The Great Resignation has impacted talent pipelines and industries across the world, the worst hit being the digital ecosystem which encompasses newly emerging technology led E-commerce, Internet ventures and SaaS companies.
For nearly two decades, companies in the digital sector were under the assumption that their superior policies, open work culture, challenging tech environments and high pay scale would continue to attract the brightest and the best candidates. The sudden depletion of the talent pool, the lack of engineers and a wave of resignations threatened to put everything to a halt.
Case Study of a European Fintech Start-up
Jacques, CEO of a European Fintech start-up stated that his company had recently raised over $50 million in their Series B funding process and was adding users to their platform rapidly. His commitment to his investors included improving his platform to provide better user experience with added revenue offerings.
He had to extend his core technology team in order to take on an additional product roadmap and deliver online and mobile applications on schedule in order to succeed. For the next eight quarters, they had to hire 20 engineers and testers per quarter. It was also crucial to scale the product in order to raise $100 million the next year.
Since the beginning of the Great Resignation, the cost of hiring has climbed by 80-90 percent per candidate, the hiring success rate has decreased by 50 percent, and the average wage cost has increased by 35 percent for each candidate. His hiring metrics had been cut from 100 applicants, 50 interviews, 20 offers, and 10 joiners to 100 applicants, 30 interviews, 10 offers, and 3 joiners. Interviews were being attended by fewer candidates. They were also rejecting offers and failing to show up after accepting them. Obtaining 100 candidates, on the other hand, required a larger budget (more recruiters, more marketing). Given the uncertainty in talent availability, product releases slowed and the plan became nearly difficult to follow.
He was now two quarters behind schedule and things were only getting worse. He started considering a range of options, including the possibility of moving substantial portions of his work to Eastern Europe. The strategy, however, was full of challenges. Most Eastern European providers were struggling to find engineers and were unable to deliver 5-6 engineers in the coming quarter.
It was evident that Jacques’ problems would continue to worsen until they could be addressed at a fair volume and scale. Fortunately, his technology stack was standard and was extensively used in a number of web applications worldwide. Eventually, it was decided that a combination of hiring and outsourcing, along with periodic acquisitions, would be the best way to build a scalable and sustainable talent pipeline. They narrowed in on three small web technology firms in India and Vietnam, each with 50 to 100 developers and testers searching for a way out.
According to a survey conducted by a leading manpower agency towards the end of 2021, over 7 out of 10 employees in the United Kingdom felt confident in switching to a new job within the next two months. Nearly a quarter of those surveyed said they wanted to migrate in the next 3-6 months. We anticipate talent availability to remain the number one challenge for technology-led digital enterprises around the world.
These figures should be concerning to any CEO or founder seeking to bring a product to market. Companies are bound to fail until talent management is rethought completely. Those who don’t fail will face tremendous growth and scale issues in the future. The situation is only going to get worse before it gets better, with Millennials and Gen Z professionals favouring high employment mobility and the rise of the gig economy.
Talent management can be challenging in these uncertain times and success requires a deep understanding of the unique problems of the specific organisation and an approach that is crafted with multiple parameters, as opposed to a boiler-plated approach.
At Blue Helion we collaborate with Internet Ventures and Technology firms to help CEOs to ideate and execute a strategic plan and act in a direction to help them succeed in this new cutting-edge competitive world.