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How co-sourcing can bridge the digital skills gap

co-sourcing digital skills
Image credit: Techpods

The digital skills shortage has been a perennial problem holding back the UK’s innovative companies. There is a chronic imbalance between the number of workers with sought-after tech skills and the number of vacant roles that shows no sign of abating.

While the skills gap is a global issue, it has been acutely felt in the UK thanks to the double blow of Brexit and the Covid pandemic.

According to UK government statistics, UK tech job vacancies rose by 50% between 2020 and 2021. A 2021 report – the latest available – by the Department for Digital, Culture, Media & Sport (DCMS) revealed that 48% of UK businesses were recruiting for roles that required data skills, but that 46% of those have struggled to find appropriately skilled candidates.

A more recent survey of UK managing directors found that 81% of UK managing directors are seeing a negative impact on their business due to a lack of digital skills.

Put simply, there are not enough software developers, data scientists, analysts and system architects in the UK to meet demand.

There are many mechanisms that can address the talent shortage, from digital skills bootcamps, to on-the-job upskilling to apprenticeships.

However, it takes time for these new skills to filter through into the job market. And experts say it’s still not enough.

The result is businesses are fiercely competing for workers with the right digital skills. This drives up costs for hiring businesses and causes friction in the job market. Meanwhile, some companies that require immediate access to tech talent are unable to fill roles.

This has a knock-on impact on the wider economy. The UK’s tech industry has grown rapidly over the past decade. Last year, the UK became the third country after the US and China to create a tech industry valued at $1tn or more.

Despite these successes, the shortage of tech talent raises an important question: how much larger would the UK’s tech industry be if businesses had access to the right digital skills?

“The digital skills shortage not only hinders growth, but also poses a threat to the overall success of UK tech businesses by slowing innovation and limiting access to the right technical skill sets, subsequently leading to increasing costs, and even the loss of key employees,” says Benjamin Kane, co-founder and CEO of TechPods.

What is co-sourcing?

Co-sourcing is one option that businesses are embracing to meet their tech talent needs amid the digital skills shortage. It sees a company partner with a trusted talent provider to supply a dedicated team of high-skilled workers hired directly from the market to suit the needs of a specific project or role within the business. It is the same as hiring full-time equivalents (FTEs), but without the employment liability.

For example, a rapidly growing tech company might need a developer team to build a new suite of software features for a fintech app. Co-sourcing brings a qualified team in to deal with that extra workload, with no long-term commitments from the hiring company.

Alternatively, a company can use a co-sourced team to take care of other administrative tasks, freeing up internal IT teams to focus on larger projects.

Companies are opting for this approach due to the flexibility it provides. Co-sourcing is an arrangement that is best suited for scaleup companies that are looking for a stable, long-term solution to tech resourcing problems across the UK.

Isn’t that just outsourcing?

Outsourcing has at times been given a bad reputation due to poor delivery, spiralling costs and a lack of oversight. Unlike outsourcing, though, co-sourcing gives companies full control over team structure and resources. This ensures businesses have oversight to mitigate the pitfalls associated with outsourcing.

“Transparency, sustainability, and ownership are major parts of building a successful co-sourced team,” says Kane. “Whilst traditional outsourcing could work for smaller, short-term projects, it is ultimately a tactical fix, whereas co-sourcing is a strategic solution.”

Co-sourcing is an approach that, at its core, is more collaborative than traditional outsourcing. Co-sourced staff are usually heavily involved at the hiring company and often treated in the same way as internal staff or long-term contractors.

It is more of a partnership than a vendorship. However, it does retain some of the benefits of outsourcing, particularly when using offshore talent. This can help businesses access talent at a more competitive rate at a time when the average UK tech salary is more than double the country’s average household income.

In fact, with co-sourcing companies can build an offshore team that’s based in a fully branded office, but without legally hiring anyone or committing to a rental agreement. Instead, that legally responsibility lies with the co-sourcing partner.

And, like outsourcing, it saves on the costs of hiring full-time teams, whether that’s for front-end, back-end or DevOps specialists.

How can co-sourcing help combat the digital skills crisis?

The government has said it wants to make the UK the “next Silicon Valley” and a science and tech “superpower”. To meet this goal, it will need the country’s innovative companies firing on all cylinders.

That is only possible if businesses have the right people with relevant skills. Co-sourcing can play a key role in supporting the UK’s private enterprises and pave the way for another decade of tech sector growth.

“Co-sourcing is a sustainable and cost-effective solution for businesses that need to scale quickly while the absence of employment liability guarantees maximum flexibility,” adds Kane.

“Co-sourcing also provides a wider range of expertise that otherwise might not be available internally.”

To find out more about how co-sourcing can support your talent needs, visit https://techpods.co/

Sponsored by TechPods, a UK-based technology co-sourcing company with offices in Bulgaria.

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