In the age of cloud, outsourcing won’t work; develop in-house software talent

We are going through a tech explosion. Everything is becoming software defined. No matter what business you are in, your entire existence depends on software technology. In fact unless you are running your company under a rock, by now you have become a software company. BMW, Comcast, AT&T, Uber, Airbnb, Target, Walmart, Netflix…pick your brand name, they are all software companies.

John Donovan, Chief Strategy Officer and Group President, Technology and Operations at AT&T once said, “I am inching closer and closer to explaining our software transformation in the past tense and telling you that AT&T has become a software company.”

The bottom line is, digital transformation is transforming every company into a software company. This transformation is creating new opportunities and new challenges. One of the greatest opportunity and challenge is talent pool. There are just not enough people to meet the growing demand of software professionals. There are survey after survey, report after report that point at the growing gap between the supply and demand of developers to keep up with  digital transformation.

In the beginning of November, Cloud Foundry Foundation came up with a report/survey that points at the worrying situation.

There is a looming shortage of developers driven by non-tech companies’ need for developers. A majority (64%) of companies see the gap and is starting to feel its impact. As companies start their cloud journeys, including the use of more cloud-native architectures, broader use of containers and multi-cloud environments, they will feel the shortage more acutely. Most respondents (57%) state that this shortage has already impacted their ability to hire skilled people.

Traditionally, non-tech companies relied on outsourcing their IT needs to cut costs. At the same time, being a non-tech company, they kept themselves at a distance from investing in technology other than basic infrastructure; outsourcing was cheap.

That approach is coming back to bite them.

Sam Ramji, CEO of Cloud Foundry Foundation told CIO in an interview, “You know what’s more expensive than hiring good developers? Losing to your competition. Banks are challenged by the rise of the fintechs. Industrial companies across the board are seeing losses in market share and profitability,”

Smart companies know this and they are putting their money where their mouths are; they are investing heavily in technology. “Nike made a big move to shift their marketing spending from Advertising to Digital Experience in 2012-2013.  Rather than spending $1.2B on ads, they put that money into technology: developers and platforms who built digital experiences for their customers.  Nike+ was attributed to driving revenue up 60%, profits up 57%, and doubled the company’s market cap,” said Ramji.

Whether you are a giant like Nike with over $32.4 billion in annual revenues, or you are a small company, you can’t afford not to invest in people. “With the speed that customer expectations for technology is moving, NOT investing in people has become the cost enterprises can no longer bear,” said Ramji.

Immediate solution?

Ok, we get it that companies do need to invest in people, but these surveys and reports have made it abundantly clear that there is a shortage of people, so where are these companies going to find talent? Are there any short-term, immediate solutions?

“There is no immediate solution,” said Ramji, “The long term solution is simple: training. Current and future developers have time to skill-up on the methodologies and approaches businesses are implementing to be ready. That said, the time to act is now. Cloud Foundry is planning to help meet this gap through training and performance-based certification.”

I talked to some companies about the talent crisis and their answer is managed services and operations. They said that you don’t have to hire new people, you can simply use their managed services. Does that really solve the problem? I still see a kind of ‘out-sourcing’. And you still need ‘people’ to manage those services.

“Even if a company is using a managed service to address its business needs, there are developers building on that service,” said Ramji. “The outsourcing you refer to is really outsourcing operators and operations. The problems we’ve identified in this study remain, it becomes less a matter of if the demand for cloud skills exist, and more about where they exist.”

Long term solutions and cultural shift in education

There are no magic pills, there are no shortcuts to this challenge, companies need to develop in-house talent; you can’t be a software technology company without a team of software developers. Organizations like the Linux Foundation and Cloud Foundry are offering courses to address these crises. But that’s not enough, the problem is much bigger. We need  fundamental change at education level. The good news is it’s already happening, there are efforts like the Holberton School that’s taking a more practical and realistic approach towards education.

Ramji agrees that education will need to shift. He said, “That is starting to happen. Recently Pivotal teamed up with Carnegie Mellon to offer a “Cloud Computing for Business” course to graduate students. In addition to the materials we’ve already released, we also have a lot in the works for 2017 to help solve this problem.  Universities are generally not focused on curricula that prepare students for real-world work; we need to team up across open source projects and focus on delivering the raw materials for these classes to universities and professors around the world.”

Legacy vs. cloud native

While growing the in-house talent pool, one challenge that companies face is the fleet of developers that have been with the company for decades. I have talked to my friends at such companies and they said that there are people who had been with the company for decades working on legacy systems, and they have no desire or incentive to learn completely new technologies.

Ramji said, “Developers tend to be bright, curious, and constantly seeking new knowledge.  We see little evidence that developers don’t want to learn how to build cloud-native applications. Developers are some of the most important people in the enterprise today. Part of what this means is those developers who are working on legacy systems may need to learn some new things – but in most cases, it’s an expanding pool. We aren’t going to have a complete turnover of legacy systems in a day; there will be bi-modal IT in most large enterprises for many years to come. This means an expanded developer pool – some of whom will need to know what’s next and some of whom can focus on legacy technologies.”

The new opportunities

Where there are challenges, there are opportunities. “There has never been a better time to be a developer,” said Ramji. The digital transformation is creating new job opportunities. It’s a boon for economy, it’s a boon for next generation and it’s a boon for those organizations and institutions that are involved in education.

The wise thing to do is stop running your company on software developers on lease, build your own army of software developers, no matter how small or big that army is. Start hiring new people, start training existing employees. That’s the only way to survive in the age of cloud.

Be a software (developer) defined company!