A tech startup looking to hire software developers will experience several challenges.
First, talented developers are hard to come by, whether it's because they are from a foreign country with a language and culture different from yours, are in extremely high demand, or because they charge expensive rates that many startups can't afford.
The hiring process takes up energy, time, and resources. Recruiting a full-time developer can cost a company between $28,548 - 35,685 dollars per hire. Many startups prefer to enlist the services of a professional software developer recruitment agency to get guidance and support for sourcing the best talent for the company. An agency will hasten the pursuit of your future employee and help scale the hiring process, connecting you with both passive and active candidates who could be the perfect fit.
Let's say a tech company is looking to hire Ruby on Rails developers but lacks the skills and resources necessary to source and vet top talent. The company can, in such a case, hire a software developer recruitment agency to help with the process. But even though the agency is responsible for increasing efficiency, and sourcing the best candidates, this investment needs a well-informed approach.
Murray Resources reveals there are over 20,000 employment and recruitment agencies in the United States and many, many, more if we look internationally. You simply can't afford to hire just any recruitment agency without fully understanding the factors that separate the good agencies from the bad ones.
So, how do you choose the right software development recruitment agency?
Challenges startups face when hiring software developers
It's common for startups to face challenges when recruiting software developers, including:
- Software developer shortage - There is a high demand for software developers in almost every industry. The number of software job vacancies is expected to increase by nearly 22%. But the average software developer growth rate in the United States is currently at 8%, indicating an already severe and overwhelming shortage of skilled developers.
- The salary question - Unlike big companies, most startups can't match the high salaries being offered to top engineers by large companies. Many startups are being forced to offer uncomfortably high salaries (higher than budgeted) or are starting to look for engineering talent outside of the U.S. (like in Latin America).
- Cultural discrepancies - Tech companies can opt to hire an offshore or nearshore software developer. But you can't ignore the cultural differences. A candidate can perceive a hiring manager's statement differently and vice versa, causing confusion and misunderstandings. English fluency and soft skills are also a common issue and obstacle.
- International market specifics - There are many local market nuances to consider when hiring an offshore software developer. But, it can be time-consuming and puzzling to study foreign markets. You must analyze recruitment potential and compensation, tax planning, IP law, labor regulations, and more.
That's why hiring a nearshore software developer recruitment agency like TECLA is advisable to help navigate these hiring challenges.
Why should you hire a software development recruitment agency?
Here's why a tech company should hire a software development recruitment agency:
- To save resources - Hiring a recruiter saves you time and money. SHRM published research revealing that it takes, on average, 42 days to fill a position, which is long, considering that most tech startups need to move fast. By collaborating with a recruiting agency, your company can reduce the time it takes to find the software developer your company needs. The agency gives 100% attention to the recruiting task, unlike your internal HR team, which already has other duties. Most importantly, the agency is also likely to have prospects in its talent pool that are a perfect fit for your vacant roles.
- To increase hiring quality - Software developer recruitment agencies have expertise in the sector, so they already have a talent pool at their discretion. With their undivided attention and high sourcing capability, they go over and beyond to help fill your pipeline with qualified candidates and adequately vet the best talent.
- Ideal if you have short-term hiring needs - A company may need to fill a role fast and for a short duration of time. For example, you may need to hire a temp if your full-time software developer takes a paid leave, maternity leave, or is on holiday. A recruiting firm can find employees fast, thanks to its vast network of candidates.
- Ideal for specialized or managerial roles - If your in-house recruiter has never hired for specific roles such as a Chief Technology Officer (CTO), he or she may have to spare time to learn how. A recruitment agency brings its expertise of specialized skills, unique sourcing techniques, vetted talent pools, and niche job boards, hastening the process.
- For additional security - A benefit of working with a recruitment agency is that most offer a guarantee period, meaning you have the assurance of new hire retention. So, agencies usually promise that your new hire will stay with the company for a specific time. Suppose the recruit leaves or is fired before the guarantee period. In that case, the recruitment agency will either find you a replacement for free or offer a credit or refund (which should be stated in the terms and conditions of your agreement).
