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The Growing European Software Development market

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During my years in Software Development Recruitment, I have witnessed the growing European market for development services. It doesn’t take long recruiting in this market to see how the shortage of talent is pushing European companies towards outsourcing their development. In addition to offering cost savings, outsourcing allows these companies to stay focused on their core business. The most important driver of demand is digital transformation and automation, which has been accelerated by the current pandemic.

Europe has a growing demand for development services. The combination of a considerable shortage of skilled developers and an increasing need for digital transformation and automation drives this growth. Software development requires specialist knowledge and in the era we live in, practically every company needs software in some form. This being said, most companies do not want/need to hire an in-house development team and because of this, development is the most outsourced IT service in the world.

There is a large gap between the number of development jobs and the number of available developers. A google search later and I discovered that in 2014, the European Commission predicted a shortage of 900,000 IT professionals for 2020. In 2017, they adjusted this prediction to a shortage of 500,000. Although it may be smaller than initially estimated, the shortage is real: 53% of European companies report difficulties in recruiting IT specialists.

Naturally then, you would expect the European developer population to grow, which it is, however it cannot keep up with the demand. In 2019, the number of developers in Europe increased by 7% to 6.1 million. At the same time, demand for IT skills in Western markets is expected to grow by more than 10% in 2021! This demand has been boosted by the awareness that the recent lockdown measures have created, highlighting the need for digital transformation and automation.

To fill this void, many companies in Europe try to hire developers from abroad. Since this shortage affects most European countries, and through my conversations I have established that most European developers prefer jobs within their own country, companies regularly recruit talent from outside Europe. A more practical option, which provides more flexibility, is to outsource development tasks to offshore providers. The recent increase in remote working due to lockdowns may spur this on, as it blurs the distinction between in-house, nearshore and offshore teams.

A major advantage of outsourcing development services is that European end-user companies do not need to hire in-house expertise if they outsource these activities. Development requires excellent knowledge, tools and security provisions that most European end-user companies do not have readily available. Outsourcing allows them to focus on their core business and gives them the flexibility to engage specialised developers as and when needed. This is particularly relevant during the recovery from the COVID-19 crisis, as companies need the staff they retained to perform their core activities, which may already include additional tasks from colleagues that were let go or furloughed.

In conclusion, it is evident to me that in this digital era, the supply cannot keep up with the demand. Every day I talk to more businesses that are exploring other ways to service their development requirements and I find it very exciting. If you keep fishing in the same ponds, however good the fish are, there are only so many of them.

If you'd like to discuss current markets in software development further, please do not hesitate to contact me at