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The Coronavirus has put tremendous pressure on small and medium-sized businesses (SMBs). For startups, in particular, this is a challenging time to keep moving forward while attracting (much needed) investment.
For tech startup vying for an injection of capital and mentorship, the process has also changed overnight. For example, the 12-week startup accelerator program, Intel Ignite, led by Intel in Tel Aviv, carried out the entire final interview (and selection) processes remotely.
But it’s far from ideal. Virtual selection processes via Zoom, for example, lacks intimacy. In this scenario, founders and innovators risk not having the same impact as one would have (engaging an audience) in a physical setting.
There aren’t opportunities for mentors and judges to interact with people, so networking is much harder. But although this process is much arduous (to say the least), it doesn’t mean that it’s impossible.
In times of crisis, those who survive, adapt. They identify what works, optimise it, and set the stage to grow and prosper, even during a pandemic.
The situation on the ground: a drastic drop in confidence
For startups and SMBs, COVID-19 has been a rude awakening. And this is especially true for those who didn’t qualify for the emergency business loan schemes like the Coronavirus Business Interruption Loan Scheme.
If this wasn’t bad enough, the Office for Budget Responsibility expects the British economy to contract by as much as 35% in the second quarter of this year. According to the Studio Graphene survey of over 100 UK tech startups, as much as 38% stated that they were “not confident” or “not confident at all” of seeing growth in business turnover in 2020.
This had a domino effect on recruitment as only 58% were planning to hire more staff (a glaring 33% drop from the same time last year). In the same vein, only about half (or 49%) hoped to expand to new territories offshore, an annual drop of 18%.
Another 69% had significant doubts about the British government’s ability to support UK tech companies through the crisis. While all this paints a future that’s quite bleak, the reality promises to be different.
The situation on the ground: not all doom and gloom
After mounting pressure, Chancellor Rishi Sunak and the government have offered small British businesses 100% government-backed rescue loans. Although it took weeks and a lot of criticism from the startup and business community to make it happen, emergency loans are now available.
Cash-starved small firms can leverage the new “bounce back loans” with full government backing to ensure business continuity. In this scenario, small businesses can apply for “micro-loans” worth up to 25% of their turnover, or up to £50,000. While it (certainly) isn’t a lot, it can help keep small companies afloat.
The British government also announced plans for a new “Future Fund,” specially focused on high-growth startups in the country. In this scenario, the government promises to provide loans between £125,000 and £5 million to qualifying startups.
Launched in May and expected to run through September, these plans aim to provide enough investment to ensure business viability during the pandemic and economic downturn.
The British government pledged a total of £250 million of taxpayer money that took the form of a convertible loan note. Startups are also tasked with securing an equal or higher amount to match the funding from private investors.
Continue reading in our blog about how to identify and make good use of an opportunity to thrive in a post-crisis world.Rosella3 likes this.
Employers and IT contractors should be aware that the UK's IR35 tax rules have been delayed by the Treasury by one year amidst the coronavirus outbreak.
Since 2017, IR35 rules stated that public sector organisations would have to determine the tax status of contract workers, and whether they fell inside or outside the IR35 remit. In July 2019, HMRC stated in the draft finance bill that those rules were to be extended to medium- and large-sized private sector businesses, starting in April 2020. Indeed, as of February 2020, the Treasury said it planned to move forward with those plans.
"This is a deferral, not a cancellation," Chief Secretary to the Treasury Stephen Barclay said at the time. "The government remains committed to reintroducing this policy to ensure that people who are working like employees, but through their own limited company, pay broadly the same tax as those employed directly."
This gives CIOs some much-needed breathing room, but in the coming months, it will be crucial to draw up clear organisational maps to take stock of their workforce, off-payroll or not, as the new deadline looms. Assessing reporting lines will be crucial, as will weighing up the future pros and cons of reliance on contract workers, particularly for operational support.
Might the answer to IR35 lie in software team extension overseas?
Check out these two articles for more information:
How Extended Teams Overseas Can Provide Relief From IR35 Disruption
How to Remove IR35 Risks by Leveraging Nearshore Resources
As highlighted by the UK's Life Sciences 2030 Skills Strategy, a number of sector-wide skills issues need to be addressed to fulfill the sector’s full potential, including:
- Computational skills,
- Statistical literacy,
- Effective communication, etc.
Some of the most in-demand jobs during the COVID-19 outbreak include infrastructure professionals, IT support, cybersecurity specialists, and programmers.
