July 26, 2022
They say you can’t have a world-class business without world-class employees, and the competition in the marketplace for the best employees has never been so fierce.
Pent-up demand
The global pandemic initially caused businesses to press pause on their recruitment plans in 2020, and since then new variants of COVID-19, and the inevitable restrictions that initially came with them, caused a swell of pent-up demand among companies looking to recruit. The financial services company, Prudential, conducted a study early in the pandemic that found “one quarter of workers plan on looking for a new job when the threat of the pandemic decreases, signalling a looming ‘war for talent'. They weren’t wrong!
Table of contents
Tech Boom – A Double Edged Sword
Top 5 recruitment challenges in 2022
'War on talent' revealed
As we did last year, our Microsoft Partner research this time around has a significant qualitative element to it in the shape of a series of lengthy 1-to-1 interviews with all of the participating CEOs. It was in these discussions that the issue of recruitment and the ‘war for talent’ really came to the fore. We have used direct quotes from these interviews where possible.
“We have struggled to hire as fast as we need to. It’s been knackering. We have had to hire when we haven’t met people. Five or six who joined, some left as they didn’t make through probation. It’s all part of the challenges of hiring under pressure.”
“We are all fighting for a few good people.”
“People supply is a problem, the availability of skills and resources. Brexit and pandemic have really hindered supply. ”“We have a plan of what’s coming up and may hire on spec. We won’t pass on good people.”
Tech Boom – A Double Edged Sword
As discussed in the previous chapter Microsoft Partner Insights 2022 – Financial Review, Microsoft Partners, and the UK tech sector as whole, have not only shown incredible resilience to the pandemic and Brexit, but they’ve actually seen an incredible boom in recent years, with the sector growing at 2.6 times faster than the rate of the UK economy (TechNation). In fact, the UK tech sector is currently valued at over $1 trillion, a valuation that only China and the US have achieved. And with higher valuations and more investment come more jobs.
The Office for National Statistics (ONS) showed recently that job vacancies hit a new record of 1,318,000 in the period from December 2021 to February 2022, with half of all industry sectors showing record highs.
“We have a weekly meeting on hiring and last year I had 6-8 vacancies permanently. Now we have 11 open vacancies.”
A City A.M. report in December 2021 shone a light on the UK tech sector in particular with some very interesting findings:
- Overall increase in jobs
There has been a 50% rise in overall UK tech job vacancies advertised in 2021 compared to 2020’s figures, with advertised tech vacancies reaching 160,887 in November. - Tech jobs mostly in London and South-East
Tech vacancies made up 12% of all available jobs in the UK, with just over 50% of these jobs available outside of London and the South East. - Everyone wants software developers
Software developers are still the most in-demand tech job across the UK. These positions make up 9% of all tech jobs with prospective developers being offered an average salary of £64,318, a 12% increase on 2020’s figures. - Tech specialists come at a high price
Specialist staff such as java developers and IT systems architects continue to be able to command high salaries with the average advertised salary for these roles being £80,076 and £93,004 respectively. - Tech sets the standard for flexible working
The UK tech industry continues to lead the way when it comes to hiring practices since technical jobs are well positioned to be carried out remotely. - Remote working opens the recruitment playing field
21% of all job adverts in the IT sector are advertised as remote roles. This is also contributing to the spread of the UK tech ecosystem beyond London as businesses can hire across the country and find the staff that they need, regardless of location.
Top 5 recruitment challenges in 2022
1. Getting staff on board takes time
The lead times for finding candidates were really affecting many of the companies surveyed. But even if they could find suitable people willing to change jobs, their notice period often made a bad situation worse.
“In the UK everyone is on 3 months’ notice. You have to wait a long time for talent to come on board, it is taking much longer than it used to.”
“Recruitment time really varies. We are seeing more of people on 3 month notice periods. Often 4-5 months on average. The longer notice periods that new hires have to work is the biggest factor.”
“We hired an internal recruiter to speed up the hiring process.”
With this in mind many of the CEOs we spoke had decided that, instead of hiring for specific vacancies or projects, speculative hiring was the way to go to lessen the pain.
“We are hiring speculatively. Partly as it takes so long to get someone in the business by the time, they have to work notice. Partly as there is so much going on with customers, we are likely to need the resource.”
“We used to recruit just when roles have become available i.e. as we’ve needed, but it is now speculative.”
“We are hiring 11 people this quarter; we are only 30 people so it's a lot. We might hire speculatively.”
2. The skills shortage is here to stay
The UK’s tech economy currently employs around 3 million people and it’s anticipated that the job surplus in the sector is set to continue for the foreseeable future. The Department for Culture Media and Sport published research last year that found “the UK tech sector is on track to add a further £190bn in value to the economy and create nearly 700,000 jobs over the next three years.”Realising that this skills shortage could be here to stay, several Microsoft Partners in our cohort were looking to change the way they had traditionally recruited in the past.
“We are switching to an always-on recruiting strategy. I don’t think any business can recruit on an as-needed basis. You have to be always recruiting.”
“We are headhunting. Sponsoring visas is something we have just started. We hired an internal recruiter earlier this year which has had a massive impact.”
“We have so much defined headcount, so we are always hiring. We have in-house recruitment now.”
