June 7, 2023
Mixed signals about macroeconomic conditions in the US continue to cause headaches for businesses trying to navigate their way through uncertainty.
It’s particularly problematic for CTOs and their colleagues in HR trying to secure skilled software developers in what remains an incredibly tight market. According to industry body CompTIA, tech occupations across the economy declined by 99,000 positions in April. That’s largely as a result of right-sizing by companies that expanded their tech functions too rapidly from 2020 to 2022.
The unemployment rate for tech occupations remains incredibly low - just 2.3%, compared to the national unemployment rate (3.4%). Employers posted a healthy 300,000 job listings for tech-related roles last month.
Back in build mode
Many of Accelerance’s customers have initiated hiring freezes this year. They don’t want the cost of having additional full time employees on the payroll in uncertain times. But they also urgently need to ramp up development work on new or continuing projects. The explosion of interest in artificial intelligence since the debut of ChatGPT in November has spurred a wave of integration and development work.
Business leaders face this lingering dichotomy - the economy remains fragile and business confidence is in the doldrums, but pausing tech projects puts them at a competitive disadvantage, and finding skilled developers to do the work is very hard.
So what’s the answer? It certainly isn’t ChatGPT and its numerous spin-offs and imitators! They are great for automating many business processes and acting as smart assistants, but aren't going to take the place of skilled and experienced developers anytime soon.
You could pay more to get US-based contractors onboard. But that can be a hit and miss experience. Contractors, by their nature, love independence. Many of them are brilliant, highly experienced developers. But they often don’t integrate into a developer team very well, particularly in large organizations. They are looking out for ‘number one’, which is fine - more power to them. But they can leave for the next gig at short notice when a more attractive offer comes their way.
There is a better answer - strategic use of offshore outsourcing partners. I can tell you with confidence and based on current experience that a software developer working for a quality outsourcing partner in a near-shore location like Latin America or South America is likely to provide you far better results than hiring a contractor in the US. The cost is also likely to be 30 - 40% lower.
Outsourcing companies can provide the same level of service at a fraction of the cost of hiring in-house staff because they have access to a wider pool of talent and can spread the cost of overhead over multiple clients.
Educate yourself
The US is struggling to produce enough IT grads and, in recent years, tightened restrictions on the number of skilled migrants who can receive H1B visas.
In contrast, countries including Colombia, Argentina, Vietnam and Bangladesh have been doubling down on STEM education. Those countries now have large tech workforces and become thriving software outsourcing hubs as a result.
Resistance to outsourcing is often rooted in concerns about the complexities of working with teams in different time zones and via Zoom calls and Slack messages. But too often, it's linked to ignorance about the level of sophistication those offshoring locations now display when it comes to high-quality software development.
If you currently have outstanding FTE (full-time equivalent) roles with project milestones looming, it’s worth considering whether outsourcing is a more effective option than joining the hunt for onshore contractors. With a good outsourcing partner, you can access a team with a strong corporate culture, and developers who want to be there. You get accountability and established processes for tracking KPIs and project goals.
The outsourcing partners Accelerance works with are full of professional technologists who want to apply the best thinking and tools to solving problems for customers, and are incentivized to do so. With ongoing cost pressures and lingering uncertainty, it's worth giving yourself the flexibility to do your own right-sizing based on your business needs and the state of the economy.
Three key reasons to consider software development outsourcing
- Access to talent: Another advantage of outsourcing is access to talent. Outsourcing companies can provide access to highly skilled developers and engineers who may not be available locally. This can be especially beneficial for businesses that are located in areas with a shortage of tech talent.
- Flexibility: Outsourcing can also provide flexibility. Outsourcing companies can scale up or down their resources as needed, which can be helpful for businesses that experience seasonal fluctuations in demand. Additionally, outsourcing companies can often provide 24/7 support, which can be essential for businesses that operate in multiple time zones.
- Improved focus: Outsourcing can help businesses improve their focus. By outsourcing non-core functions, businesses can free up their internal resources to focus on their core competencies. This can lead to improved efficiency and productivity.