How to choose the best recruitment agency for software developers
A Harvard Business Review's report stated that roughly 40% of companies outsource their recruitment needs to third-party organizations or recruitment agencies. But there are so many recruiting agencies for software developers, which makes it hard to choose the best fit for your hiring needs. Here's how to go about choosing a software developer recruitment agency for your company:
Get your team on the same page.
Assess your company's needs to know exactly how many positions you are looking to fill. This will help you determine how large of an applicant pipeline the agency will need to build for you. Determine the position, required skills, and knowledge because understanding this helps choose the relevant recruitment agency. It also helps understand the kind of talent pool they ought to have, the size, and their approach to recruitment. Here are sample questions to ask yourself:
- Are you looking for an entry-level, mid-level, or expert software developer?
- Do I have all technical details and tech requirements ready?
- Are you hiring for more than one position?
- Is the position temporary or permanent?
- Are you looking to employ an entire software development team?
- Is the position on-site, 100% remote, or hybrid?
Next, be clear on what you're offering. In 2019, the Developer Skills Report by HackerRank reviewed 71,000 software developers from across 100 nations to find the primary motivations of developers when looking for a job offer. The results were shocking because neither junior nor senior developers included "competitive compensation" as their number one option.
Option 1: Career growth and learning
- Seniors: 57.9%
- Juniors: 71.5%
Option 2: Work/Life balance
- Seniors: 44.7%
- Juniors: 45.7%
Option 3: Competitive compensation
- Seniors: 42.9%
- Juniors: 31.3%
So, before outsourcing your recruitment needs, know precisely what you're willing to offer. Talented candidates are more concerned about a working arrangement that provides a better work/life balance, which translates into being able to work remotely.
Determine your budget
Choosing the best recruitment agency is pointless if their rates exceed your budget. So, it's essential to consider whether the agency’s recruiting fees are affordable and how soon you need to fill the new role or hire a replacement. You can confirm the agency's pricing, services, and terms and conditions on their website and check internet reviews, but some of the more sensitive information will definitely need to be communicated to you by someone on their sales team. The average cost of filling a vacant in-house role is roughly $4,425. But, keep in mind that this is an average, so the price could vary, depending on your preferred recruitment method. Most agencies charge based on the role you're looking to fill. Consider factors such as:
- Type of role to be filled
- Number of posts to be filled
- The role's seniority (e.g., junior vs. senior developer)
- The job hire type (part-time, hybrid, remote, full-time, etc.)
- The position's estimated compensation
- The urgency with which the post has to be filled
- Ability to source suitable candidates
Undercover Recruiter states that recruiters charge between 15% and 25% of a potential hire's first-year salary. But, if the post is high-level or hard to fill, for example, if you're hiring a Head of Engineering, CTO, or Software Architect, the percentage can rise to up to 50%. So, compare different software recruitment agencies to see which meets your needs and budget.
Search for specialized expertise
Hiring a software developer recruitment agency is crucial since they’ll focus mainly on placing tech talent. A niche agency already knows its talent segment inside and out and will get acquainted with the requirements and technologies outlined in a tech role's job description in no time. Such an agency already has the expertise, substantial networks, a good reputation in the industry they hire for, and field knowledge of the role-specific recruiting challenges. Most importantly, these agencies already have a prescreened, vetted pool of talent that can move ahead to interviews without going through the sourcing and pre-screening stages, which tend to be the most time-consuming.
Unlike a freelance recruitment agency or general staffing firm, a niche agency fills the role faster because their laser beam focus lets them know exactly where to source the best talent and ensure they meet your skill requirements and make a perfect addition to your team in matters of company culture. In short, a good software developer recruitment agency will speak the same language as developers.
Check for social proof.
You can note down a list of all the software development recruitment agencies you want to contact. The best way to do this is by asking people in your network to recommend agencies they've worked with. You can also check websites like Clutch and G2 for the list of the best recruitment agencies and read the reviews for agencies from the list that specialize in hiring for the role you're interested in filling. Again, go for agencies that focus strictly on software development.
Look at the agency's track record.
Check LinkedIn to see the agency's top management, recruiters, and their professional networks. Who are their past clients? If possible, you can reach out to them to ask about their experience working with the agency, or ask the agency to provide references. Also, what's the size of the agency's talent base, and how is their online presence? Checking their online presence can help you learn about their brand and company culture. Also, what sourcing strategies do they use? How well do they engage passive candidates on the internet? You can follow the agency and connect with their recruiting staff on LinkedIn to learn more about how they do their thing. When evaluating the recruiters on LinkedIn, here's what to consider:
- How do their recruiters present themselves online?
