June 14, 2022
- Four major trends are currently shaping the IT labor market, according to U.S. company Coherent Solutions
- Independence, flexible work and retraining are most commonly requested by most of the sector’s workforce in 2022
- Along these, the nature of the projects and/or technologies that future or existing employees are going to work with, as well as the option of changing projects along the way, also feature prominently These are also criteria by which candidates decide whether or not to accept a work offer
- Compensation and benefits continue to be the starting point in job negotiations, with the companies developing creative proposals, including non-financial options and attractive work projects, to attract the best people
- The employment contract is no longer sacred: increasingly more IT professionals choose to work through B2B forms of collaboration (through companies they own or as self-employed professionals), ), thus making the company’s mission to develop and train its own workforce all the more difficult
- IT staff shortage attracts candidates who retrain to change careers even after 15 years in other lines of work
Four major trends are currently shaping the Romanian IT labor market, according to American company Coherent Solutions, one of the new entrants to the local software development and services market. In the year and a half since launching locally, the company went from zero to having 65 employees and projects that in another two years it will employ around 400 people.
Employees seek independence, and companies respond with creative job offers
Given the shortage of IT professionals, the biggest challenge facing companies is the increase in personnel costs, with wages and benefits still being the starting point in negotiations to retain or hire talent. Currently, data shows that the salary budgets of IT companies are growing annually at rates that far exceed the rate of pay increases in other industries.
IT wages keep rising. According to recent research conducted by the consulting company Mercer and published by the Employers’ Association of the Software and Services Industry (ANIS), the average size of compensation in R&D (including bonuses) grew by 33% in Bucharest between 2020 and 2022. The Romanian capital thus ranks second among European cities by R&D wage inflation, following Budapest, which saw an increase of 42% in R&D wages over the same period. Also according to Mercer data, the average salary in the Romanian technology industry grew nationally by 15% between 2019 and 2020 and by 6% between 2020 and 2021, respectively.
The starting point for job negotiations remains the wage package. But given that compensation is more or less aligned among industry players, to attract the best talent companies are designing creative, complex job offers that include various benefit packages, remote or hybrid work arrangements and, last but not least, the opportunity to work in attractive projects or with very new technologies.
An example of a creative response to the increase in personnel costs is the increase in the share of other forms of collaboration than the employment contract – namely, commercial contracts where IT professionals provide work through a company of their own or as self-employed professionals. Both companies and people are looking for solutions to optimize costs. B2B-type solutions reduce the tax burden incurred by welfare contributions, which are not exempt; in Romania, the only tax facility available to IT employees who develop software is the exemption from the payment of income tax. This is making Coherent Solutions’ mission all the more difficult, as companies must comply with labor regulations and can therefore only work with contractors on specific, discrete projects.
Employer flexibility and retraining: some employees choose a career in IT even after 15 years spent in other fields of work
Almost equally important are things like the ability of the employer to show some flexibility (including by accepting B2B forms of collaboration), the option to work remotely, the training routes offered by the company (especially for junior-level employees) and the benefits package, all of which are among the options offered by Coherent Solutions to prospective hires.
Something often discussed in the negotiating stages is the possibility to work remotely, a benefit that a lot of employees have gotten used to over the last two years and that not many are willing to give up – and only if given the freedom to return to the office when and for how long they want. More than two-thirds of the tech companies surveyed by Mercer offer their employees flexible work arrangements, to be able to choose between office-based and remote work.
In the current context, increasingly more professionals in other fields are choosing to change careers to work in IT. According to Coherent Solutions, most people who choose professional retraining are former employees in engineering and construction, finance, or business. Coherent’s team includes some employees who have changed careers after spending 15 years in other fields of work.
At Coherent Solutions, opportunities are also provided to junior-level employees who have little or no experience, through “internal school” or traineeship programs that offer the chance to enter a real project after graduation. At the last such project, out of 20 trainees, four were hired and went directly to work on company projects.
Another prominent trend concerns the benefits package. In the experience of Coherent Solutions, if in the case of freelancers pay is virtually the only object of discussion, in that of employees it matters a lot the type of projects or technologies on which they would work, how current these are, what specific business problem the project actually solves, as well as the possibility to change the project mid-way if the employee feels they need to. The company’s data show that over 70% of the interviewed candidates look for projects they find interesting.
“The Romanian IT market, and especially the software development segment, is one of the most dynamic in the region, which is also one of the reasons we are confident in the growth of our business here. We opened our local office in the spring of 2021, under less than favorable auspices because of the pandemic, which had already lasted for more than 12 months. And yet, in that same year, we managed to reach a turnover of almost a million US dollars, and for 2022 we project over four million. We already have 65 employees and we expect to expand our team by the end of the year, making up almost 9% of the workforce we now have in the eight countries where we operate. We intend that by the end of 2024 our operations in Romania will have 400 employees and permanent collaborators who will provide creative and valuable software solutions for our customers around the world in artificial intelligence, machine learning, the Internet of Things, or Extended Reality. At the moment, attracting customers from all over Europe is a priority, which is why we will continue to expand to other countries in the region. In the coming period we will also open our first offices in South America,” says Igor Epshteyn, Coherent Solutions CEO.
“Current developments are happening very quickly, both in terms of technology development, the scope of application and adoption rates, as well as with general demand for software products and services and the growth of the entire industry. Our projections for the next two years anticipate the doubling of the company’s workforce approximately every 12 months. Nationally, according to estimates, the industry faces an annual deficit of about 10,000 IT specialists, about half of the current market demand. In our main field of work, software development, almost three-quarters of companies (72%) experienced personnel turnover caused by employees willingly departing. Employee values are extremely important to us: in order to attract the best talent, it has become critical to identify those projects that are actually interesting to candidates, as well as how employees can leverage their skills: not just by working from anywhere but also working on projects they find interesting or challenging. Obviously, the challenge is equally the employer’s,“ says Alina Șandru, Coherent Solutions Romania General Manager.
“Romania has exceptional growth potential in the IT software and services industry. It is also true that we are waging tough competition to attract the best talent. Our teams are also involved in advanced artificial intelligence and machine learning projects such as image processing, computer-aided vision, and natural language processing, with applications such as facial recognition or sales forecasting. We also develop blockchain-based solutions that include private and public blockchains, smart contracts, blockchain network infrastructures, cryptographic protocols, and algorithms. In the field of Extended Reality (XR), we have developed innovations in haptic technologies, data visualization, indoor spaces navigation and intelligent assistance, and our IoT projects target portable devices, HVAC systems, CNC machines, fleet management, remote healthcare, and smart homes. We have a diverse product and services range, covering most of the current technologies: Java, .Net, Frontend, etc.,” explains Maksim Belov, Coherent Solutions Chief Technology Officer.
About Coherent Solutions
Coherent Solutions is a software product engineering and consulting company with over 2,000 employees across eight global locations. Thanks to its expert teams in software development and digital engineering solutions, Coherent Solutions delivers results to customers around the world through its high-performing, distributed teams. Offerings include custom digital solutions, web and mobile application development, DevOps and data services, and emerging technologies such as blockchain and IoT—with 1,000+ completed projects going back to the company’s inception in 1995. The company is headquartered in Minneapolis, Minnesota, along with development centers in Belarus, Bulgaria, Lithuania, Moldova, Poland, Romania, and Ukraine. Globally, the company had a turnover of more than $100 million in 2021, up 31% from 2020.
Coherent Solutions was named among the fastest-growing companies in the USA by Inc. magazine.
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