London is one of the world’s premier booming tech hubs, quickly coming toe-to-toe with California’s Silicon Valley in terms of economic output. Ever since former Prime Minister David Cameron pledged in 2010 to transform London’s East End into East London Tech City, London’s technology sector has taken on unprecedented growth. Alongside it, the financial squeeze of office space and developer costs hasn’t ceased to reach new peaks of intensity. For London-based tech companies, this makes it a genuine challenge to find and acquire highly skilled, qualified software developers.
When there are thousands of active, growing IT businesses and a dozen billion-dollar tech corporations located in the UK, the fight is in full force to hire and retain the best local developers. To be able to work with the best, companies need to increase their salaries for both new and existing staff. This causes the average software developer salary to rise uncontrollably, especially as the gap between demand and supply keeps widening.
With over 338,000 software developers and programmers, London is host to Europe’s most dense population of IT professionals. And it looks like there’s very little hope for improvement.
Many speculated that with 2016’s Brexit referendum, Britain’s economy would suffer immensely, dragging down the IT sector with it. Surprisingly, tech companies rode the bump with little trouble, with the sector continuing to flourish well above the UK’s national growth rate. In 2017, just one year later, over 10,000 new companies launched, 59% of them in the field of software development. The population of software developers in the UK continues to rise, reaching over 810,000 in 2019. Even with this surge in available developers, demand remains even higher.
Today, the developer supply gap remains an uphill battle. The technology sector is known for its rapid growth and innovation, making it a difficult task to hire skilled workers at the same pace. Furthermore, the skills and knowledge of developers can quickly become outdated as technology progresses, and many complex technologies and software today require deep specialization. This combination has created intense competition between UK technology companies to the point of ‘poaching’ employed developers with the lure of an ever-higher salary.
In 2018, the need for developers accounted for 7% of all job vacancies in the UK. There are so many software development jobs being created that there aren’t nearly enough professionals to fill them. In 2019, this has driven London’s annual developer salary to an average of £53,221, one of the highest in the world. When sourcing local talent, London companies must add this rising salary on top of the increasing costs of office space, employee benefits, hardware costs, and associated taxes. Every year, due to the deficit of skilled local developers, London companies pay over £2 billion to compensate for temporary hires and increased wages.
The effects of competition are tremendous. Not only do software developers cost more, but it is a tough process to attract and hire specialized developers before they receive a better offer from competition. Companies then must decrease the risk of other companies poaching their acquired talent, so more benefits are introduced to the position.
Perhaps the most concerning factor is that higher wages do not equate to higher levels of skill. In fact, many companies are forced to lower their standards of skill and experience, simply to fill the lot of vacant positions. An average of 95% of software engineering graduates from Britain’s top 10 universities are employed. Within the available, unemployed workforce, skill and experience are in noticeably low supply.
If the local pool of talent is severely lacking, how do London companies continue to fuel their growth?
Laura Citron, CEO of London & Partners, put it succinctly: “The strength of our tech sector is built on the international makeup of our tech workforce.”
Just as international business is the driver behind the biggest successes in East London Tech City, it makes sense that a London-based company’s workforce can also benefit from an international spread. If it proves difficult and expensive to hire skilled developers locally, outsourcing to talented developers in more economically-suitable locations becomes the ideal solution.
For an established company, there are many cases in which outsourcing your development may be preferable to hiring locally. You may require a team of specialists to build an innovative new product or feature. Your product may have grown too complex and demanding for a small team to maintain. Perhaps you intend on expanding a product line rapidly, necessitating a large number of developers to work simultaneously.
Outsourcing is a fountain of skill that many of the largest companies in the UK choose to tap into, as it provides a qualified workforce that is both affordable and scalable. Thankfully, this pool of talent may not be too far away from home.
Though Great Britain and the rest of Western Europe continue to experience a chronic lack of qualified IT professionals, the reverse is true for Eastern Europe. In countries such as Poland, Slovakia, and Ukraine, the population of highly-skilled developers continues to rise at an increasing pace. In 2018, average software developer salaries were a staggering 47% lower in Warsaw, Poland than in London. As echoed by the lower wages in Eastern Europe, there is a relative oversupply of skilled software developers in this region.
According to a 2019 report compiled by SkillValue, 5 out of the top 10 countries with the world’s most skilled developers were located in Eastern Europe: Poland, Czech Republic, Ukraine, Hungary, and Slovakia. In comparison, the United Kingdom ranked at number 19.
The reason for this lies largely within the quality and focus of their technical education systems. In Eastern Europe, there is a major emphasis on STEM subjects such as mathematics and technology, as well as utilitarian application of these skills. Additionally, technical focus is preferred over a multidisciplinary approach, making vocational training a norm. This educational environment is an ideal foundation for the creation of specialized developer talent, and helps professionals remain adaptable and up to date with technological advancements in their fields.
But education is just one piece of the puzzle. Having worked on a variety of projects for clients often coming from all around the world, many software developers in countries like Poland are experienced enough to use their own common sense to make educated decisions and reach the best possible outcome. This also means that, as a client, you have a chance of getting a lot of free value and feedback – especially if you choose a software development house that specializes in working with established international clients.
It’s worth noting that this “common sense” stands in opposition to relying on overrated industry best practices which don’t suit every project or client and can often lead to longer development and problems with the code.
Plus, the developers who work with clients from the United Kingdom or the United States on a daily basis are all fluent in English (what’s actually common among developers from the EE countries), which means there will be absolutely no communication problems should you outsource your software development.
On average, the time zone discrepancy between the UK and Eastern Europe is a mere 1 to 2 hours, allowing either side to reach the other during standard working hours. Similarly, it only takes a few hours to travel from London to major Eastern European cities, allowing you to visit your remote team when needed. For example, all major Polish cities are well-connected with London thanks to a wide network of flights to London airports, operated by both national and international air carriers. The flights are available multiple times a day – and the flight takes just a bit over 2 hours.
As mentioned earlier, for EE developers, English is not a problem. Most Eastern European outsourcing destinations rank Moderate to High on the EF English Proficiency Index, and professional developers tend to rank even higher than their national average. Communication between London companies their Eastern European remote teams is a non-issue.
The business culture in Eastern Europe is largely the same as it is within London – polite and prompt, with great emphasis on skill and quality. As members of the European Union, Eastern European countries abide by EU business laws and codes of conduct, allowing for streamlined cooperation, transparency, and protection of intellectual property. Lastly, the governments of many of these countries provide solid support for their outsourcing economy, resonating these benefits to companies that choose to outsource to them.
The convenience provided by Eastern Europe assures that your product will be developed by some of the most talented professionals available, without any hiccups in communication or business conduct.
Great Britain shows no signs of slowing the rapid expansion of its technology sector. At the same time, the UK must attract hundreds of thousands of new software developers within the next decade to keep up with exponential levels of demand. The current skill deficit has created serious competition between tech companies for top talent and qualified workers. This is an expensive and cumbersome problem, especially as it becomes increasingly more unsustainable to continue the development of complex software and technologies within London.
More than a mere quick fix, outsourcing may very well be a beneficial solution. As Poland is home to a wide pool of experienced and skilled developers, UK companies can fill the gap not only with significantly lower wages, but higher average skill level as well. This combination can lead to a better, more profitable products overall.