With a boom of startup ecosystem across EUROPE and especially in cities like Berlin, Warsaw and Paris the demand for high-quality engineers rises in a daily manner.
Latest research shows exciting but also disturbing numbers. In Berlin for every new 4 positions, there is only one engineer that can fulfill the requirement. Almost half of those who can fulfil the requirements are not ready to work in a full-time commitment.
The situation with contractors
The contractor market is growing but this opens a whole new problem to startups which need a dedicated team and people who live and are part of the product, unfortunately, this is not the case with freelancers.
While contractors have the skills, they are not reliable for many startups because startups need people that understand business value and commit full time to a single product.
In addition, contractors are expensive with an average starting price of 70 EURO per hour. Yet many startups have no other choice than to hire a team at that price point.
Building your full-time team
The ideal case for a startup is to have full-time employees who work on the project from the beginning and are accountable for it. But where do you find these people?
First, you can hire an in-house recruiting team. While that is a good affordable option, the market is overcrowded with external recruiting agencies who day and night scout Linkedin, Xing, and other professional networks. This creates a fierce competition over talent.
External recruiters can also be a source of talent but they also face the same problem of a competitive market with a high demand for talent. And when you do find talent, external agencies often charge up to 25% of the employee’s salary which makes this route not very cost effective. In Germany, an average recruiter will make 20,000 EURO on a one-time payment for placing a candidate.
Multiply that by 5 which is your average development team size and you just spent 100,000 EURO just to hire a team that may end up leaving 6-12 months later anyway for a better offer.
Or even worse, that employee leaves your company to work as a contractor and begins raising their rates by 4x just because they know you can’t afford to lose the critical knowledge they have about your product.
Relocating talent from eastern Europe
Another option for companies is to start recruiting in Eastern Europe and relocate the team members to the country their company is located in.
There is a great danger that current employees will use your company as a “Taxi Service” to get a visa and then change their job in 6 months time, furthermore, there are huge issues with culture integration.
In many cases, people have to go through a period of cultural adjustments and often experience culture shock when moving overseas.
Hiring an agency
Another alternative to hiring full-time team member is to hire an agency. Think carefully before you apply to outsourcing resource provider as there are several things to beware of.
- You can never be sure how good of a product they will build
- You will most likely not see your agency in person on a day-to-day basis
- Since your agency is not employees of your business, they do not develop the attitude and culture acclimation to help you scale your business.
Considering the prices that agencies charge, it’s a high price to pay with a lot of risks involved. Many agencies charge a starting price of 1000 EU per day for onshore developers and 500 EU per day for offshore. These prices are unreasonable for companies.
So what is the solution?
The ideal solution for a company owner or CTO would be:
- A dedicated full time employed team
- Experience no issues in communication
- Have people onsite and know them personally
- Build a team from the beginning of the product so people are accountable for what they deliver
- Pay them market price
- Have recruiters accountable for the risk and keep people for a long time
Sounds like a myth?
Not exactly, in the next articles on this topic, I will share my experience by defining some tips and hints on how to bring this “Myth” into reality.
Article published by A.I. Evangelist, Startup Advisor and Entrepreneur Albert Cyberhulk.