- Are they members of groups where passive candidates are likely to be found?
- Do they participate in discussions happening in their industry? And do they sound like industry experts?
- Have they ever placed candidates in your industry?
The few recruiters you find will give you insight into the team's culture. Professional recruiters tend to offer valuable content and maintain a dominant LinkedIn presence. You will see what they've done for past clients and get a sense of their recruitment strategy and approach.
Interview prospective recruitment agencies
Next is to set up meeting requests with the software recruitment agencies you've chosen so far. When speaking to prospective agencies, request that they share past cases and successful placements for the positions you're looking to fill. If you want to pipeline candidates in a particular area of high growth, and the agency can prove that they've done that for another client, shortlist this agency. Also, ask them to include the account manager or recruiter responsible for that hire in the next meeting so you can probe them for more information on the placement execution.
Here are sample questions to ask prospective agencies:
- For how long have you been in operation?
- Who are your past clients?
- How long can it take to source a candidate for the role I'm interested in filling, and what's your average time to hire?
- What's your fee schedule?
- Can you provide a few sample profiles in your network?
- How do you go about selecting a CV?
- Do you have placement guarantees?
- What is your CV to interview ratio?
- What is your interview to offer ratio?
How do I recruit the best software developer?
There are two ways to recruit the best software developer. You can either hire directly or use a recruiter. Companies can hire directly from social media, job boards, tech events, developer communities & blogs, etc. Direct hiring doesn't cost your company additional fees, but you won't get access to many qualified candidates, and it may take more time.
The second option is hiring a recruitment agency. Your company can pay an external organization whose primary goal is to connect employers with job seekers. A software development recruitment agency keeps your in-house HR focused on the job at hand while sourcing and vetting top talent in a short time.
What are the main challenges startups experience when hiring software developers?
Startups looking to hire a software developer face many challenges, including a shortage of software developers, high salary expectations, cultural discrepancies, and the time and costs involved in the recruitment process.
How long does it take a company to hire a software developer?
It takes, on average, 40 days to hire a software developer, according to Glassdoor research. But if you're looking to hire a software engineer with, for instance, cloud security skills, it would take 96 days.
What do software service companies do?
Software service companies use software to offer customers with a service. The Software as a service (SaaS) distribution model allows a cloud provider to host applications and make them available to the end user over the internet. The cloud provider may be a third party contracted by an independent software vendor (ISV) to host the application. These businesses have instant access to an unrestricted international market and can grow without raising product delivery costs.
Is there a software developer shortage?
A 2019 CNBC report revealed that there would be an alarming software developer shortage in 2022. And by the end of 2021, there were 918,000 unfilled IT positions. Another report predicted that software job vacancies would increase by almost 22%. The average software developer growth rate in the United States is currently at 8%, indicating a severe and overwhelming shortage of skilled developers. Also, according to the Bureau of Labor Statistics, there will be a software engineer shortage in the US of approximately 1.2 million by 2026, and the demand for software developers, including engineers, will rise by 22% between 2022 and 2030. This percentage growth is roughly 4% more than that of average careers. Also, according to Forbes, in the next ten years, there will be around 189,200 job openings for software engineers annually.
Hire TECLA as your LATAM software development recruiter
Recruiting a talented software developer who meets your startup needs can be challenging. It costs time and money and can be hectic. Plus, the demand for software engineers keeps rising at a breakneck pace, making it hard to recruit top tech talent. This pattern has further increased the average salary of software developers in the United States, with a software developer making roughly $109,020 annually. So, startups must look for talent elsewhere instead of sticking to a defined radius. However, most don't know how or where to find this talent.
You can hire nearshore software developer recruitment agencies like TECLA. We specialize in headhunting tech talent from Latin America, and we excel at it because we have a pre-vetted talent pool, know the field extensively, and know precisely where to source the candidate(s) you're searching for. Our on-demand contract recruiting services give you access to top LATAM talent who are skilled, well-equipped, and ready to help you achieve company objectives. Reach TECLA today to make us your LATAM recruiter of choice.