17 August 2018

Filling the right spot: employment challenges in the European tech sector

 
employement challanges


Searching for an employee

Without key people, your business may lose a lot of potential. The process of recruiting specialists in the IT industry is not easy. You are looking for experienced people, possessing specific skills whose financial expectations meet your capabilities.

When you hire a specialist after the recruitment process, you expect you will be able to develop your business together with that person and other employees. After all, you invest money in a product via the employed person.

Boss, I’m leaving

Unfortunately, the truth is that IT employees in large cities such as Dublin or Berlin may choose offers and often decide not to be dedicated to only one company.

They are curious about other organizations. They favor frequent changes, various projects, new people, and new possibilities. They may change their work locations, because change often means higher salaries or they simply want to work with a different technology or trade.

For you, staff changes always constitute costs of following recruitment processes and implementations. An insufficient number of specialists also results in that Sprints are not as efficient as they should be.

Offering more and more

In order to retain an employee, you offer the person more and more: more money, remote work, flexible working hours, private medical care, company budget for integration, modern equipment, or various other benefits, which constitute the attribute of only IT companies.

What once constituted the attractive element of your company has today become a market standard. 

Startups and larger companies from the IT industry in London, Dublin, Stockholm, or Berlin frequently face the challenge of creating a coherent team.

In order to better understand the specifics of each market, I will perform a short analysis of the main complaints concerning Dublin, Berlin, Stockholm, and London in terms of acquiring and keeping employees. Let’s start with the capital of Ireland.

Dublin’s tech talent 

Dublin, to a large extent, became the European headquarters of large corporations. We can list Google, Facebook, Twitter, Linkedin, Amazon, Zalando, Groupon, PayPal, AirBnB, Dropbox, HubSpot, Accenture, Salesforce, SAP, or Uber. The list is complemented by Siemens, HP, Intel, Dell, Microsoft, and Symantec. In terms of gaming EA, PopCap, Riot Gaes, and Zynga have their offices here. Many European capitals can be slightly jealous of Dublin’s Silicon Docks.

The presence of so many large corporations in Dublin results in about 80,000 specialists working in IT and each year this market expands by a few thousand additional positions. HubSpot established its main office in Dublin in 2013 and in the beginning employed more than 100 people. It was then stated by Declan Fitzgerald (Global Recruiting Director with HubSpot), that their goal is to employ 300 more people in the fields of sales, marketing, and engineering.

This illustrates the magnitude of the demand for specialists not only in large corporations but also in smaller companies where startups must compete with giants who possess much larger resources which they can offer the best people.

Large corporations won’t lose talented people without a fight, seeing how in 2014 HubSpot itself had problems finding and placing the right people.

The large demand for tech-talents results also impacts rent prices which become higher and in the Dublin’s real estate market the demand is higher than the supply, making the city one of the most expensive to live in Europe.

Therefore, if any candidates from outside of Ireland think about working there they often prefer to select or change the company in favor of a one located in the smaller cities of Cork, Limerick, or Galway.

Employees decide to leave the capital in favor of the eastern part of the country because there the costs of renting or purchasing a house are often 50% lower.

Berlin’s tech talent 

The Berlin Jobs Startups research states that there for startups the remuneration is higher than outside of the capital city, however, it is lower than in the case of non-startups. Of course there is a significant difference in the salaries concerning tech-talents between people without experience (€ 2900 median), and those with many years of experience (€ 5000 median). What’s interesting is that circa 50% of employees feel that they earn less than their expectations (they feel underpaid).

Comparing Berlin with Munich, the cited studies are quite interesting. An analysis carried out by HoneyPot indicates that remunerations in Munich are the highest in Germany in reference to the cost of living.

Berlin is currently a location strongly supported by investors. In 2016 London received circa £860 million via “VC funding” while startups and companies from Berlin received as much as £1 billion, the highest amount in Europe. In the previous year, Berlin was a city with the most rapidly developing number of startups.

What may constitute a big chance for Berlin in the future consists in partially taking over employees from London who leave because of Brexit. After all, politicians have implemented billboard campaigns in the English capital with the following slogan: Dear startups, Keep calm and move to Berlin.

The costs of living are lower than in Munich or London (in this case at as much as 43%) making Berlin retain the title of the European capital for startups. If one would look for certain problems faced by employees: higher financial expectations, a large percentage of employees lacking or possessing short-term experience, the rotation of specialists, and the fact that very talented German programmers choose America for their professional development.

London’s tech talent

London achieved the top spot in the European Digital City 2016 Index. 

EDCi describing how well different cities across Europe support digital entrepreneurs. For startups and scaleups, the index will provide information about the strengths and weaknesses of local ecosystems […]

The city possesses an immense potential because it still is the No.1 main migration destination for specialists outside of England. As much as 38% of specialists decide to work in England and particularly in London because it is a city which is very open, with businessmen quickly adapting to newly introduced technologies.

