The Pandemic Upends the Job Market for Software Engineers, Boosting Compensation While Making Hiring More Challenging

The pandemic has turned IT job market upside down. For recruiters and hiring managers, filling open positions is now as challenging as ever, even as the candidate pool has expanded around the globe. Alexei Miller explores the key challenges of a high demand in the labor market and explains why DataArt is historically so favorably positioned to tackle them.
04/26/21
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By Alexei Miller
Managing Director at DataArt
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The Pandemic Upends the Job Market for Software Engineers, Boosting Compensation While Making Hiring More Challenging

Throughout the pandemic, the IT market has experienced unprecedented growth. Tech companies are expanding, and our competitors are bringing in a small number of large new accounts. DataArt is experiencing this period of expansion differently, earning a large number of mid-sized accounts.

This rapid growth IT market is changing the rules of the game. People are working differently and assessing roles in new ways, and their motivations are changing, too.

Quick Overview of the Current IT Market

For any company to maintain growth, hiring competent and skilled employees is essential. Some companies contend that hiring is not an issue, while others say they are aggressively investing in recruitment. The one certainty is that every company is facing its own unique challenges.

This is the new reality that IT companies face every day, especially service companies that see the market more broadly than product companies. However, clients of these service companies are often unaware of the new reality, and they do not realize the rules have changed. Those who have caught wind of the change are unsure how to react.

Globally, there is a shortage of programmers and traditional IT outsourcing markets are no exception. As of 2020, the global talent shortage totaled 40M skilled workers worldwide. By 2030, the global talent deficit is predicted to reach 85.2M.

Recent stats about global talent shortage.
Recent stats about global talent shortage.

Over the past year, new ideas have emerged and been implemented. Many companies needed instantaneous digitalization of their services (broadband growth) — everything started to go online. Prior to the pandemic, the digital market was flooded with investment, and billions of dollars were deployed for digital projects.

As a software outsourcing company, we must ensure we can meet the staffing needs of client projects. Through our experience, we have developed solutions for some of the most pressing labor market problems.

Key Consequences of High Demand in the Labor Market

Problem 1. It has become much harder to find people for legacy technology projects.

Engineers prefer to work on «fashionable» projects using the latest technology stacks. In a rapidly evolving market, they seek continual professional development. Our internal survey results confirm that engineers are more motivated by interesting work and professional development than by money, and this influences the turnover.

DataArt’s Solution

When a customer must choose between upgrading a legacy system or creating an innovative new solution, it is important to know that an upgrade could involve staffing issues and high turnover. The market has increasingly responded to the desire for continuous development by offering pay-for-skills compensation, where professionals are paid for qualifications rather than the position held.

Customers do not fully understand the legacy vs new technology conundrum as yet, and they do not see why they must pay more to upgrade simpler and older technology. A possible solution is a project roadmap that clarifies the need for gradual, definite and permanent transition from the old to the new.

Problem 2. It is much harder to find employees willing to work according to a rigid schedule.

In addition, the pandemic has driven already nascent demand for wellness and work/life balance.

DataArt’s Solution

DataArt leads on this issue: we have always offered work/life balance, paid fairly for overtime, supported a generous vacation policy, and provided 10 extra days of sick leave beyond the standard offering — with no extra paperwork required. We offer a flexible schedule and mobility whenever possible. In terms of managing remote workers, we are well equipped for the change.

DataArt’s managers and team leaders have long known how to manage, evaluate performance, and motivate their teams remotely. DataArt had its first engineer in Russia and its first client in the United States: perhaps uniquely, we were working remotely from day one. In 2020, we simply needed to scale up.

Transitioning to a ‘remote/virtual-first’ model can be smooth if a company has several processes in place:

1) a culture that puts people first and emphasizes trust.

2) the technology and business model to allow multiple modes of work with a strong emphasis on virtual collaboration.

3) InfoSec and Compliance fully ready and equipped to work remotely.

