Despite efficiency improvements, the need for skilled personnel remains, making it difficult for companies to meet high expectations for rapid software development.
This situation, characterized by a lack of talent coupled with pressure to deliver software quickly, presents an ideal opportunity for offshoring and nearshoring of tech talent as a solution, according to Leo Tucker, CEO of KMS Technology, an American product and services engineering company with development and testing centers in Vietnam and Mexico.
“It’s certainly not a big resignation anymore,” Tucker said, referring to the post-Covid job-hopping phenomenon that has been rampant among tech talent as remote work opens the door to more competitive wages around the world. “But that being said, there’s so much pressure that’s been put on a lot of software companies, especially by the PE owners, or their boards, or whoever it is, to keep accelerating and keep putting more and more functionality.”
The high costs associated with hiring are exacerbated by the need to compete with Silicon Valley salary standards, which have been further inflated by an influx of high-paid candidates from recent tech layoffs. This situation makes it difficult for companies outside of California’s tech hub to attract and retain skilled professionals without significantly increasing salary costs.
These challenges stem from a lack of specific skill sets, such as quality assurance (QA), data analysis, solution architecture, or data architecture. This question has become more pronounced in the digital economy, especially after COVID, as not only software companies, but almost all types of business are undergoing digital transformation.
Despite new graduates entering the market each year, the demand for software developers far exceeds the supply, making it a complex question of the quality and quantity of available talent.
GenAI accelerated the talent needed to analyze data
One key challenge is finding enough skilled data architects and experts skilled in handling data in various technologies. In particular, it highlights the increasing demand for artificial intelligence and machine learning skills, particularly fueled by the rise of interest in generative AI technologies.
While many of the skills required for AI and ML are data-related, there is also high demand for other AI-specific expertise. “While finding talent for common technologies like Java or Python might be easier because of their widespread use, securing experts for older or legacy technologies like Ruby on Rails can be particularly challenging,” Tucker explained.
This is because new members of the workforce tend to be more familiar with newer technologies, making it difficult to meet the needs of existing systems that rely on older technologies and leaving countless organizations with legacy software understaffed.
Best practices for offshoring and nearshoring initiatives
When it comes to outsourcing, many organizations focus on risks and challenges, such as time zone differences and a lack of transparency or control over the quality of work.
Therefore, it is best to look for software development partners rather than temporary staff augmentation. Partners who not only understand the value of the business, but are also committed to achieving the overall goals play a key role in the growth and innovation of the business.
Ideal partners are those who can propose innovative solutions, effectively conduct discussions with investors and have the ability to develop in accordance with the changing needs of the company. Organizations that can adeptly manage time zone differences, have excellent references and have minimal team turnover are best suited to become an integral extension of development teams, according to Tucker.
When deciding between developing existing teams with offshore or nearshore talent or fully global dedicated teams, there are clear advantages to the latter. Such teams operate autonomously, requiring less direct supervision from the client, as opposed to staff augmentation where one or two developers may join an existing team but need significant training, resources and management.
A fully dedicated team therefore represents a self-sufficient unit capable of moving projects forward without the need for constant intervention or additional support from the client’s internal team. This setup not only improves efficiency, but also allows the client’s core team to focus on other strategic areas of the business, making it a preferred option for companies looking to streamline their operations and scale efficiently, Tucker explained.