April 19, 2023 • 6 min read
*This article was first published in Frederic Joye’s LinkedIn newsletter, Culture-Focused Outsourcing*.
Despite the potential for growth in the software development industry, many tech startups and SMEs struggle with a significant challenge: high turnover rates among their engineers.
With attrition rates for IT roles estimated between 15% to 22% (21.7% in 2021, according to the Australian Information Industry Association), retaining top talent can be a difficult and crucial task for tech-first companies.
In this article, we'll explore why this attrition happens, why it's important to prevent it, and what we do at Arcanys to keep our best engineers happy and committed.
So, why are so many developers leaving their jobs? Even companies that seem to have it all together can’t seem to hold onto their talent.
Well, there are a few reasons. First off, the job market for software developers is super competitive. Companies are all vying for the best talent, which makes it easier for employees to jump ship when they feel that a better offer is around the corner. Plus, with remote work becoming more common, people can switch jobs without having to relocate.
Another reason is that the software development industry is facts-paced and can be stressful. Burnout is a real issue, and some developers leave in search of better work-life harmony.
And with the industry constantly evolving, some developers feel like they need to switch jobs to keep up with the latest technologies and learn new skills.
Lastly, poor company culture, lack of opportunities for growth and development, and low salaries can all contribute to high turnover rates. It’s a tough market out there, and tech companies need to work hard to keep their developers happy and engaged – particularly startups and SMEs.
It turns out that there are some pretty big consequences associated with high turnover rates.
I’m talking about the time and money it takes to recruit, onboard, and train new engineers, not to mention the lost productivity. And when a good engineer leaves, they take all their expertise with them, leaving a huge gap in knowledge that can cause project issues and delays.
It’s not just the core tech team that’s affected either–support departments have to work extra hard to replace talent and get the team back on track.
Plus, high attrition can hurt company culture and motivation, which can lead to decreased productivity and lower-quality work.
Long-term retention of employees isn't solely determined by who you hire initially. Keeping developers happy requires extra effort from employers throughout the entire work experience. At Arcanys, we’ve found that focusing on these four elements helps us maintain a staff retention rate above 90%
It’s no secret that software engineers want to (and should) be fairly compensated. It’s important for them to feel that their skills and expertise are valued and that they’re being paid what they’re worth – even though the salaries differ greatly from one region of the world to another. Company perks and benefits like health insurance, retirement plans, and bonuses also provide a sense of security and stability for employees, which helps reduce the likelihood of them leaving.
Plus, giving them the option to work remotely is a great way to boost job satisfaction and keep them from looking for opportunities elsewhere.
One key factor in keeping engineers motivated is giving them the chance to work on exciting projects with the latest technologies.
People want to feel like their work is meaningful and impactful, so it's really important to work on software projects that provide a sense of purpose (that’s why we are so selective about the clients we take on).
They also need to stay up-to-date with the latest technologies and techniques to feel more engaged and fulfilled in their work, so training can't be neglected.
Remember that encouraging the use of modern technologies is not just practical, it also fosters creativity and innovation, which can be highly motivating. Conversely, legacy technologies can be a real downer for developers because they limit growth opportunities, make work feel dull and unchallenging, and cause frustration due to inefficiencies and compatibility issues with modern tools. All of these factors can contribute to a lack of motivation among developers.
When we prioritize the growth and well-being of developers, it makes a difference in how they feel about their work and their team. At Arcanys, we’ve set up a wellness program that includes access to in-house nutritionists and fitness coaches with rewards for sticking to a workout routine. And it’s not just good for our current team, but it also helps us to attract high performers.
We're also big on team building and work-from-home allowances - those things really help build camaraderie and show our employees that we support them as part of a tight-knit team. Plus, we’ve also beefed up our referral program so that developers get a bonus for every successful hire they bring in.
We believe creating a culture of openness and good communication is fundamental to retaining our staff. As companies grow, bureaucracy tends to increase, which can hinder innovation and slow progress. As a leader, it's important to eliminate bureaucracy wherever possible. We encourage direct communication between developers and clients without the need for intermediaries. We also foster an environment where everyone feels comfortable sharing their thoughts and ideas, which builds trust and makes people more invested in the company's success. This, in turn, leads to greater engagement and job satisfaction.
To promote open dialogue, we hold regular one-on-one meetings, town hall meetings, surveys, and bi-annual reviews with both our client team and internal staff. By gathering feedback from everyone, we can ensure that we're all on the same page and working towards our shared goals.
If you're familiar with the SPACE framework, then you likely understand how the parameters listed above impact the productivity and overall satisfaction of software developers. This framework highlights five fundamental areas that significantly influence their performance and work experience: Satisfaction and well-being, Performance, Activity (in terms of output and actions), Communication and collaboration, and Efficiency (the ability to make progress in their tasks). By focusing on these dimensions, we can help developers enhance their fulfillment in the workplace.
Of course, improving developer retention takes time and effort to enhance compensation, benefits, work-life balance, and company culture. For some tech companies, partnering with a culture-focused team augmentation provider like Arcanys, who maintain an attrition rate below 10%, is a winning strategy to secure a stable AAA team and significantly increase their tech output for the same budget.
How does your organization tackle the challenge of staff attrition?
Fred had been working on IT and operational projects in the finance and software industry in Switzerland for 10 years before co-founding Arcanys in 2010. With nearly 20 years of experience in the industry in Switzerland, Hong Kong, and the Philippines, Fred is now leading the worldwide sales and marketing efforts of Arcanys.
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