With an increasing number of software developers working remotely, and a talent-poor market in the UK – are jobs at risk from a global workforce?

Could a global workforce reshape the UK tech market?

Global pandemics and political trade agreements can have enormous power to disrupt job markets.

When remote working becomes normal in a market already facing a significant skills shortage, what is stopping globalisation from becoming the next major force shaping the technology sector? Is this something businesses and workers should accept as inevitable?

The scale of the UK technology skills shortage

A recent study found that more than 70% of technology employers expected to experience a skills shortage during the following year.

A separate 2019 to 2020 report found that more than 45% of web development and design vacancies were classed as skills-shortage vacancies. This increased to 48% for programming and software development roles.

The North West is among the regions most affected by shortages of programmers and software developers.

In markets like these, businesses may hire developers who do not yet possess every required qualification or area of experience, with a longer-term plan to develop their skills. Alternatively, positions remain unfilled, delaying projects and restricting business growth.

Remote working removes some hiring barriers

Many of the previous barriers associated with remote recruitment, onboarding and management are no longer considered as significant.

Businesses experiencing developer shortages may therefore find it increasingly difficult to reject suitably skilled applicants simply because they are based overseas.

Hiring individuals or outsourcing work to businesses located thousands of miles away is not always straightforward, even when remote working has become normal.

However, the technology sector is known for its problem solvers and innovators, who are unlikely to be discouraged by challenges that can potentially be solved through technology.

Supply, demand and developer salaries

With significant government investment and an industry that has proven more resilient than many others during the pandemic, the technology sector remains attractive to students and people considering retraining.

This is positive for addressing the longer-term skills gap. However, people already working within technology currently benefit financially from the shortage.

Developers with sought-after skills can often command higher salaries when moving roles because they have several opportunities from which to choose. They may also be able to prioritise businesses offering stronger progression and development potential.

A genuinely global remote workforce could eventually place downward pressure on salaries if employers gain access to a much larger pool of skilled people.

When outsourcing overseas becomes a practical alternative, employment opportunities and salary levels within the UK could both be affected.

For candidates, this may make the current market a valuable time to secure an opportunity that provides fair remuneration and strong long-term development.

Is international hiring already replacing UK teams?

It is reasonable to expect international hiring to become more common, but there is no immediate rush away from employed UK teams and city-based working.

Within Manchester, we have not yet seen businesses adopting overseas outsourcing as their default approach.

Hiring UK-based employees who work remotely remains considerably more common.

Permits, visas and tax considerations

International remote working creates important questions around visas, tax and permission to work.

Requirements vary considerably between countries, so businesses and individuals should always use the latest official government guidance before making decisions.

Several countries have introduced remote-working visas designed to attract freelancers and remote employees, sometimes without requiring them to pay local income tax.

These arrangements can create interesting opportunities, but they also add another layer of legal and administrative complexity.

International trade uncertainty

Trade agreements between countries were particularly uncertain during the pandemic and the period following Brexit.

Uncertainty often delays investment and decision-making. This may slow the development of a fully global technology workforce in the short term, even when the operational technology is already available.

Time zones, language and effective management

Outsourcing software development internationally creates new challenges around time differences, communication and management.

Businesses already operating across several countries may be able to adapt relatively easily. For UK technology firms with no previous international operations, managing employees and suppliers across different time zones could represent a significant change.

Communication can also be affected by language, interpretation and cultural differences.

Colloquialisms, working hours, tone of voice, accents and individual communication styles can all influence how projects are briefed, managed and delivered.

These issues need to be addressed directly so that limited face-to-face contact does not affect project outcomes, deadlines or working relationships.

Finding the right skills

Large technology companies have long benefited from global supply chains and international manufacturing because of lower labour and operating costs.

It is reasonable to ask whether software development will increasingly follow the same model.

Businesses considering a global remote workforce still need to determine where the right skills can be found.

Silicon Valley remains one of the technology sector’s most influential hubs, with professionals and businesses around the world looking towards California for emerging ideas and standards.

Other major technology centres include Toronto, Shenzhen, Seattle, Tel Aviv and Melbourne.

Within the UK, businesses must also compete with established technology hubs including Cambridge, Birmingham and Reading.

The important question is whether an organisation can support, motivate and develop skilled people in the same way as larger technology businesses, regardless of where those employees are based.

Government investment in technology skills

Government campaigns encouraging people to retrain for technology roles generated considerable debate during 2020.

However, they also demonstrated that technology was being recognised as an important growth sector and that developing digital and cyber skills within the UK was a policy priority.

The Cyber First campaign was criticised for its messaging, but it also challenged some of the gender stereotypes associated with STEM careers.

Gender imbalance remains one contributor to the technology skills shortage. Encouraging more women and girls to consider technology careers could therefore help develop a broader pool of UK-based talent.

The government also announced £2.5 billion for the National Skills Fund as part of its retraining and reskilling programme, including the Lifetime Skills Guarantee.

Disruption creates further disruption

Disruption often creates innovation, and innovation can create further disruption.

Businesses may view change caused by technology and globalisation negatively, but these forces are too powerful to ignore.

Market disruption becomes most damaging when organisations fail to adapt.

Businesses often resist change because it requires investment, creates risk and forces them to move away from familiar ways of working. Many therefore wait for competitors or market leaders to move first before following their example.

That approach can work, provided the business is not the last to respond.

The future of work from anywhere

Once organisations successfully employ people remotely, the question naturally becomes whether those employees need to live within commuting distance of the office at all.

When someone can perform their role from the Bahamas, Singapore or Australia while communicating through video calls, it becomes difficult to argue that everyone else must live near the company’s headquarters.

Concerns about losing traditional office and city-centre working practices may be slowing wider adoption. However, major businesses including Twitter, Google and Spotify have already explored remote and work-from-anywhere models.

Smaller organisations should watch how these approaches develop and consider how changes made by major employers could eventually affect the wider market.

Planning for the next two to five years

Businesses should consider the potential impact of global remote working when planning their workforce strategies for the next two to five years.

However, international outsourcing is not the only possible response to the technology skills shortage.

Investment in training, education, career changes and greater gender equality could all help develop more technology skills within the UK.

For now, businesses should watch the major technology companies, understand how the market is changing and be prepared to adapt when necessary.

Technology has already transformed how people search for work, requiring recruitment businesses to change their approach. Better Placed will continue adapting to ensure we can add value throughout the hiring process.

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