According to CWJobs.co.uk., 8 out of 10 (80%) of UK businesses believe that a candidate with a tech specialism is a key factor in their future hiring decisions, no matter what sector they are in.
As one of the largest sub-sectors in tech, employing 121,900 people in the UK, the competition to recruit the best MedTech talent is greater than ever.
Telehealth alone can save NHS £7.5 billion and help reduce GP appointments by 56% and hospital appointments by 3%. However, for telehealth solutions to disrupt NHS, experienced software engineering talent is required.
To avoid talent shortage issues, it's recommended that MedTech companies:
- Attract and retain globally software engineering talent;
- Accelerate convergence at the interface between Life Sciences, computer science, mathematics, statistics, engineering, and chemistry in the fields of diagnostics, personalised medicine, and data science;
- Find a reliable tech partner for bespoke MedTech software development and ad-hoc project resources to keep moving and avoid business hibernation
Rather than viewing technology companies from outside the health industry as a competitive threat, MedTech companies can look at them as potential partners!
As the healthcare ecosystem becomes more connected, the advances in diagnostics, genomics, AI and other emergent data technologies will reinforce each other, driving an exponential acceleration towards personalised care.
What are the most critical needs as far as medical technologies are concerned?
- A cyber-secure ecosystem for data exchange - health care data breaches have been recorded at a rate of about one per day in 2019, according to EY. This level of vulnerability must be addressed before a connected ecosystem can be achieved.
- A secure supply chain - As healthcare evolves toward a more dynamic ecosystem built on data sharing, med techs should identify the business model that represents the best vehicle for them to deliver future value.
- New business models to handle various tech-driven user needs:
- Breakthrough innovator - Future success depends not just on the cutting-edge hardware but on its ability to connect into a wider data ecosystem, to help deliver better health outcomes.
- Disease manager - Maximizing the use of data to best manage all the patient’s chronic conditions and co-morbidities
- Lifestyle manager - The ubiquity of sensors, wearables, and smartphone software represents a huge opportunity for companies to develop this “softer” side of personalized Medtech
- Efficient producer - Supply chain transformation to target the significant market in low-tech, commodity Medtech products
- The lack of interoperability between the data-management systems used across health care. - Without a shared digital infrastructure, there’s no mechanism to allow data to flow seamlessly between stakeholders.
- The lack of incentive to drive collaboration. - There are just a few precedents for stakeholders collaborating at the scale needed.
- MedTech dev talent shortage - Finding the right supply of skilled workers from software engineering to researchers needed to develop, manufacture and support world-class devices and eHealth applications is a big issue.
1. Invest in data & IT infrastructure
2. Build analytics and AI capabilities
3. Develop digital well-being and remote monitoring solutions
4. Get closer to the consumer
5. Strategically partner or integrate with bespoke software providers to:
Get more insights from the video below:
- Increase time to hire software engineering talent due to access vast yet untapped pools of MedTech talent overseas;
- Save costs due to labour cost arbitrage and flexibility swapping resources quickly;
- In-source knowledge through ongoing knowledge sharing and access to robust third-party expertise
- Distribute your IT team to increase the capacity of the in-house software team and keep your core product team focused on the roadmap.
Rakgitha likes this.
As the impact of the Coronavirus is being felt across almost all industries, software development is not an exception. Many service IT companies with clients from the sectors hit hard by COVID-19 (e.g., travel, HoReCa, offline businesses, etc.) and many startups are at risk of taking quite a bad beating in the weeks to come. As businesses hibernate and are stymied behind their software development roadmaps amid the pandemic, the recovery will be tough.
Yet, there’re ways for businesses to stay afloat and ensure business continuity. It’s just a matter of changing mindsets and building telecommuting work cultures.
Apart from the current crisis, there are additional factors that negatively impact the software development capacity of in-house teams.
According to the latest State of Software Development survey, the lack of capacity is the #1 challenge of modern software development (SD). In software engineering, the term ‘capacity’ refers to the availability of human and technical resources needed to deliver a project of a particular scope within a specific timeline. A lot of software development projects with pending tasks in their backlogs are struggling to find resources for increasing the capacity of their development teams.
What holds back software team capacity?
1. The high cost of local talent
Because good developers are scarce, they feel entitled to command high salaries. By ‘high’ we mean unreasonably high. According to Glassdoor, the average senior software engineer's base salary in London is £73,075/yr.