During the crisis, we saw a huge surge in hacking and phishing attacks. The key lesson: never neglect the basics. Security processes must always be strong. Our security recommendations include:

  • Invest in security training
  • Reassess your information security risks
  • Ensure employees only use authorized devices and software
  • Assure that your communication and reporting mechanisms work as intended
  • Educate your employees on information security
  • Ensure all devices used in WFH mode have a secure logging mechanism up and running with multi-factor authentication

4) managers and team leaders must know (or be willing to learn) how to manage, evaluate performance and motivate their teams remotely.

Problem 3: Increased attrition is the reality today.

Changing a job is as easy as logging out of one Slack chat and logging onto another. Additionally, there are people in the remote environment who work for two companies at the same time.

DataArt’s Solution

DataArt’s attrition rate is 8-9%, far lower than the industry average of 15%.

People often leave jobs for more interesting work, rather than more money. We keep employees engaged by encouraging them to change projects and work on what interests them most.

We create an atmosphere of trust and foster «horizontal connections» — employees stay because they are surrounded by friends. The company’s philosophy is built on «people first»: we treat everyone in a respectful, human way. This becomes an important factor in helping our employees find a comfortable work/life balance.

Over 2020 in particular, we took pains to understand what our employees needed. We conducted surveys and fostered communication to create a continual feedback loop. And we worked hard to respond to this feedback.

DataArt Team Satisfaction Survey Results

In short, to care for our employees, we offer protection (our value proposition), reliability (asking what they need) and space (access to communities and offline group events). By successfully implementing these policies, we won a prestigious award from European Employer Brand Management in 2020, which rewards excellence in the employer brand management process.

Problem 4. Remote clients increasingly demand that candidates meet rigorous requirements and hold extra qualifications to precisely meet their needs.

It became more difficult to find candidates with these high-level, optional skills, which often involved advanced technologies and degrees or many years of technical experience.

DataArt’s Solution

As a software-engineering company, we provide IT — that is the service we deliver to customers. Our service must provide value in order to accomplish definite objectives beneficial to the client. It is crucial that the expectations of provider and client are always perfectly aligned. Our approach may seem straightforward, but we tend to avoid projects that have near-impossible conditions and requirements.

Problem 5. Not all clients understand that projects are a joint responsibility.

As a custom software development and consulting services provider, DataArt can’t solve problems without the input from the client. It is still our role to develop a plan to support employees, but customers must get involved.

DataArt’s Solution

We make sure that clients are familiar with the plan and understand the language of risk, the connection between turnover and a project’s success. Who pays to mitigate this risk? Most clients are well intentioned and willing to share knowledge and experience: they enjoy being experts and authorities.

However, we find that clients think little about the dynamics within a team — for example, that engineers can outgrow their roles. It is necessary to show clients how this occurs, explain unique difficulties and convey team interests. The same applies to ‘cultural training’ and onboarding: clients who want a long-term relationship should understand that underinvestment in onboarding is a risk for everyone involved. Clients face these problems themselves, but on a smaller scale — so usually, we can educate them easily.

Problem 6. Clients often have a limited understanding of security issues

Even in 2021, when the number of cyber-attacks and data breaches surges, some clients remain confident believing that background checks and appropriate certifications are all that is necessary to ensure security.

DataArt’s Solution

In our experience, background checks and certificates are often of limited use. Building relationships within the team, keeping employees involved and ensuring the team has a positive attitude toward the client are more important for security than any credentials.

Conclusion

It is safe to say that software developers and other IT specialists play a critical role in helping companies adopt digital transformation, suggesting that demand for IT jobs will remain high. If the trend continues, we may be faced with a shortage of IT professionals lasting at least for the next decade. Companies will continue to hire software developers, cloud engineers and DevOps personnel to introduce new, innovative technology that improves the customer experience. Our crystal ball is still a bit cloudy, but we will keep you updated with our forecasts for the ever-changing future.

Do you have any comments, thoughts or reflections on this topic? We encourage you to contact us to discuss them!

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