The Future of Technology Depends on the Talent to Run it

The technology industry, in many ways, makes the world go round. But with growing market challenges and global uncertainties, what does the future of tech look like, and how can tech companies weather the storm?

What We’re Facing

Projections indicate several market challenges. These include the widening skills gap, too few developers to meet current demand, and low retention. When it comes to the skills gap, it’s estimated that 87% of companies are struggling to find candidates who align with their technical needs. There’s a widening difference between the skills businesses require and the skills tech workers are trained in. This gap could lead to 2.4 million jobs being unfilled between 2018 and 2028. Meanwhile, in addition to lacking IT staff who are trained in relevant skills, there are simply too few tech workers on the market. The National Foundation for American Policy estimates that vacant tech positions currently exceed 804,000, with 326,000 representing software development roles. That’s a lot of jobs left unfilled, and understaffed companies are hurting. And perhaps worst of all, even when companies are able to find (or train up) staff who meet their needs, they often struggle to retain them. 52% of workers say they’re interested in looking for a new job, and tech is facing the highest turnover rate of any industry. Retaining top performers is a significant challenge across the board. None of these issues are ideal.

What We Want

But what future do we envision for our tech companies? What’s the dream? I think many of us would say: a well equipped team that can help our company surpass its goals and innovate new solutions for our customers. And if that’s the dream, what factors do we need to make this a reality?

First, we need an upskilled team, trained in the technical competencies that will allow us to create and upgrade our products or services. We also need a consistent team, AKA low turnover. Our team should benefit from the institutional knowledge that comes with longer staff tenure. This means that we need to keep our staff happy enough to stay onboard, but it also means that we need to be scaling our teams thoughtfully, not recklessly. We’ve seen how companies that grow too quickly can end up suffering from sudden layoffs. This impedes company success, both because of a shrunken staff and because workers on the job market will be less interested in working for companies that could let them go with little notice. And finally, to get to the point where we have a highly skilled team with low turnover, we need to streamline our hiring and onboarding processes.

So we know what we need in order to equip our companies for success, but how do we get there? How do we overcome these hurdles and thrive in the face of adversity? The answer is outsourcing, but in a newer, evolved form.

When Outsourcing Falls Short

Outsourcing is becoming more widely practiced by American companies looking to increase support for their internal teams, save money, or expedite a project. The current value of American spending on outsourcing is $62 billion. It’s estimated that about 66% of US companies outsource the labor of at least one department, and that number is expected to increase in the coming years.

The appeals of outsourcing include reducing labor costs, providing temporary support for your in-house team, or assigning an auxiliary project to external contractors so that your in-house team can focus on the bread and butter of your business.

But these benefits come with certain challenges. Outsourcing’s common setbacks are so well known they’re practically clichés.

Firstly, outsourcing firms have traditionally been located overseas, which means these staff work wildly different hours from US companies. For example, there is a 12.5 hour time difference between San Francisco and New Delhi. Such timing differences often lead to project and communication delays. If a sudden issue arises—a cyber attack, a client complaint, a software vulnerability—overseas outsourcing can’t put these fires out in a timely manner. Surprise challenges are left unaddressed for longer than they have to be, leaving your company vulnerable to hackers, poor customer experience, and lost revenue.

In addition to delays, there are usually other communication difficulties when outsourcing overseas. As a client, you will likely need to spell out exactly what you want, in the most direct language possible. It is often not a good idea to assume outsourced staff will use their own common sense and take initiative to suggest alternatives. This leaves large room for error.

And when you outsource overseas, this often means you don’t directly supervise the work being performed. Typically outsourcing firms will have you liaise with a project manager who moderates feedback between your in-house team and the outsourced staff. Having to communicate via a middleman can exacerbate project delays and contribute to miscommunication.

It’s clear that traditional outsourcing’s many setbacks make it unideal for companies looking to perform with excellence. But can we make outsourcing a viable staffing solution? Is there an option that allows for the benefits of outsourcing, without its many issues?

Nearshoring: The Modern Solution

In recent years, outsourcing has innovated. Its modern incarnation—nearshore staff augmentation—allows for all the benefits of traditional outsourcing without any of the setbacks.

But what is nearshore staff augmentation? “Nearshore” means your temporary staff are working in a compatible time zone to your in-house team. They are neither domestic nor overseas. For example, a nearshoring firm that services North American clients will likely source their staff from South America. For European clients, staff might be based out of Africa. These arrangements allow nearshore staff to work the same (or similar) hours as your in-house team. “Staff augmentation” means that these contractors are integrated into your in-house team, rather than operating as an external team overseen by an unfamiliar project manager. You directly manage the work of augmented staff the same way you would with traditional W-2 hires.

