The current global tech talent shortage amounts to 40 million skilled software engineers. By 2030, it will reach 85.2 million, making companies lose $8.4 trillion in revenue.
Such tendencies make hiring a qualified software engineer a real challenge. When you are a startup, everything becomes even more complicated. Based on statistics from Harvard Business Review, the cost of a poor hiring decision amounted to 30%–50% of the employee’s salary, significantly impacting startup budgets. To mitigate such financial setbacks, founders must transition to a more data-driven hiring methodology. Fortunately, outsourcing can ease things for small companies assembling teams.
Learn more about how to hire developers for startups step by step and why you’d better outsource it in our article.
What Matters for Startups When Hiring Developers
Failory’s research, conducted through interviews with over 80 failed startups, highlighted that 18% identified Team Problems as crucial factors contributing to their failure. These issues encompassed a spectrum of problems, including lack of domain knowledge, marketing expertise (and strategy), technical proficiency, and business experience. Additionally, Tech Problems were mentioned in 6% of cases, despite technology being integral to the majority of the startups analyzed. Notably, the most prevalent error identified was the premature over-investment in costly technology, particularly developer time, without first validating marketing assumptions.
When hiring developers, startups mind slightly different factors than large companies. The lack of established processes, fast growth, and limited budget shapes the recruitment process, among other factors, including:
Technical expertise and experiense
In startups, lack of experience is a big issue. Among 83 respondens, 20 mentioned it, with 9 saying it caused their failure. Here’s what it usually means:
- Lack of technical knowledge:If your product is technical, having a skilled technical person is necessary. Without one, building a good product becomes difficult. However, it’s important to keep technical aspects lean and agile in the early stages of a startup.
- Lack of domain knowledge: Talking to potential customers early on is crucial to understand the market well before building anything. If you skip this step, it often leads to failure.
- Limited marketing knowledge: Being able to reach and engage customers is vital for business growth. Many tech-focused teams struggle with this, highlighting the need for a skilled marketer among the founders.
- Lack of business understanding: Poor business decisions can ruin all efforts and the business itself. Fortunately, this challenge can be addressed by seeking mentorship or technology consulting from an experienced team that has successful cases in their portfolio.
If the founder of a startup has no or little technical background, they won’t understand what tech stack is better for the project. Hence, they will need consulting services before hiring software developers to know who to look for.
Need for skilled developers
When the project is fresh, you cannot hire junior software developers to work on it. People with minimal experience will require mentoring and can make mistakes that are too costly for startups. Besides, inexperienced engineers cannot complete complex tasks that are common at the initial software development stages. That’s why startups should search for skilled developers who have already created complex software from scratch.
Scalability of the project and team
If everything goes well, startups grow fast. Hence, when hiring developers, startup owners need to be ready that their team will increase and change all the time. It puts additional pressure since startups have to quickly find new team members in the scarce market.