Outsource tech skills for growth

Young people working in an office
There are many well-established agencies and consultancies to whom you can outsource tech skills

This week saw the publication of a report by Whitecap Consulting into the state of Fintech in the North East, with contributions from many technology and financial services players in the region. I was delighted to be able to contribute my thoughts to the report, which paints a picture of emerging opportunity with some unique advantages, but also highlighting the need to outsource tech skills to support growth. For example:

  • The North East has the fastest growing tech sector in the UK outside of London
  • It has the highest density of STEM students in England
  • Startups represent a higher proportion of Fintech firms in the NE than in any other region

Of course there are challenges to overcome. Whilst the fantastic quality of life in the North East of England gives rise to some enviable in-company staff retention rates, there is still a constant drain of talent from our world-class universities to London and the South East.

We can’t rely on the boomerangs

Whilst we benefit from a relatively high proportion of these people returning to the region once they’ve grown tired of high rents and commute times (so-called “boomerangs”), we could do so much more to create an environment right here in which people can flourish and realise their aspirations.

One consequence of the relatively low mobility of talent in the NE is that flexibility of resourcing is holding back growth. The report comments:

We have not observed the same number and scale of outsourced technology consultancies in the North East as we have in other regions, and these are the firms who are creating jobs at the fastest rate in other regions.

Hiring people is a costly and risky business, and a fast-growing firm should take care to ensure that it has sufficient flex in its resources to cope with the inevitable peaks and troughs that it will experience in its growth trajectory. There is an ongoing shortage of tech talent in the North East, as anyone who has recently tried to hire software developers will know. You need to be careful to avoid hiring someone simply because they’re available!

Outsource tech skills to cut cost and risk

I’ve worked with many startup businesses over the last few years, helping them to utilise outsourced tech skills in design, engineering and product strategy. Outsourced tech offers growing firms access to talent that is hard to come by, at short notice and on very flexible terms. This flexibility also reduces costs in a very real way, as the hidden costs of hiring people permanently are high; once you take into account employee benefits, utilisation, holidays, sickness and other reasons for downtime the total cost of employing people racks up.

Furthermore, the risk of sub-par performance can be hazardous to a smaller business, as it is typically a costly and lengthy process to address. Conversely, agencies and consultancies must maintain high performance levels in order to preserve their clients’ confidence and assure continued business. They also live or die by reputation, and it’s very much in their interests to keep you happy so that you will recommend their services to others. Employees don’t come under the same pressure as it’s a brave employer these days that would be truly frank in their assessment of a former employee’s performance when giving a reference!

Get the right mix of permanent and flexible resources

Of course, a tech business needs people who are there for the long haul, who are loyal to the cause and have a stake in its success. Depending on the nature of your business and the stage in its growth, the proportion of flexible resources you need will vary considerably.

For example, a slowly-growing mature business with many long-term contracts may need to outsource tech skills only when investing in major new initiatives. In the past I’ve worked with established software firms that used only a few outsourced resources to help them with specialist work or temporary peaks in demand due to unusual circumstances.

Conversely a fast-growing startup or scale-up may need a very high proportion. I have also worked with numerous digital startups that had only a few permanent employees but worked with development teams comprising several dozen engineers, designers, product managers and scrum masters.

Choosing how to outsource tech skills

Outsourcing can appear to be a daunting proposition, especially in the software industry. It’s common for a business to feel nervous, sceptical or even suspicious as to the motives or capabilities of agencies and consultancies. That’s why it’s important to ensure that you can talk to someone who can advise you honestly on what to watch out for when choosing to outsource for growth, how to monitor and measure performance and how to get the best from your suppliers.

This is where Flektion can help: we have deep experience from the field on both sides of the fence; we’ve procured agency assistance and delivered it for clients. Drop us a line if you’d like to know more.