Growth = Selling + SOURCING

About the recent IT labor market survey

An IT company that enjoys good health and has the expected sales growth, undoubtedly grows in specialized personnel, especially if it is a service company. In this growth, sourcing [1] and staff retention is as important as selling, and we are going to go deeper into this topic.

Although the recent CUTI-Advice IT labor market survey [2] does not address it directly, the demand for talent by companies in the IT sector is in crisis: the demand-supply gap is not being covered by the ICT academic offer in Uruguay.

This can have several explanations:

• The problem of the lack of talent in the USA is spilling over to Uruguay, which is confirmed by the increase in the percentage of Uruguayan exports to that destination (73% of the total).
• There are multinationals that moved their headquarters to Uruguay and are requiring national talents, who are very well remunerated, have good perks, and are attractive employer brands.
• The economic impact of the pandemic is requiring companies in the USA to lower costs, added to the new normal in which both parties (employee and employer) feel comfortable with remote work, makes companies in the USA hire people directly in LATAM.
• The economic impact of the pandemic is also accelerating the digital transformation of Uruguayan companies in general, which also require more services from IT companies and are vying for more in-house IT talent.

Given this new reality of the labor market, it is worth reviewing some common practices of IT companies:

• Have internal trainings, where junior people are trained.
• Hire only in Uruguay: because of the lack of habit of hiring remote people and even more if they are remote outside Uruguay, or because I can control the remote staff less.
• Use recruiters internal to the company and thus avoid paying external recruiters, putting all the responsibility for recruitment to the company's internal.
• Do not do psycho-labor tests because you do not know the benefits or to save the cost, based solely on a technical evaluation of talents.
• Compensate staff in some way when recommending talent to recruit, in order to motivate this practice, as it is valuable.
• Contact a friendly company looking to hire a resource for a project when you are unable to recruit.

But many companies are beginning to realize that these strategies are not enough with the current reality, especially because not only do they have to recruit talent for new projects, but also because having a low staff turnover is challenging.

Our strong recommendation is to take sourcing as a strategic issue: it is no longer something that I can comfortably delegate to internal recruiters. There has to be a strategy defined at the highest level of the company, because it can affect growth by having to abandon business opportunities due to lack of available talent.

Some initiatives/positions we are seeing in IT companies that are worth considering:

• They are giving up on only recruiting juniors and having internal trainings to train them, they are giving up on only hiring within Uruguay / Montevideo, because remote talent is also valuable (although it could impact IRAE).
• In addition to internal recruiters, whose team can be strengthened, more use is being made of external recruiters.
• In addition to the traditional search, headhunting is being used, that is, "tempting" candidates from other companies. This is a sensitive subject, where it can feel like "stealing people from my acquaintances".
• Psycho-technical tests are being used more, for two reasons: to make sure that it is a fit to the company in soft aspects, and because it is being very long to recruit, so having a failed recruitment is not an option.
• It is renouncing to always solve the need for talent by increasing the internal team, adding sourcing strategies with predefined trusted companies. This has the advantage that if demand drops, there is no need to lay off staff.
• The issue of age discrimination in human resources, which was perhaps due to the fear of having employees older than the company average, which facilitates access to additional talent, is being overcome.
• It is deepening to show itself as an attractive employer brand, with good perks and some associated with retention (eg. are generated with the permanence), social media campaigns, job fairs, brand presence in IT education centers, etc..
• Staff motivation is being professionalized, with challenging jobs, motivation and work climate surveys, and career path within the company.

We are in a moment that demands to be creative in the face of the talent demand crisis, where doing more of the same is not an option. A time for IT company partners to take ownership of the need to have a sourcing strategy, which will allow them to mitigate obstacles to growth so that it remains healthy, and thus not lose business opportunities.}

1] Sourcing is the discipline of using and acquiring talent that focuses both on identifying, evaluating, and attracting potential candidates for positions in the company, as well as identifying, evaluating and having a short list of companies / freelancers that provide that talent externally for a given project. 2] Monitor Laboral TI de Uruguay - Talent demand and ICT industry in job search portals, Advice - observatorio TI CUTI, February 2021.