Canada’s tech sector is booming, fueled by digital transformation and the post-pandemic surge in e-commerce and remote work. Revenues in the sector grew at an average annual pace of 9.4% between 2015 and 2020. But this growth has given birth to a new problem: the shortage of tech talent—Canada is currently going through the biggest shortage of tech workers that the country has ever experienced. Per the Business Development Bank’s Tech Industry Outlook, 55% of tech entrepreneurs are struggling to hire the employees they need, while 29% of tech entrepreneurs struggle to retain their employees.
To counter this lack of personnel, companies have increased the wages and perks offered to software developers and engineers. Some tech companies have gone as far as increasing the salaries by 25%. But nothing seems to have worked—currently, there are too few specialists in the country to fill all the positions, especially when considering that the pandemic has led to an increase in tech jobs across all of Canada’s territories.
What has caused this? And what’s the remedy that businesses across Canada can apply? Can tech recruiting agencies step in and bridge this gap?
That’s what I will discuss in today’s entry.
There are many underlying reasons for this shortage—technological advancements, demographic changes, and shifting job requirements. But let’s have a look at the following graph. What do you see? You see a surge in employment in the digital economy in 2020—in fact, unlike the general economy, where there is a huge dip, employment in the sector remained stable during COVID-19 and shot up immediately after. It is clear that this shortage of talent is caused by two main reasons: the limited number of tech specialists that were already present in the country and the COVID-19 pandemic.
Over the course of the past three years, our behavior and general attitude towards pretty much everything—from work to shopping and entertainment—has become digital, largely due to the lockdowns where all things went online. And companies have had to respond in kind, shifting an increasingly large part of their activity to online mediums. This does not only include the sale of products through online platforms but also the fact that many employees now prefer working remotely. The increase in online shopping—which in turn increases the demand for tech talent—and the tendency of the workforce to use remote work platforms has created a severe deficit of IT personnel in Canada.
A long-term solution will be to invest in tech education across universities and other vocational institutions. From there, businesses can have a steady supply of specialized talent. A medium-term solution could be businesses investing in university programs to prepare market-ready talent to hone their skill set. This could include on-campus training, internships, or virtual training. But this is a route that only large businesses can take.
What else, then?
The most immediate—and effective—solution is offering remote work opportunities to talent from nearby countries. With the pandemic continuing to wreak havoc across the country, the solution that many companies have preferred is to look for remote workers from abroad. In fact, Provinces like Alberta have even passed legislation designed to make it easier for businesses to employ foreign remote workers.
It has many benefits associated with it.
The first one, as is the subject of this article, is that remote talent from nearby countries addresses Canada’s tech talent shortage. That was the primary reason why companies considered nearshore staff augmentation.
But as a byproduct of this strategy, hiring talent from nearby countries, such as Brazil, Argentina, Mexico, Columbia, etc., is more cost-effective. You know that when you hire an on-site professional for $100,000 a year, it is not really $100,000–we have shown here that it could go as high as $165,000. Per our estimates, companies could save up to 30% on their human resources while hiring from Latin American countries. Some can go even further than that, but that’s not something we would recommend. When we say 30% saving, we refer to the kind of talent that companies get at home–expert IT professionals who offer the same quality of work.
Another compelling reason is the time zone matching. Some companies may consider offshore talent–from India, Pakistan, the Philippines, etc.–but the downside of that approach is the lack of cohesiveness in the team. There are frequent delays in communication, and you may encounter scheduling issues or late project deliveries.
Lastly, it is the ability to scale up and down. Did your project get bigger? Hire a whole team. Do not need full-time employees? Consider fractional tech talent. Got fewer needs than usual? Let go some of your team members–it’s comparatively easier than laying off remote staff than on-site resources.
The new immigration policies adopted by the government have also made it easy for employers to relocate the tech workers (if any business would prefer that) to Canada, provided that they meet a number of minimum requirements.
Following Alberta’s example, other provinces have begun hiring tech workers from abroad to supplement their existing teams. The method has proved fruitful; more and more positions for software developers and engineers are created every day and filled accordingly.
While you can explore freelance platforms and other job portals, it is more of a hassle. You will have to sift through hundreds of applications to find the right talent for your project. Once hired, it is not a smooth ride.
Alternatively, you can partner with nearshore recruiting agencies like DevEngine. We have made it easy for Canadian–and US–companies to interview and hire software developers, DevOps, data engineers, and architects from South America. We do it the DevEngine Way–where we find talented individuals through our extensive network, referrals, and presence in Latin America. In the next stage, we test and vet all candidates before they see your table.
Plus, hiring IT talent is not just a one-off affair at DevEngine. We oversee the whole process end-to-end, from hiring to management and payment. But if you would like to manage your own team, you can explore our ‘Build, Operate, Transfer’ model–we give you the team, and you manage it.
Canada’s tech worker shortage is the biggest that the country has ever seen, and while the situation is not worsening, it is expected that it will last until at least 2028. While solutions have been found to access a foreign workforce, the increasing demand for tech workers constantly drives salaries up. It is currently impossible to estimate how much software engineers and developers may be paid in the near future. However, it is certain that the wages will not go down.
This has pushed many companies to accelerate their plans of hiring foreign remote specialists before the expected wages would impact their overall budgets. Canadian companies like DevEngine have helped alleviate the stress placed on the Canadian workforce, but the issue is expected to worsen before it improves.
Contact us today, and let’s work together to build your perfect team!