How Startups Can Win the War For Technology Talent

Building a great startup requires an amazing engineering team, and this is increasingly challenging and expensive for U.S. and Western Europe startups, where the competition for highly-skilled technical talent is fierce and growing. To scale up, startups must get in the ring with Big Tech firms, but how can they compete against companies with deeper pockets and big brand names?

We’re living through the greatest age of software development talent shortage. The lack of high-caliber employees has doubled in the past decade, while the demand for innovative IT solutions continues to grow. Nearly every startup is either deeply technical or a tech-enabled business, and an extremely tight recruiting market combined with high salaries for leading engineers makes it difficult for upstart businesses to build a great team in the US or Western Europe. 

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What’s Happening On the Front Line Of the Talent War? 

The competition for a skilled workforce is no new thing. In 1997, the term “war for talent” was coined by Steven Hankin of McKinsey & Company to refer to “an increasingly competitive landscape for recruiting and retaining talented employees”, and this challenge has grown exponentially since then. Recruiting a great team is difficult, retaining the team is expensive and software developments are highly mobile and more confident about switching jobs than ever before. 

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According to DCI’s 2019 report, 40% of the surveyed participants admitted checking new career opportunities weekly or even daily. The attitude towards job-hopping has changed - great engineers have many job options, and they won’t stick around just for a competitive salary - they want technical challenges, mentorship, career opportunities and the chance to make an impact in the world.

According to LinkedIn’s study on job switchers, more than 54% of technology specialists leave their companies because of the lack of career development. Other top reasons for quitting include poor management, wrong cultural fit, the absence of challenging work, dissatisfaction with benefits and a lack of recognition and rewards. 

Does it mean that startups aren’t able to stand their ground in the war for talent? Not at all! Big Tech companies (Facebook, Amazon, Google, etc.) certainly have a head start because they can offer very high salaries, excellent training and luxurious perks, but startups can successfully work with the world’s top developers if you play your cards right. Here is how you can do it.

How to Get an Edge In the Talent War?

Whether you’re going through an explosive growth or just starting out, these strategies will help you take the lead in the hunt for talent.

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1. Nimble and Innovative Hiring

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Startups score an advantage through speed and innovation - and this starts with the recruiting process. 

• Speed: Being nimble can get you ahead of competitors whose interview rounds usually take weeks to be complete despite it being relatively easy to identify top performers when you find them. We suggest using your small size to your advantage and moving quickly when you find great candidates - in some cases making offers on the same day as fit and technical interviews if they go well.
• Interview Process: Many software engineers voice their displeasure when interviewed by people who don’t understand the role. Picking the right interviewers as well as minimizing the wait time for your candidates leaves a positive impression and helps you avoid making a misguided talent decision which can be extremely costly. Especially early on, have your founders/leaders control the interview process, even for junior candidates - this can be the difference between the candidate fully understanding your vision or you being “just” another company they met.

• Talent Scouting: Scouting for talent must be an ongoing activity, not a short-term search to fill a couple of openings up. That means that sourcing activities require careful planning and the role of HR professionals has become more complex. Whenever possible, we suggest in-house recruiters that are 100% aligned with your vision and not paid by commission. This ensures everyone has the same goals from the start - the best developers, not the easiest ones to find.

• Hiring Metrics: To be more effective, Gartner recommends adopting an evidence-based approach to hiring. This strategy is based on market analytics and forecasting rather than simply satisfying current staff needs. The model enables recruiters to respond to ever-changing market demands on time. The evidence-based approach enhances recruiting and removes bias from the entire process so that you don’t risk losing great candidates and hiring mediocre ones due to the “similar-to-me” effect. Here are the principles behind this strategy:

1. Using data and evidence instead of opinions 
2. Identifying personal attributes necessary for the specific job
3. Implementing metrics to evaluate and improve hiring results 

• Perks: Innovation can also be integrated into your perks system, especially at an early stage. As Paul Graham famously wrote, “Do things that don’t scale”, and that applies to recruiting and perks as well - the biggest advantage startup founders have is their time! We suggest meeting candidates in person and learning about their interests, families and hobbies. You can then cater your perks around what people actually care about on a one-off basis, especially when building an initial team (e.g. a pet day at work, free-lunch Friday, etc.).