3. Time to nurture existing staff
With top talent hard to find, employers are focused on keeping their existing team motivated and happy. Many had sought to bring the search in-house and develop talent internally.
“We have been good at attracting talent at graduate level.”
“We are trying to fill junior developer roles. We like to develop our people.”
"Recruitment has been really tough. We are employing different strategies like going to juniors and mids to get the talent in. Even developing our own staff."
“Trying all kinds of recruitment - interns, juniors – even developing more of our own people. This is a longer-term strategy.”
Given the sizable recruitment costs associated with hiring in the marketplace today, not only does this strategy have direct and positive impact to profitability, it also shows employees that you champion talent mobility and are willing to invest in people and their careers. This has shown to be a key driver in employee retention and lower attrition rates.
4. Location, location, location
In the past, geography had been a sizable recruiting obstacle for many Microsoft Partners, with many opting to cast their net locally. However the events of the last two years have forced people to rethink this stance and in some cases scrap it all together.
“We hired a woman in Belfast and others in Preston, Leeds. We are now asking ourselves the question, ‘If we can successfully onboard all over the UK, why not in Asia?’”
“We hire where we need people and where the best people are. We’ve had difficulty managing people too far away but are working on that.”
“We are now looking at offshoring.”
“50% of our staff are now non-Northeast-based. So yes, we’ve changed our outlook on geography and hiring.”
“We look further afield geographically. Two full time contractors are based in Sri Lanka, and that works well. Another person works from Spain and UK depending on what works for them.”
“Absolutely. We now hire across the UK.”
“We have felt quite limited being based where we are. We used lockdown to hire a bit further afield.”
With such a skill shortage affecting all tech companies, the competition for the best people was, and still is, huge. Although remote working has opened the talent market for many Microsoft Partners, a few of the leaders we interviewed felt that it wasn’t a level playing field.
“It’s difficult to compete when London firms are offering London salaries to a Norwich-based individual, for example.”
“We have had a lot of competition with London-based IT companies. Geordie shoring! They can pay them less but have the kudos of London-base.”
While Microsoft Partners outside of London struggled to match the remuneration of those based in the capital, it wasn’t plain sailing either for London tech businesses. A CNBC article in August last year highlighted that “technology firms in London are finding it increasingly difficult to recruit tech workers as Silicon Valley tech giants scale up their operations in the U.K. capital.”
The key players have all been actively increasing their footprint:
“Alphabet, Google’s parent, in the process of building a vast complex in King’s Cross with enough room for up to 7,000 Google employees and around 1,000 DeepMind staff. A few miles away, Apple is planning to move 1,400 staff into a new Apple Campus at Battersea Power Station. While the builds have been held up by coronavirus lockdowns, they’re still going ahead. Elsewhere, Facebook and Amazon have recently opened big multi-story offices in London.” (CNBC)
5. The battle for top tech talent
It was clear during our conversations with the senior leaders in the group that good tech people were the ones most in demand, but it was also interesting to hear about the other roles that people were urgently trying to fill.
“We are recruiting primarily tech and project consultancy roles. Level 3-4 tech. Someone with the breadth of experience, and more legacy tech like Citrix where clients in healthcare sector have a significant investment and requirement for it.”
“High qualified financial people who can work with Private Equity. The reporting requirements are really complex.”
“We had 2 developer roles. One client services director and one practice lead.”
“We are mostly hiring for tech roles.”
“Mostly in consulting, Azure. We are getting the people, but we are having to headhunt them.”
“We are trying to build sales capability.”
"We hired in sales and marketing, managed services, we also hired and strengthened leadership team.”
Many in the group were keen to invest more in sales and marketing.
“Sales is the main place we are hiring at the moment. They all demand really high basic. Do you hire inside or outside the industry? In sales we have a really long sales cycle, so it’s hard to then also map a new sales starter and how productive they are.”
“We are hiring across the board. We are investing in sales and marketing.”
“We’re currently hiring field salespeople. Trying to build a toe hold.”
The comments focusing on hiring new sales and marketing staff were interesting when put next to the quantitative data on how the partners win new business. Even though our results showed that ‘sales team’ and ‘marketing’ combined accounted for 31% of the responses (individually the second and third most popular in the survey) when we asked the group, ‘What are your top ways to win new business?’, the overwhelming winner was still ‘general and partner referrals’ which covered 45% of all responses. This was in-line with last year’s results where referrals came top again with 42% of the vote.
Top ways to win new business
The recruitment landscape however wasn’t as bleak for some.
Several of the CEOs interviewed reported that their recruitment strategy had been very successful and they had managed to make some key hires.
“We are recruiting a lot. We have hired 30 people in last two years.”
“Where we have really wanted someone, we have got them.”
The outlook for how Microsoft Partners hire, retain and engage staff looks complex. However several key themes have emerged such as work place flexibility, wage inflation, diversity, equality and inclusion, and culture are areas that can no longer be ignored. You can read more on these topics in remaining blogs in this series of Microsoft Partner Insights.
Further Reading
This is the third chapter of our 10 part blog series, Microsoft Partners Insights. Read chapter 1 - Benchmarking Research, for an introduction into Law 365's Microsoft Partner Insights 2022, key themes involved in the research, and quantitative data on this year's participants. Or see chapter 2 - Financial review for insights into the Financial information of the UK's top SME Microsoft Partners - revenue, profit & more.