It’s no secret that British companies are suffering from a tech talent shortage. According to the Tech Nation Report, as many as one in three London-based startups are plagued by the talent shortage.
When the competition for the brightest minds in the business intensifies, salaries skyrocket, and companies have to get creative with their benefits packages to close the deal.
Where does this leave startups around the country?
In a post-Brexit world, they aren’t in the best place to create, innovate, and disrupt traditional processes.
But it’s not all doom and gloom. If British startups decide to revolutionise old recruitment models and embrace dispersed development teams, they can still disrupt and deliver.
This is because companies that engage in team extension to build cutting-edge products are better placed to gain a competitive advantage in the marketplace.
But before we get ahead of ourselves, let’s define it.
Team Extension Defined
Team extension can be described as a business strategy where you build robust dispersed teams to help achieve business goals. In this scenario, remote team members (based around the world) will work closely with your team on-premise to build software products and ensure an achievable roadmap.
Even if the United Kingdom is suffering from a lack of software engineers and STEM graduates, other countries like Ukraine consistently produce a large pool of top talent. So it’s a highly effective response to the skills gap that helps startups and established companies keep innovating and move forward.
“A decline in EU immigration, coupled with a considerable rise in EU emigration has resulted in net EU migration of 48,000 for the year to June 2019. This represents a dramatic fall from days of 2015, when net EU migration to the UK peaked at 218,000.” Tech Nation Report, 2019
The Team Extension model is not the same as the traditional outsourcing approach to software development, as you’ll remain in total control of the project from discussion to deployment and beyond.
You’ll know if you need to embrace team extension by conducting an internal skills audit. If you don’t have the necessary skills and experience for your next build, extending your in-house team might be right for you.
What are the key benefits of team extension? Let’s take a look.
1. Extended Teams Help Accelerate the Recruitment Cycle
If you partner with an established extended team provider, you will be ready to start developing software in a matter of days, not months. This is because they will already have a deep pool of top tech talent for you to choose from. In addition, they have firsthand experience with establishing Extended Teams, onboarding dedicated software developers, bringing teams up to speed and retaining top talent. In most cases, Team Extension service providers cover everything for their clients, from tech recruitment and HR management to IT infrastructure, payroll and legal. This allows startups to focus on product development and get relief from an administrative burden.
What’s even better is that your extended team members will be with you for the duration of their contract. If this approach works for your business, you can get them involved in the next project.
2. Extended Teams Help Eliminate Extra Investment in Infrastructure
As your extended team won’t be working on-premise, you won’t have any overheads that are typically associated with growing development teams.
When you’re not bound by geographical limitations, you’ll be free of all additional costs like desks, hardware, software, operating costs, and more.
As you’re working with technology professionals offered by a third-party team extension services provider, you won’t have to absorb all the HR and benefits costs that generally go along with permanent in-house employees.
3. Extended Teams Give Access to Enhanced Agility and Shorten Time to Market
For startups, timing is everything. It can either make or break your business. When you work with dispersed extended teams, you also enjoy a high degree of agility.
This is a highly cost-effective approach because you can pay professionals to complete specific tasks when you need them. This gives software teams a high degree of flexibility to scale up or down based on present demands.
In this scenario, (the good news is that) you don’t have to deal with any of the payroll-related liabilities. You won’t be forced to hold on to employees once their task is complete (at least, for the time being).
4. Extended Teams Give Access to Higher-Quality Yet Lower-Cost Resources
In the UK, for instance, there’re many legacy-bound software developers who have been stuck behind some old-school stack for several decades and don’t want to advance and acquire new skills that modern businesses need so badly to thrive.
In countries like Ukraine, the pool of tech talent is pretty young, IT education is extremely popular and many tech specialists are really hungry for projects that leverage cutting-edge technologies like data science, fintech, artificial intelligence and machine learning, AR/VR, etc. Many of Evolve’s Extended Team clients admit a high level of competence of the Ukrainian tech workforce and, what’s even more important, their ability to come up with non-trivial outside-the-box solutions and creative workarounds.
Another advantage of working with off-premise developers is that they’re more willing to join a startup compared to the local talents that typically choose jobs at established brands over startups. The reasons are obvious: startup jobs tend to come with high workload, high responsibility, high risk, and low pay.
In countries like Ukraine, software developers are used to getting monthly gross salaries, i.e., they already include social benefits and taxes that are normally paid by employers in the UK/EU. As such, the total cost of a dedicated development team in Ukraine will be 30-40% lower than in the UK, but the quality of talent will be the same or higher.
5. Extended Teams Keep Investors Happy by Maximising Profitability
When the team extension model is at the heart of software development, you’re well-placed to maximise profitability.
Even if you take a long-term approach, team extension helps reduce costs when it comes to salaries. A .Net developer in London, for example, commands an average salary of £54,267 per annum and this doesn’t include social benefits packages.
A tech professional doing the same job in Kyiv, for example, commands about (at the time of writing this post) $46,800 a year (or around £36,090, including taxes and social benefits).
That kind of cost difference when it comes to top tech talent is almost impossible to ignore.
With highly effective communication applications like Slack and Skype, and advanced project management tools like Asana, Bitbucket, JIRA, and more, it’s a breeze to manage and track the work completed in real-time.
Startups, by nature, are consistently finding creative ways to innovate and build groundbreaking digital products. Embracing extended teams to gain a competitive edge is far from a massive leap. In fact, it’ll probably become the norm in the current recruitment landscape.
If your startup is looking to leverage the team extension model, request a commitment-free call from Evolve.