The Unexpected Costs of Developer Turnover: Is Your Project at Risk?

Oct 16, 2019, 2:52:59 PM / by Ashish Patel

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Think your company couldn’t possibly have anything in common with Microsoft? Think again, if you’re struggling with developer turnover - either on your own staff or through your outsourced software development provider.

Microsoft strives to maintain a diverse and satisfied stock of internal talent, yet competition for securing - and actually keeping - new hires remains fierce. Satya Nadella, Microsoft's current CEO, touches on this in his 2018 annual report:

"We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits."

Even with all of its perks, Microsoft finds itself in much the same position as other giants in the tech sector - talent is slipping in and out of the company at an alarming rate. 

Paysa reported an overall retention rate of only 1.81 years at Microsoft in 2017, suggesting a possible talent-keeping crisis at the company. As mounting staffing requirements push management to hire more and more people, a trend of skittishness among tech talent threatens to complicate the company’s continued growth. Issues with high turnover rates in the tech sector are widespread and affect many facets of a growing company's operations.

 

Developer Turnover  

Tech sector turnover rates are most evident in developer positions. At 56 days on average, according to Workable.com, global IT times-to-hire are high. With no one available to fill these roles, companies often resort to elevating the responsibilities of current hires, which may be driving them to burnout.

Currently, tech sector churn is the highest of all industries, sitting at 13.2% on average. In practical terms, this means that more than 13% of a tech company's workforce is likely to need replacing in a given year.

Tech candidates have a huge wealth of attractive choices to consider at any given time, incentivizing the practice of “company-jumping” for greater pay and perks. In an attempt to retain hires longer, businesses have taken to up-skilling and promoting to keep them satisfied, but this is far from a perfect strategy.

Up-skilling new hires or existing talent is a double-edged sword. It may be beneficial to adapt a worker you know and trust to a new job, but it also leaves organizations vulnerable to newly trained employees seeking higher-paying employment elsewhere.   

 

Turnover in Consultancies

Turnover isn’t just something you need to be concerned with if you manage an in-house development team. When excessive, turnover can be problematic within consultancies as well - especially if it forces these teams to pull talent off your project to be allocated elsewhere.

 

Onshore Consultancies

Turnover isn't likely to be much lower in onshore consultancies than it is at local companies, given the current breadth of opportunities in the tech sector job market.

Great onshore talent is likely to be snatched up by better opportunities sooner, rather than later as companies resort to active talent-poaching tactics to fill open positions.

 

Offshore Consultancies

Surprisingly high turnover rates in offshore dev teams, ranging up to an alleged 40%, can pose significant challenges for time-sensitive development projects.

Comprehension of business goals and company standards ranks highly in importance for offshore teams. Yet an elevated turnover rate can hinder them in this regard by limiting their ability to deliver on schedule as new hires get up-to-speed with a project’s requirements.

 

Nearshore Consultancies

Nearshoring, as a hybrid approach, may represent a lower turnover risk than purely offshore consulting. However, working conditions at individual consultancies can have a highly variable impact on talent retention.  

 

How Consultancies Can Reduce Turnover

Workplace culture is one of the driving forces behind strong talent retention, though it goes beyond high pay and an attractive workspace. Google offers both, but limps forward with a meager 1.1-year employee retention rate overall. Amazon fares a little worse (one year) and Apple is a little better (two years), but their numbers aren't exactly great.

Google's issues, as reported on Glassdoor, range from interpersonal issues to developmental, all of which apply to consultancies:

 

Collaboration

Poor collaboration practices and other “big business” issues contribute to growing dissatisfaction among employees. Solving this issue boils down to facilitating better communication between employees and management.

For consultancies, this issue can be magnified even further as an additional layer of communication is needed to keep employees, management, clients on the same page.

 

Supervision and Guidance

When employees are given a little wiggle room and encouraged to act in their clients’ best interests, they often perform a bit better. However, too little guidance can lead to missed deadlines and contribute to a host of misunderstandings.

Strong leadership at consultancies involves treading a careful line between the extremes of micro-managing and keeping things “out of sight/out of mind” to find their team's productivity sweet spot.

 

Inclusion and Cultural Diversity

Dropping the inclusivity ball shortly after onboarding new recruits and allowing inhospitable cultural dispositions to sneak into a dev team can shake its very foundations.  

 

Growth Options and Career Development Pathways

Without a clear career trajectory in sight, talent may choose to jump the fence for greener pastures. Google in particular has yet to figure out the appropriate balance here, as vertical career development opportunities appear to be drying up in-house at the company.

Talented developers aren’t willing to stagnate in their positions. Facilitating growth within your company is essential to keeping hires in place.

The same goes for recognizing the value of all positions and contributions. At Google, reports suggest that the teams in charge of developing new technology have been given precedence over others in charge of maintaining and improving existing products. Reportedly, this has led to frustration among the latter, who feel ignored despite the obvious importance of their contributions.

 

How Consultancies Can Invest in Their Talent

As hinted at above, investing in talent is less about perks and more about creating a supportive workplace that’s responsive to team members’ concerns. The following questions can help you gauge the current state of your talent relations:

  • Do team members understand their responsibilities? Ensuring everyone truly understands what is expected of them cuts down on misunderstandings and potential for conflict.
  • Does management delegate responsibly? Delegation goes beyond simply setting goals for team members. Accounting for experience on the job, current workload, and shared responsibilities can make a world of difference in worker morale.
  • Are projects planned and managed appropriately? Proper planning means beginning and ending strong. Continual communication and active management makes handling loose goalposts easier across the board.

Ultimately, nurturing talent requires a willingness to hear and respond to team members’ most pressing concerns. 

It’s about prioritizing people above everything else. At Simpat, we live that commitment by investing in infrastructure, prioritizing diversity and gender equity, building a strong labor culture, and improving both economic compensation and professional development opportunities. That’s why we’ve been able to maintain a 95% retention rate, and why we were ranked one of the best places to code in Mexico by Software Guru. 

For a more detailed analysis of the role factors like these play in the tech sector’s current talent acquisition and retention dilemma, check out Simpat’s whitepaper on outsourcing in today’s competitive labor market:

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Ashish Patel

Written by Ashish Patel

Ashish Patel is the CEO and Founder of Simpat Tech.