Startups: overcoming the challenge of rising software development costs

 

Although the demand for IT services had been growing steadily for a few years before the pandemic, this growth became exponential in the second half of 2020, as companies caught up with investments and new projects. During 2021, every software development project that had been standing by during the pandemic was restarted and generated a renewed demand for software talent. Besides, old businesses had to take into account post-covid trends: remote work and online shopping (among others) were here to stay and pushed everyone to get an update that usually involved technology. 

 

Global shortage of tech talent: upsides and downsides

 

The Bureau of Labor Statistics, a US government agency, established that by the end of 2020 there was a global shortage of tech talent of about 40 million people. That’s a lot of work waiting to be done… with no one available to do it. But there’s more. By the end of this decade, as the demand for IT services keeps rising and rising, the global shortage of development talent will have scaled to 85.2 million workers. 

And while this may not be so terrible for big international companies, it particularly affects local startups, small entrepreneurs, and non-technical founders that are giving their first steps in a challenging and extraordinarily competitive digital market.  

As a software company that has deep roots in Uruguay, Eagerworks takes this problem very seriously, and we are determined to help as many local startups as we can. But before we talk about ourselves, let’s take a wider look at what are the options for startups looking to improve their software services and solutions. 

 

Scarce labor, high costs: strategies to overcome threats for small businesses

Development costs for startups in emerging markets can be prohibitive. Some companies are forced to hire inexperienced teams of software developers. Although this option may seem attractive at the beginning due to its low costs, it too often leads to poor results, with potentially harmful short and long-term consequences. Requirement definitions and technical decisions made at the first stages of a project are critical. Partnering with a strong team capable of understanding your users’ needs and developing the correct software product for them can save your startup, in the long-term, not only money but a huge amount of valuable resources. 

Some solutions can be more plausible:

 

• For smaller software agencies, the opportunity cost of working with a small business is huge, since they are usually not in a position to give up work hours that they should be dedicating to bigger projects. But the situation can be a little more flexible for bigger agencies. Since most software agencies are continuously training new devs, some may take advantage of smaller projects to guide them through their first steps. This of course is not always easy, since software development is a complex process that requires the guidance and supervision of an expert or a group of experts. 

 

• Another possible solution: with code camps and bootcamps booming, there is also an opportunity to match the needs of new devs and students and those of the startups. Development students can have the chance to get into real problems as part of their training, supervised by Senior software developers.

 

Eagerworks: we are looking to be part of the solution

 

In a way, it wouldn’t be unfair to say that we, the software agencies in Uruguay, are part of the problem. As we export development hours to other countries, we are of course helping improve our country's balance of trade and generating more job positions, but at the same time, we are exacerbating the problem of high-tech costs. This is why we, at Eagerworks, put special focus on the importance of contributing to the enhancement of our local businesses, working with local startups, and collaborating with the Uruguayan entrepreneurial community. We have even invested in one of them, PlanIT, with two investment rounds: pre-seed and seed, and our mission is to continue to support new startups continuously. 

Software agencies in our country have benefited from a flourishing tech environment. We now have the possibility to help our business community, as a whole, become stronger and contribute to a positive impact on job opportunities by supporting startups and small entrepreneurs.