Venture Views: Talent shortage threatens growth of tech industry

Tech talent has never been more in demand, but the current shortage of suitable candidates is proving to be more than just a major headache for start-ups and venture capital firms. According to recruitment firm Robert Walters, the scarcity of talent threatens to halt the growth of the tech sector altogether.

Findings from Robert Walters’ Global Fintech Talent Report, which looks specifically at the fintech sector, found that there has been a 182% growth in tech roles within the sector — 3x the pace of the general tech market. While the forecast for the global fintech market looks positive, the report notes that its continued momentum will be dependent on the ability to recruit and retain the right tech talent.

“As the adoption of fintech products continues to grow at an exceptional rate, the concern is whether there is enough of the right tech talent to keep up with the growth,” Toby Fowlston, CEO of Robert Walters, said.

In the UK, job vacancies have grown year-on-year within fintech (136%), with these companies hiring predominately senior roles. Meanwhile, the US has seen the largest surge in new fintech jobs – illustrating a 223% increase across the board, with the majority of this growth in New York and San Francisco. Coming in at close second is Japan (214%), where blockchain technology represents almost a third of all fintech companies in the country.

According to the report, the most in-demand roles within fintech are software engineering and development — representing a third of all job roles advertised by fintech companies.

Pressure building

In addition to growing recruitment needs and the limited pool of candidates, salary expectations continue to inflate, making it more difficult for firms to retain and attract talent. According to Robert Walters analysts, fintech firms should aim to keep employees for at least 18 months. Currently, however, just New York, the Netherlands and San Francisco are able to retain their employees for this period of time, with fintech start-ups in other countries failing to keep their new hires engaged for long enough.

From a VC perspective, a failure to attract and retain the right talent is preventing their portfolios from being able to scale efficiently, says David Foreman, managing director at Praetura Ventures.

He told Real Deals: “The shortage of sufficiently qualified or experienced software engineers, developers and CTOs is driving up hiring costs, leading quite a few of our portfolio to mix the requirement for in-house tech teams and outsourced development teams to keep costs down.”

Foreman adds that start-ups are increasingly choosing to build tech teams away from the UK and implementing a hybrid remote working model to combat rising costs. “We keep hearing from our portfolio that the only way to hire developers is to offer a fully remote working contract. However, our founders are typically quite hesitant to do this because they feel it can hinder efforts to foster a workplace culture.”

Diversity woes

Despite the surge in demand for tech professionals, Robert Walters’ report finds that the sector is falling behind on diversity, with data showing that less than a quarter of the global fintech talent is female.

Fowlston said these findings make “little sense” considering the difficulty in finding candidates to fill roles within the fintech sector.

“Fast-growing start-ups need to look beyond ‘quirky’ soft perks and consider adding more meaningful benefits that may attract female professionals,” he said.