Assuring software development talent in Europe

The shortage of software developers is pushing companies in Europe to become more creative regarding sourcing new talent and developing future proof location strategies. In order to assure the required software talent in Europe, an in-depth assessment of candidate locations is the key to success: at the end of the day there is no lack of talent if you are the preferred employer.

The war for software development talent

The European software market is growing at an unprecedented pace, resulting in shortages of software developers all over Europe. This is by no means a ‘European problem’: according to the U.S. Bureau of Labor Statistics, as of 2030, the global talent shortage is expected to reach 85.2 million. The war for software development talent is centered around 4 main aspects:

• The growing demand for software developers: while the European software developer community is growing, it cannot keep up with the booming demand.
• The search for specific skills & languages: many European companies are seeking IT professionals with specific skills and expertise.
• Fierce competition for talent: where mid-sized companies experience heavy competition from the Tech Giants in the local labor markets.
• High and increasing cost of labor: compared to other parts of the world, Europe has relative high labor cost for software developers, and wage increase in Europe is +5 to +15% per year.

Labor cost index versus Silicon Valley/Bay Area

How to select the best software development location in Europe

When looking for a new software development center in Europe key topics that play a role include amongst others: the statutory employee invention compensation, the fully loaded (apple-to-apple) labor cost comparison, the local competition level, the visa and travel restrictions and the investment incentives offered for new software development projects. The optimal future proof software development location must be based on a balanced mix of cost, quality and risk factors:

• Cost factors: including all factors that can be calculated with, forecasted and can be put in any preferred currency.
• Quality of the business environment: including factors such as labor quality, availability, loyalty & flexibility but also for example market access and accessibility. These factors are given a score each between 1 (negative) and 5 (positive for the project) and weighted to lead to a total weighted quality score.
• Risk factors: all external risk factors that determine the risk profile such as country risk, IP risk, natural disaster risk and security risk are include The risk factors are measured between Low-Medium and High risk.

The importance & weighting of these different location factors are constantly changing and are very project specific. Using a transparent, proven methodology and reliable, comparable and up-to-date information is the key to select the right location for a new software development center in Europe and align all stakeholders in the decision process.

Labor market deep dive to assure software talent

In order to assure your software talent in Europe, BCI Global developed a labor market deep dive methodology for a detailed labor market assessment of existing or potential short listed locations: IDEAL - In-DEpth Assessment of Labor Markets.

This IDEAL labor market assessment focuses on quantitative and qualitative assessments of the current and projected supply and demand for talent. Regarding the labor regulations/conditions attention is paid to the labor regulations/conditions and the support provided by the pertinent authorities for the project including recruitment and training support offered. For the cost of labor, a more detailed analysis of the employers offerings is provided for selected job profiles including the career paths offered, the primary and secondary earnings and benefits, other fringe benefits and training packages offered. The result of the IDEAL assessment is the labor market feasibility of a specific software project and the competitiveness of your positioning as an employer in the local labor market offering a Basic, Competitive or Front Running employee package.  

Overview of the IDEAL labor market assessment method

So, in order to assure your software talent in Europe an IDEAL (In-DEpth Assessment of Labor) assessment of all candidate locations is the key to success. Because at the end of the day: if you are the preferred employer in the right location, there is no lack of talent!

In case you are interested in receiving your copy of our White Paper ‘Software Development Talent in Europe’ please contact Josefien.Glaudemans@bciglobal.com.