However, London is a location that showcases the growing problems of the IT market, a result of a number of interlacing phenomena, and which can be analyzed as clearly as through a lens. First of all, the problem of insufficient number of specialists is present everywhere in Europe and the USA. Secondly, Brexit surprised and impacted the highly inclusive IT environment the most. Only 3% of IT workers supported the UK leaving the EU.

The consequences are that already in 2015 there were only 0.4 candidates per one job offer in London, and demonstrates the fact that 30% of company founders believe that the development of their businesses is halted by problems related with employing a proper number of people while 39% believe that they have problems employing people with a proper attitude.

According to the research, it is believed that in order to fill the deficits of people, 766,000 specialists are needed by the year 2020. Employing people from outside of England or even outside of Europe constitutes one of the most probable solutions for filling the human resources gap.

Brexit may further exacerbate the problem of the insufficient number of specialists. At the current stage, it can be observed that the number of foreign IT specialists willing to work in the UK has decreased by half. Specialists begin to be worried and prefer to choose a different European city. After all, they have many options when it comes to the employee market.

The employee deficit in London can only be compensated by salary growth. Already in 2015, the daily remuneration for working on a contract was 410 Pounds. The especially valuable specialists are those who know SQL Windows, SQL Server, JavaScript, or .NET.

The support of VC funds for companies and a vast number of bootcamps such as We Got Coders, Makers Academy, General Assembly, or LeWagon provide a hope for the British capital city. And furthermore, almost seven thousand Code Clubs operating in Great Britain are currently teach children and students coding languages.

Stockholm’s tech talent

Listed as one of the most innovative economies in the world with high investments in startups, the Swedish government would like to repeat the successes of Silicon Valley.

The most remarkable examples of the Swedish economic success on the world’s tech map are Spotify, Klarna, Skype, or Zalando. And here I list only technological companies. In SparkLabs rankings Stockholm is listed on the second position after Silicon Valley and before Tel Aviv in terms of the number of Unicorns.

In order for a country with 10 million people to achieve such successes, the country’s policy to a large extent focuses on developing innovations in the fields of smart cities, transport, or new materials. All of these actions are related to the financial support for startups and R&D which reach about 3.6% GDP.

If it’s so beneficial are there any perturbed areas which might include startups and larger technological companies?

According to Hays Global Skills Index 2016, Sweden has already outpaced the USA as the country with the highest labour market stress level. The country ranked first among other 33 developed economies, with engineering and technology sectors facing the worst skill shortage.

It is estimated that the by the year 2030, the deficit of IT employees in Sweden alone may reach 30,000 people, the highest of all Scandinavian countries.

Summary

In this text, my aim is not to convince you that the situation in your city is so difficult that hiring people in-house has lost any sense. That’s definitely not the case. It’s simply more difficult for a variety reasons. I’ve tried to present certain phenomena in tables for each city. Of course I’m not providing you with a deep analysis similar to those performed by research agencies and public institutions.

But surely you will agree that acquiring a specialist is not easy. I believe that to a certain degree I have presented the true market reality.

Preparing for this text I have collected a few suggestions from other articles which could impact acquiring specialists.

And so, the following are listed: work-life balance, possible interesting projects, training budgets, having fun together and integrating, or monitoring employee work satisfaction.

These tips, even though correct, don’t exhaust the selection of possible solutions. Perhaps freelancers? Why not! However, remember that a freelancer wants to be independent and you probably won’t turn him or her into a full time employee. He or she likes changes and the diversity of tasks.

What I may suggest is to consider (as the CTO, CIO, or Manager) B2B cooperation which may provide the solution for the repeating situations in terms of fighting for talents. 

Of course a certain solution is to relocate employees from Poland and other countries from Central-Eastern Europe, but after all you have no guarantee that after a few months of expenses paid for proper remuneration, relocation, and other benefits, as well as after the time spent with visa documents – you are going to retain the employee at your company.

When the employee becomes part of your city’s employee market, large corporations or highly financed startups may entice that person with even more attractive remuneration and additional benefits.

Access to talent from Central-Eastern Europe or even Asian countries does not constitute a solution, but B2B cooperation between companies does. You are connected by a contract which is a bit more binding. It is all complemented by such reliability rankings as Clutch so your satisfaction with the cooperation is significant.

Also, remember that many software houses from Poland wish to create long-lasting relations with businesses on the other side of the Baltic Sea.

The employee market constitutes a vast opportunity for job-seekers and even a greater challenge for businesses. What matters are intelligently designed, long-lasting strategies which, after all, may complement each other and will not be exclusive.

In case of any questions..

B2B cooperation
Employment challenges
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