Let’s take a look at how nearshore staff augmentation (or nearshoring) can help you leverage the benefits of outsourcing with none of the pitfalls.

Accessing the Global Talent Pool

When you nearshore, you’re open to staff working remotely, which allows you to consider candidates outside your immediate geographic area. Increased remote work and a larger hiring pool mean we can more easily find candidates who perfectly align with our company’s needs. A wider net is cast during the hiring process. This gives us access to more candidates, and therefore increases our chances of finding a perfect match.

We also don’t have to worry about convincing great candidates to relocate for work. They can stay near their families, friends, and preferred school districts. Excellent, well-aligned candidates will prefer working for companies who don’t require them to upend their personal lives.

In recent decades, Latin America has enjoyed an increase in software developer talent. Some nearshore firms have chosen to leverage the LATAM tech boom for their US clients. Partnering LATAM developers with US clients gives companies access to premium tech staff, and it enables Latin American countries to retain their population of talented engineers, who can then support their loved ones and local economies. Meanwhile, countries like Rwanda and Kenya are experiencing the benefits of the Fourth Industrial Revolution, allowing their tech workers to partner with companies based out of Europe. Nearshoring helps enable global economic prosperity.

Cost Savings

Nearshoring makes this access to great talent possible at a reduced cost. While not downright cheap (like traditional outsourcing tends to be), nearshoring allows some companies to save around 33–50% on staffing costs. It’s not a scrimp-and-save option, but it is more cost effective than hiring domestically. Cutting edge companies can work with top notch talent at a reduced price.

Similar Time Zones

When you nearshore, you’re contracting staff who operate in a compatible time zone to yours, usually within three hours of your in-house team. This eliminates delays with projects and communication, because everyone is clocked in around the same time. This also means your augmented staff can respond to surprise challenges in a timely manner. They’ll be available for impromptu problem-solving sessions and can put out sudden “fires.”

Ease of Communication

There also tend to be little to no communication difficulties with nearshore staff. This does depend on which staffing firm you partner with, but excellent nearshoring companies typically vet their staff for language fluency, clear communication, initiative in asking questions, and the ability to collaborate.

Direct Management

Nearshore staff augmentation involves contractors working alongside your in-house team, collaborating to make your dream projects a reality. No middlemen complicating your feedback, and no distinct teams struggling to sync up. Nearshoring enables increased productivity and fewer issues along the way.

Screening for Soft Skills

Not all outsourcing firms are the same. If you’re going to try nearshoring, it’s important to find a firm that sweats the little things. To that end, find a firm who screens for soft skills, in addition to technical competencies. It’s no use partnering with a software developer who is well credentialed but doesn’t communicate proactively. Same goes for taking initiative with identifying problems and collaborating on solutions. Those aren’t qualities you’ll see on a candidate’s resume, so make sure your nearshore firm has ways of testing those skills.

This might look like holding extended, discussion-based interviews. A firm’s technical challenges should also involve the candidate proposing alternative solutions, communicating their thought process, and asking clarifying questions. It’s also a good sign if the firm allows you to interview candidates yourself, so that you can screen for these qualities with your own unique methods.

Protecting Retention

An ideal nearshore firm will also have a strong company culture and imbue its values in its contractors. In order to mitigate turnover, firms should encourage contractors to be personally invested in their work. Beyond compensation, it’s essential for staff to have a vested interest in their company. A firm that keeps their staff engaged and happy is primed for long-term partnerships and the innovation that comes with it.

How It’s Done

For companies considering outsourcing, nearshore staff augmentation is a great way to do it. Organizations like McGraw Hill, a digital education innovator, have been able to scale their teams swiftly and affordably by partnering with nearshore developers from Jobsity. The aerospace manufacturer Boeing chose to partner with wiring technicians from Mexico, and now 95% of Boeing’s 787 Dreamliner aircrafts are wired by Mexican nearshorers. And Groupon was able to maintain the high quality of its marketplace, LivingSocial, with the help of nearshore software engineers. Outsourcing works, and its benefits are significant—if it’s done right. Nearshore staff augmentation is the best way to do it.

If nearshore staff augmentation is sounding like a good option for your organization, prioritize firms with strong recruitment and vetting procedures, staffers located in your same time zone, and low staff turnover. These will allow you to take full advantage of the benefits of nearshoring: seamless onboarding, reduced costs, and collaborative partnerships. The future of technology depends on the talent to run it, and nearshore staff augmentation paves the way.