2. Share Your Vision

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In the pursuit of meaningful work, tech talents prefer companies whose mission they understand and that resonates with them. Mission-driven employees have a higher sense of purpose and commitment and are more likely to stay with their current company for a longer time. Challenges also play a huge role: as we’ve mentioned above, lack of challenging tasks is one of the most common reasons for tech talent to leave.

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James C. Collins once said that “great vision without great people is irrelevant”. At the same time, you can’t engage passionate and interesting individuals if you have nothing to offer. This is especially true for startups whose strong points are vision and opportunity.

To win talents over, make sure to take these steps first:

• Create a clear mission statement to let people know about your vision and plans.
• Appoint someone - ideally a founder - to discuss your vision and the company’s goals with every candidate for every role.
• Share successful vision achievement stories. Make sure they know why you will win.
• Build an internal culture where people can both support and challenge each other.
• If you’re VC-backed, use the power of your investors’ names to increase your credibility in the candidates’ eyes.
  

Finding driven talent becomes easier if you show your own dedication to the cause.

3. Let Employees Be Your Brand Ambassadors

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Top developers know other top developers and your employees can be your best recruiting pipeline. One of the best things about happy and engaged employees is that they can help you build a talent pipeline by referring their friends and former colleagues. With that in mind, it’s crucial to design an employee referral program in your company to reward staff members for every successful hire.

In addition to referrals, engaged employees can have a positive impact on the overall image of your startup as well. With the overwhelming popularity of social media, people are eager to share their thoughts with the world online. About 50% of users post content related to their work. These are the people who are very likely to become your activists. As such, they are highly engaged and tend to promote your company in both social media and real life, especially if they enjoy working for you. 

Employees humanize your company and make you stand out among other businesses. Letting them tell your story and how they contribute to it is a great way to make people feel connected to your company. Empower your employees to represent you and showcase their achievements, be it a blog article or podcast, and you’ll be on your way to establishing a sterling reputation as an employer.

4. Engage Offshore Talent Pools 

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As talent acquisition becomes more competitive, startups can turn the tide by reaching out to talent pools outside the United States which can be lower cost yet just as strong as U.S. and Western European software engineers.

Some enterprises resort to traditional outsourcing as a project-based model and delegate peripheral tasks to a third-party services provider. However, it’s a short-term solution that doesn’t work well for startups (you get the work done — but not the team behind it!). Further, you retain little to no control over the development process.

To scale up and retain tech talent, startups should integrate offshore software engineers into their long-term workflow. The simplest way to do it is to engage a talented offshore dedicated software development team. The “dedicated teams” model of offshoring is much more flexible and transparent than old-fashioned outsourcing as it allows you to extend your in-house team with international talents that are fully committed to your mission. 

Below you’ll find a list of features that sets dedicated teams apart from outsourcing:

• Long-Term Collaboration: Dedicated teams operate as a natural extension of your in-house development and are built for the long run.
• Full Control: Your interaction with the dedicated team doesn't differ from your communication with your in-house team members.
• Transparency: You know exactly what (and who) you’re paying for and can promote your dedicated team members at your discretion.
• Scalability: Dedicated teams are easy to scale up and recruiting is handled by the third party.
• Cultural Fit: A good dedicated team will embrace your mindset, mission and values.
• Time and Cost Efficiency: Offshore dedicated teams are much lower cost than in-house US engineers (in the case of Satellite, we aim for 60-70% savings!).
• Motivation and Retainment: your dedicated team works in a branded office and is taken good care of.
  

In a nutshell, dedicated teams can be a one-stop solution to the talent war. They work best for long-term projects (such as startups building large, complex platforms) — and give you a significant edge in the war for talent. To give one example, our partner DigiFi was able to scale up with Satellite’s dedicated team from Belarus, reduce per-person costs by over 70% and grow their team from 4 to 17 developers in just a few months.

The Bottom Line

Competing with Big Tech is hard and can be expensive, but any Goliath can be beaten. Leverage your strengths, such as mobility, growth opportunities and a powerful mission, and consider a dedicated offshore team that provides the benefits of leading talent, lower costs and increased speed. If you’re interested in learning more, please contact Satellite and we would be happy to speak!

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