Despite efficiency improvements, the need for skilled personnel persists, making it difficult for companies to meet the high expectations for rapid software development. 

This situation, characterized by a talent shortage coupled with pressure to deliver software quickly presents an ideal opportunity for offshoring and nearshoring tech talent as a solution, according to Leo Tucker, CEO at KMS Technology, a U.S.-based product engineering and services company with development and testing centers in Vietnam and Mexico.

“It’s certainly not the great resignation anymore,” Tucker said, referring to the post-Covid phenomenon of job hopping that was widespread among tech talent, as remote work opened doors to more competitive salaries around the globe. “But that said, there’s so much pressure that’s put on so many software companies, in particular, by the PE owners, or by their boards, or whoever it may be, to keep accelerating and keep putting out more and more feature functionality.”

The high costs associated with hiring are exacerbated by the need to compete with Silicon Valley’s salary standards, which have been further inflated by an influx of high-paid candidates due to recent tech layoffs. This situation has made it difficult for businesses outside the California tech hub to attract and retain skilled professionals without significantly increasing their payroll expenses. 

These challenges stem from a shortage of specific skill sets, such as quality assurance (QA), data analysis, solution architecture, or data architecture. This issue has become more pronounced in the digital economy, especially post-COVID, as not only software companies but virtually all types of businesses are undergoing digital transformations. 

Despite new graduates entering the market each year, the demand for software developers far exceeds the supply, making it a complex issue of both quality and quantity of talent available.

GenAI has sped up the talent needed for data analysis

One critical challenge is finding enough skilled data architects and experts proficient in handling data across various technologies. Specifically, it highlights the soaring demand for AI and ML skills, particularly driven by the surge in interest in generative AI technologies. 

While many of the skills required for AI and ML are data-related, there’s also a high demand for other AI-specific expertise. “While finding talent for common technologies like Java or Python might be easier due to their widespread use, securing experts in older or legacy technologies like Ruby on Rails can be particularly challenging,” Tucker explained. 

This is because new entrants to the workforce tend to be more familiar with newer technologies, making it difficult to fulfill needs in existing systems that rely on older technologies and leaving the myriad of organizations with legacy software short-staffed. 

Best practices for offshoring and nearshoring initiatives

When it comes to outsourcing, many organizations are focused on the risks and challenges, such as timezone differences and a lack of transparency or control over work quality.

Thus, it’s best to seek out partners in software development rather than temporary staff augmentation. Partners who not only grasp the business’s value but are also committed to achieving overarching goals play a crucial role in the growth and innovation of a business. 

Ideal partners are those who can propose innovative solutions, effectively guide conversations with investors, and have the capability to evolve alongside the company’s changing needs. Organizations that can adeptly manage timezone differences, have stellar references and have minimal team turnover are most suited to become an integral extension of development teams, according to Tucker. 

When deciding to grow existing teams with offshore or nearshore talent or to have fully, global dedicated teams, there are distinct advantages to the latter. Such teams operate autonomously, requiring less direct oversight from the client’s side, which contrasts with staff augmentation where one or two developers may join an existing team but need significant training, resources, and management. 

A fully dedicated team, therefore, represents a self-sufficient unit capable of driving projects forward without the need for constant intervention or additional support from the client’s internal team. This setup not only enhances efficiency but also allows the client’s core team to focus on other strategic areas of the business, making it a preferable option for companies looking to streamline their operations and scale effectively, Tucker explained.