Among the many different impacts of the COVID-19 crisis, there has been an undeniable spike in the amount of digital transformation occurring across almost every industry as organizations adapt their businesses to a more digital world. In one year, companies of all regions and sizes have accelerated the digitalization of their internal operations and customer interactions to levels they expected to reach in three or four years. The share of digitally enabled products offered in their portfolios has also accelerated by up to seven years. The speed with which companies reacted to COVID-19-related changes is even more impressive as many businesses moved to adapt to these changes 20 times more quickly than they had thought possible before the pandemic. The backbone responsible for these astonishing transformations is the same worldwide: the companies’ tech teams.
Hiring tech talent has never been easy, and it’s about to get harder
From full-stack developers to data scientists to security specialists, recruiting high-quality tech teams has always been a major challenge for organizations. Qualified candidates can be difficult to find, expensive to hire, and accustomed to working remotely, creating a perfect combination for a competitive hiring environment among employers. And now, the race to recruit tech workers is only get fiercer.
Despite the increase in global unemployment in the last year — nine percent of working hours were lost compared to 2019, equaling more than 250 million jobs — the demand for digital skills continues to grow. The total number of technology-oriented jobs may increase nearly five-fold by 2025, rising from 41 million in 2020 to 190 million in 2025.
Under these circumstances, emerging markets will face an even bigger hiring challenge, as they must compete with tech giants like the US and Europe for scarce talent. Geographical boundaries continue to be torn down as remote work allows big tech companies to hire foreign talent. Unable to match their capacity to pay high salaries, companies in regions like Latin America — especially small and medium-sized companies — will need to find creative ways to source and retain IT workers.
Brazil is in the middle of a perfect storm
On top of the acceleration of digital transformation and the global competition for tech talent, Brazil has another problem as the local startup scene gains momentum. Though this is a positive trend, it is a challenge that threatens to make the gap between supply and demand for talent even larger. The local startup ecosystem has been growing at impressive rates in recent years, and the funding from venture capital firms to local tech startups has reached all-time highs. In Q1 2021 alone, almost $2 billion was invested into the sector, more than half of what was invested during all of 2020. For small startups trying to source IT workers, this means that they must fight their way through international players, large corporations, and well-funded local tech companies.
This sudden increase in demand didn’t take long to shake the market. In 2020, the average salaries for the IT sector went up around 30 percent, with developers being the most sought-after workers, accounting for almost 70 percent of the open positions. With more than 75 percent of companies looking for senior and semi-senior developers, two big questions arise: How does the country attract more Brazilians to become junior developers? How can they quickly enable those workers to become senior developers? The answers won’t come from traditional education models. It is expected that an additional 420,000 IT professionals will be needed by 2024. However, the current education system is only graduating 46,000 students per year.
Seeking creative solutions for hiring
Tech companies have different approaches to hiring talent: they leverage head-hunters, rely on in-house scouting teams, reach out to their networks, and partner with entrepreneurship hubs. No matter how many strategies these companies may have to recruit new employees, their efforts will be useless unless more developers are trained every year. With a traditional education sector that has not been able yet to evolve and meet the needs of the market, new models have appeared to try to solve the shortage of tech talent. From online course platforms like Udemy or Codeacademy to coding academies like Digital House to intense coding bootcamps like Brazilian Trybe or Accion Venture Lab’s portfolio company Henry, many startups are working towards the same goal: training better developers in a more efficient way.
As employers realize that some of these emerging models are not only providing fast education but also equipping their graduates with the latest tech tools, improving their much-needed soft skills, and putting them to the test under a true work environment, we might see the talent gap start to close while digital transformation continues to move full steam ahead. Ultimately, these solutions will help more people find employment while helping more businesses succeed in a more digital world.
Join us for our next webinar
This blog is part of a series of articles and webinars Accion Venture Lab has launched with the support of FedEx to help Brazilian SMEs overcome some of the challenges they are facing during the COVID-19 crisis. In our upcoming webinar on July 14, startups will share how they source and retain the best tech talent in Brazil and discuss with other players in the industry how they are helping to solve the need for developers with innovative education models.