2021 gave the technology industry a boost: many IT companies received excess profits, and employees received excess salaries. The average income of Ukrainian IT businesses that work with foreign clients has grown by 29% over the year, according to the Payoneer payment platform. How can companies compete for talent as the shortage of talent grows?
Investors will invest in technology
Expert forecasts indicate that active investment in IT will continue for at least the next three to five years. According to Roelof Botha, a partner at Sequoia Capital investment fund, $16 trillion in the world is invested in instruments with negative returns. In simple terms, it’s like putting $100 on a deposit, and in a year the bank will return $99.75. This situation means that large investors now, in fact, have nowhere to put their money. To be more precise, as Eugene Pentsak, a professor of finance and economics at the Kyiv-Mohyla Business School, noted: “Prospects, as before, are for IT companies with a focus on cloud technologies, cybersecurity and anti-fraud.”
According to Gartner, global IT (including data center systems, enterprise software, devices, IT services and communication services) will spend $4.5 trillion in 2022, which is 5.5% more than in 2021. And the growth rate of expenses will decrease (from 9.5% to 5.5%). In 2023, companies will receive about $30 billion in revenue from the sale of products and services that were not there before the pandemic.
The number of startups is growing rapidly: in the first half of 2021, investors invested $292.4 billion (almost the same amount startups attracted over the entire last year).
Also in 2021, 30 companies received decacorn status (startups valued at $10 billion or more), according to Crunchbase. This is twice as much as last year. For example, Grammarly, a company with Ukrainian roots, announced on November 18 that it had raised $200+ million in investments. The valuation of the business reached $13 billion (that is, it increased 13 times compared to 2019, when the company received the status of a unicorn).
Despite the fact that most startups will start making profits in the long term (5-10 years), it is more profitable for investors to invest in these projects than to lose them by storing them in bonds with negative yields.
The technology market will continue to grow. This means that the competition for IT talents will not only continue, but will also intensify. In order to attract professionals faster, companies will compete with rewards – in the short term this will reduce their profitability, but in the long term it will allow them to stand in the market, create many new breakthrough technologies and increase capitalization.
Possible black swans
Any scenario can be corrected by unpredictable events with a high degree of impact on the economy, including the technology sector. For example, it is difficult to predict how the risk of China’s stagflation (when the economy is collapsing and high inflation occurs at the same time) will affect the world. Many markets are economically linked to China. Obviously, the wave effect will affect many countries, including the US.
In the Ukrainian market, experts note the risk of lower investment due to the unstable political situation. The aggravation of relations between political forces, the investigation in connection with the case of the “Wagnerites”, the active pulling of Russian troops and equipment to the border with Ukraine – all this does not contribute to increasing the confidence of external investors. As a result, many foreign investors are withdrawing money from government bonds and Eurobonds of Ukraine, which causes increased pressure on the hryvnia, whose exchange rate has reached a more realistic one (UAH 27/$1).
Negative factors affect the dynamics of the labor market, requests for developers in Ukraine are decreasing. This is due both to seasonality – the New Year holidays are coming, and to economic and political reasons. Nevertheless, there is restrained optimism in the market – the hope that the situation will stabilize
How IT companies should act
The talent market is going global
In the next five to seven years, the gap between the number of required specialists in this field and their availability will only increase. According to forecasts, by 2030 the global shortage will be more than 85 million specialists. These are trillions of dollars of losses due to the impossibility of rapid growth.
As a result, IT companies began to actively go beyond the borders of their country and look for talents around the world.
The global remote trend is intensifying the competition for talents: the choice of offers is growing, and there are fewer restrictions for specialists. Therefore, rewards for IT specialists – from developers to PMs and marketers – will be leveled around the world. For professionals from regions that are now considered “inexpensive”, the forecast is good: we should expect that the average salaries of Ukrainian developers will approach the global median. This will increase competition for vacancies in “expensive markets” – so it is highly likely that, for example, American companies will reduce remuneration for local specialists. Again, because employers will have more choice.
It will be more difficult for a specialist, for example, from the USA, Great Britain or Germany, to get a job in an advanced company, because professionals from Ukraine are chosen on an equal basis with them. At the same time, together with Ukrainian specialists, professionals from Asian countries, whose value in the eyes of employers is also growing, will apply for vacancies.
Continue to grow professionals with your resources. Work with technological universities, launch internships for students and retraining programs for those who want to learn a profession in IT. Provide additional training to juniors: either pay for courses, or, if a large team growth is planned, open their own schools.
Strengthen the brand of professions in IT in the labor market. The developer needs a certain mindset and deep mathematical knowledge. Students who choose IT majors because of the myth of high salaries for everyone are quickly weeded out.
In order for the selection funnel to work more efficiently already at the entrance to the profession, it is necessary to introduce it earlier, from grades 5-9. Tell what opportunities there are, what skills are needed, what needs to be studied in order to become the next Zuckerberg or Musk. There are many other ways to introduce children and teenagers to IT: for example, museums of robotics and interactive centers where you can see and “feel” new technologies.
To improve the quality of education in universities. Business expects steps from the state education system: for example, to establish cooperation from the first year, adapt programs to business needs and conduct internships in companies with the support of experienced mentors. Benefits (for example, tax) for non-state educational centers that teach technology can improve the situation.
Improve the skills of managers and HRD. Going beyond the Ukrainian market in order to hire talent faster is only the first step. Working with global teams requires new management skills. For example, the willingness to work with people based on the principles of diversity (diversity & inclusion). Be able to organize the work of specialists from different time zones.
Companies need to pump development programs at all levels – from language courses to leadership and culture. There are not enough HRDs in Ukrainian companies that can support the work of global teams. To build a payment system or a corporate culture, you need comprehensive training and, preferably, a certain background. It may be an option for some companies to look for HRD in Europe or in those markets where expansion is planned.
How to prepare for Metamir
This year, Mark Zuckerberg announced the transformation of Facebook into a fundamentally new social network – and called it Metamir (Metaverse). This world will unite virtual and augmented reality, smartphones and game consoles. People will be able to communicate without leaving their homes, while maintaining a sense of presence. The release of sensory gloves has already been announced, in which touch and feel sensors are built in, visible with the help of VR glasses.
Facebook has launched a test of the Horizon Workrooms application – teams participate in virtual work rallies from anywhere in the world (this requires an Oculus Quest 2 VR headset). Employees have avatars, the ability to edit digital boards and documents. That is, people work from any convenient place, but in a productive office atmosphere. Most likely, in a few years, candidates will be more interested in such an opportunity than in the presence of ergonomic furniture and the taste of coffee in the office.
The growth of IT will continue – this is facilitated by the conditions of the global market and demand in all areas: from business to social. The main obstacle that will slow down the development in various technology niches will be precisely the lack of talent. Therefore, companies should look for additional ways to attract specialists, in particular, expand the circle of search (including raising the age limits for candidates), launch training programs for juniors and retraining, and go beyond the local market.