manager, motivating professionals to choose our company – 73

The majority of the surveyed (76%) IT recruiters believe that the IT labor market is overheated, and the expectations of candidates are very high. The market lacks experienced professionals, according to 52% of respondents; another 44% note high competition from technology companies. More than a third consider the underdevelopment of the employer’s HR brand as one of the main problems in IT hiring.

I cannot close the vacancy on time

Many recruiters have admitted that recruiting highly skilled IT professionals is a very dramatic experience these days. The drama is based on the fact that no matter how hard they work on searching for candidates, it all can be undone by competitors, who can make the counteroffer faster.

It would seem that for an experienced IT recruiter, finding a suitable professional should not be a problem. This is not true. Some vacancies cannot be closed for months.

If university graduates and junior programmers apply for a position on their own, then more seasoned IT Professionals rarely do this now. They work in cozy offices with gyms and massage rooms, corporate travel abroad, and lush salaries. Even if they plan to change jobs, their resume is not publicly available.

As a rule, highly qualified specialists are not actively looking for a job. This means that HR departments have to do a lot of work before finding suitable candidates, and then several interviews, a test task, a job offer, and a possible rejection by the candidate and it starts all over again. Besides, working with people involves unplanned rescheduling of meetings, canceled interviews, and changing the work schedule.

Most HRs are complaining that they receive few responses or creepy spam for open jobs. It’s known that 3/4 received CVs are not matching the job requirements, which devalues the idea of searching for IT talents on job boards. Some candidates respond automatically by the job title, often without even reading the job description and conditions.

The total cost of full-time employees is several times more than the available vacancies budget

It’s a big problem for all of us. Experts said that the high salary expectations of IT professionals and a low level of competition among candidates make it much more difficult for companies to hire. The offer of a salary even at the average market level reduces the attractiveness for the job seekers.

When it comes to choosing the best job place, IT professionals assess not only salary and benefits but also non-material factors like: professional growth opportunities, training, projects variety, remote work, flexible schedule, modern equipment, and software, and of course the Brand. Companies need to consider these nuances while looking for highly skilled professionals. The period of the pandemic also has a big impact on the labor market: the delayed demand for automation and digital transformation has become a trigger for an increase in the number of jobs and projects.

Besides, research by SHRM states that it takes up to 50-60% of an employee’s annual salary to fill a new position. Staff turnover can be even more costly, totaling 90-200% of an employee’s yearly salary. If that professional leaves during the project and you have to look for a replacement, the cost for the project skyrockets even before you include all the missed opportunities for the delayed completion of the project.

According to Builtin, the hiring cost for a senior developer in the US with an annual salary of $145,263 would be roughly $87,157. The additional cash compensation is $21,105 and the approximate 20% tax is $29,052. Let’s simplify the calculations and assume that the project lasts a year with a constant load. So hiring such a professional will cost $282,577. If that professional leaves during the project and you have to look for a replacement, the cost for the project skyrockets even before you include all the missed opportunities for the delayed completion of the project.

I don’t choose a candidate from various resumes but play the role of a sales manager, motivating professionals to choose our company

The labor market has become much more complicated. Last few years, a total increase in competition, limited resources, and a lack of highly qualified and productive personnel became the main barriers that each IT company faces. In turn, the relationship between the company and employees (candidates) has become market-based, so that the line of distinction between the “company-employee” and “company-client” models has almost been erased. A senior developer with more than 1-2 years of experience is already in the recruiters’ databases of many companies. Sometimes he/she receives unsolicited job offers.

According to statistics, only 15% of IT professionals are actively looking for a new job. And 41% of IT professionals are pretty satisfied with their current place and don’t plan to change it. The remaining 44% are not looking for a job, but at the same time, they consider offers from recruiters and even go to interviews.

Some of them are hoping to get a much better offer than what they currently have. But the main goal for most is to find out how they are evaluated in the market and understand what technologies and tools need to be mastered to become an even more in-demand specialist. For a recruiter, it is a waste of time without a guaranteed result.

An IT recruiter in these conditions has to be in several roles simultaneously – as a psychologist, and a sales manager, and a merchant. So anyone with these talents will be more successful in “selling” the position.

Yes, indeed, the processes of attracting candidates and clients are very similar nowadays. Deciding to change jobs is a life-changing moment for both a candidate and his family. Often, decisions are made at a family council, where all the risks of leaving the usual place, possible prospects, etc. are assessed. Naturally, the colder the candidate, the longer it takes to make a decision.

Therefore, everyone focuses on negotiations with “cold” candidates. In this case, it is extremely important to be able to extract dissatisfaction, needs, and further hit these points, creating the value of job proposals for a specific candidate.

The key task of an HR specialist is not just to find the right applicant, but to develop a sales message, sell the benefits of switching one company to another, and create value for the candidate. If all this is not done, you will lose the battle to more powerful hunters. Mastering technology and using popular plugins is not difficult. But HR has to be able to persuade.

The situation of hiring for IT talents is aggravated by the fact that many companies want employees, not for professional growth, but a job equal to their current position. Terms that one company offers are generally no different from the conditions in other companies. Therefore, the recruiter has to sell open positions to candidates.

How do you solve a hiring problem?

Today, IT outsourcing services are very often considered as a great alternative to directly hiring rare and non-specialized professionals. It’s especially relevant for small businesses. If IT jobs are not the main specialization of your business, then it makes no sense to hire in-house developers. Sometimes it’s a good idea to partner with an expert IT company to get access to world-class talent.

Outsourcing or IT staff augmentation hiring models allows you to get an excellent result instead of an ongoing recruiting process. The IT vendor works under a contract. If the outcomes don’t meet the requirements or don’t deliver on time, you can easily change the service provider. If an in-house developer can’t handle the job, a lengthy and expensive firing and replacement procedure await you.

We shouldn’t forget about the IT personnel shortage. There are a lot of programmers on the market, but only a few of them are experienced and talented enough. The chance of hiring a superstar is increased if you go to an IT service company. That’s way, world-class talents can work full time or devote a few hours depending on what you need) to your project. But these few hours can ultimately lead to a magnitude better result than if several less qualified in-house professionals develop the same thing for you.

The biggest benefit of IT staff augmentation services is an increase in the ROI of hiring by several times. Hiring in-house teams entail costs for search, salaries, bonuses, jobs and software, health insurance, vacation and sick leave, taxes, training, onboarding, and more. In addition, the services of non-core professionals are not needed full time, so the employee’s downtime cost must be taken into account. But the main thing is access to world-class talent and the ability to attract employees from more affordable markets.

We have developed an approximate model for estimating the project cost of 20,000 person-hours for 12 months. In this model, we calculated only the price difference. We don’t consider that an outsourced project can be commissioned earlier, which can significantly increase ROI.

There are no architects, DevOps, testers in the project. For simplicity, we assumed that project managers (PM) are needed in proportion to the number of coders. There is one-time hiring in the project, and there are no project completion costs. The cost of PM hours was simply added to the outsourcing price. The most incredible assumption of the model is that the project will be delivered on time. It affects the project time and volume, but not the ROI from outsourcing.

Here is a very simplified version. We calculate without VAT and other taxes, except for those related to the payroll: Download the ROI of the hiring calculator 

Digicode provides IT outsourcing and IT staff augmentation services. With over 13 years of experience in software development and 100+ projects under the belt, we know how to help a company optimize its resources and get more profit in the project.

We consolidate the experience of 350+ professionals to maximize your business value and deliver a scalable, high-quality, and technological product.

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