If you compare these figures to the average software developer's salary in Ukraine (about $30,000/per annum, $42,000 in Kyiv but it’s the capital), the difference is gaping.
Even a stellar solution architect will cost you $60,000 (less than £50,000) per year in Kyiv, and I’m speaking about a gross figure here. So, this cost already contains tax and social benefits, and all you’ll pay on top is your team provider’s hosting (also called management) fee. This makes price arbitrage of leveraging software development resources nearshore so attractive.
In London, the cost of just an average solution architect starts at £75,000 per annum. On top of that, your offer will include up to £20,000 in benefits, £5,000 car allowance and up to 18% bonus. You don’t need to be a rocket scientist to identify the potential cost saving.
2. Long time-to-hire
The high demand for talent results in the extended time needed to fill a certain position. In the United Kingdom, the average time to fill a tech vacancy, from advertising to having an offer accepted by a candidate, is 65 days.
Waiting so long can be detrimental for business: in six weeks, your better-sourced competitors could go as far as delivering an MVP, while you are still struggling to hire the right talent onshore.
By comparison – in tech talent-rich countries, the recruitment process rarely takes more than four to six weeks, as the job market is abundant in quality candidates craving to work on challenging projects for international clients.
3. High competition for talent
Speaking of competitors – if you live in a developed economy, you are likely to compete for devs not only with companies who are, roughly speaking, in the same category as you in terms of scale and size. The competition extends to tech giants like Google, Apple, and Microsoft with affiliate branches or extended R&D Centers set up in your country. Your candidates will have a plethora of reasons to choose them over a smaller company. Apart from high salaries, these companies usually offer very hefty compensation packages that include medical insurance, retirement plans, and other fancy perks.
4. Employee retention issues
If you do manage to hire software developers with the right set of skills, your next challenge will be employee retention. Being highly sought for, local developers may choose to leave your company, and you don’t want to be left stranded and stymied in the middle of your project. Even if you bind them by contract, you may eventually discover that your staff turnover rates are dangerously high.
5. High infrastructure costs
Cloud technologies have significantly accelerated software development. Yet, infrastructure expenses are still limiting software development capacity. SD projects are resource-intensive: you have to pay for development tools and solutions and to provide developers with an infrastructure that would scale on demand.
Creating a proper environment for building and testing your products is impossible without a robust infrastructure. Even if you use free tools and open-source code libraries, you can’t completely rule out infrastructure expenses.
Ultimately, capacity limitations contribute to extending time-to-market. In the worst-case scenario, great product ideas end up crushed in the bud. Using nearshore resources, on the other hand, will help you increase your development capacity.
How to leverage nearshore resources to boost in-house development capacity: a real-life case
Distributing your software development team across several different locations helps reduce talent shortage pressure and enrich your team with the new skill sets and more diverse intercultural experiences. It’s an actionable way of extending your internal development capacity. The case of how one of our clients leveraged a distributed multi-discipline team nearshore to accelerate the time to build an MVP and attract additional funding is the best illustration of how product development team extension overseas works and can be super effective.
An award-winning UK-based startup offering a SaaS-based solution that helps businesses improve contract management and control rebates struggled to hire the right tech talent within the UK and chose to explore nearshoring scenarios. As a result, they hired us, a Leicester-based software house with its own R&D Centre in Kyiv, to assist them with entering the vast pool of software engineering, QA and PM talent in Ukraine, Eastern Europe’s leading hub for custom software development.
As a tech partner, we helped them assemble a distributed team across three locations. In Leicester (UK), we provided CTO-as-a-Service, DevOps, and Azure Stack resources. Kyiv (Ukraine) became the host of a team of .Net and AngularJS developers, Solution Architect, QA, and Scrum Master. In Malaga (Spain), we set up another team of .Net developers.
This distribution of resources allowed the company to build an MVP of a complex and sophisticated rebates platform within just eight months. Three months later, they won their first enterprise client, and eventually, attracted £1 million in funding from VC funds and private investors to “go to market” with a full-fledged product.
The story demonstrates how you can build a development team in several locations with just one tech partner. Using multiple locations allows you to diversify risks, access different skill sets in a more versatile way and optimise expenses due to labour cost arbitrage.
Alternatively, you can hire multiple team providers in different locations. This may be justified if your project demands a great diversity of technologies that no single nearshore software company can provide.
To wrap up, saving time, tapping into vast pools of software talent and receiving maximum output with the minimum investment are some of the advantages of leveraging nearshore resources.