A new report finds that tech firms are using highly skilled freelancers and independent workers more frequently to cope with the talent shortage.
The Great Resignation continues to wreak havoc over a year later, with 44% of tech founders and executives reporting that “a significant number of their top performers” have left their company, according to a newly-released report from A.Team and MassChallenge. Factor in early-stage startups and that figure jumps to 53%.
“Since The Great Resignation began last spring, it’s been a source of fascination in tech, which has seen the highest resignation rates among all industries,’’ according to the report, citing a 2021 Harvard Business Review article that said resignations in tech increased by 4.5%.
To cope, 73% of tech companies have now brought in freelancers or independent workers who are being integrated into blended teams with full-time employees. An additional 11% plan to do so soon.
Nearly half of respondents (42%) said freelancers or independent workers make up over one-quarter of their total workforce. Why? Seventy-one percent of respondents said that freelancers or independent workers give their business greater agility during uncertain economic times, while 70% said that remote work has made them more likely to bring on freelancers, the report said.
“In the past, freelance workers often handled repetitive, outsourced tasks in isolation,’’ the report said. Now, thanks to the fact that many teams now operate in the cloud, it’s become a lot easier to build blended teams.
It doesn’t appear the situation will improve anytime soon. A July 2022 McKinsey study found that 40% of overall workers plan to leave their jobs in the next three to six months.
Recruitment woes continue for tech leaders
Even though The Great Resignation remains active, hiring plans are still on the rise over the last six months for 45% of respondents, the report said. For founders and executives at the Series B to IPO stage, that number jumps to 59%.
However, executives report being frustrated with the traditional recruitment model, with 67% saying it needs an overhaul because it is too long and expensive.
“This is particularly true when it comes to product and engineering talent,’’ the report noted. “Sixty-two percent of tech founders and execs say it takes four months or more to fill new product and engineering roles, on average.”
Further, a whopping 80% said they are willing to hire someone without a college degree — for any role.
Over 40% of respondents said they have increased their investment in career growth and upskilling programs over the last year to retain talent.
This is prompting 80% of respondents to invest in formal career growth and upskilling programs, with 87% saying this is important to their employees and 41% reporting they have specifically increased their investment in tech upskilling programs in the past year.
For 62% of respondents, shifting to a more flexible work model during the pandemic has increased employee productivity, but 37% said they intend to work from the office more over the next year.
The economic downtown’s impact on prioritizations
Even though top venture capital firms have warned tech founders and executives “to avoid fundraising until well into 2024,” the report states that 60% still plan to raise money during the next 18 months. They ranked revenue growth as their top priority, followed by fundraising.
Low on the priority list? Reducing burn rate and achieving profitability, which was a distant third (14%), according to the report.
Concerns are high about workplace stress
But tech founders and executives are worried about their employees and themselves: 72% said they’re concerned about the mental health of their employees, and 62% said they’re concerned about their own mental health.
They’re similarly focused on reducing stress and managing motivation — 63% reported worrying about employee burnout, and 59% expressed concern about their own burnout.
Creative leadership solutions trending over the status quo
Another interesting finding from the research was that there is a generation of tech leaders who are already thinking creatively and disrupting the status quo in workforce and organizational structure, nixing the “wait and see” mentality during uncertain economic times.
“The prevalence of remote work, independent tech talent, and blended teams of freelancers and full-time employees would have seemed fantastical a few years ago, but it’s now what many tech founders, execs and workers want,’’ the report said. “This trend is only likely to accelerate, with bumps along the way. As they change how they hire and embrace new talent pools of skilled independent workers, founders will have to keep rethinking the way they form, manage and optimize teams.”
With these changes come new questions tech founders and executives will have to address around benefits, mental health and compensation, the report noted.
A.Team and MassChallenge partnered on the inaugural Tech Work Report, surveying 581 tech founders and executives (C-Suite or department leaders) based in the United States. Respondents were all surveyed in July 2022 through the MassChallenge network of founders, experts and partners.