In this post I want to share what I’ve learned from years of hiring and coaching developers. I’ll outline why small companies often struggle to recruit engineers and, more importantly, what you can do about it. If you’re a business owner or startup founder feeling discouraged, know that there are practical steps you can take to level the playing field. Along the way I’ll sprinkle in some personal stories from my own journey as a CTO to show that these challenges are real but not insurmountable. Let’s dive in and explore how small firms can build strong technical teams without losing sight of the people at the heart of their businesses.
A shrinking talent pool and growing demand
Software is woven into everything from retail point‑of‑sale systems to health‑care portals, so it’s no surprise demand for developers has skyrocketed. The problem is supply hasn’t kept pace. One study points out that the number of qualified developers needed is growing faster than the number of new developers entering the market . In Europe, more than three‑quarters of employers across 21 countries couldn’t find workers with the right skills, and over half received very few or no applicants . Researchers estimate that by 2030, up to 85 million roles may go unfilled globally due to a talent gap . With supply lagging behind demand, small businesses are often left with the dregs of an already limited pool.
To make matters worse, the skills required for modern software development change rapidly. It’s not enough to know one programming language; companies expect knowledge of frameworks, cloud platforms, security practices and agile methodologies. Employers report a mismatch between job requirements and candidate abilities, with 64 % of tech leaders struggling to find applicants with the right mix of skills, leading to missed deadlines and project delays . As a result, small companies must either settle for under‑qualified candidates or invest heavily in training.
The cost barrier – why salaries keep climbing
Even when qualified candidates are available, paying them is another challenge. Competitive salaries for developers have risen dramatically as companies scramble for talent. Compensation for critical tech roles has risen around 20 % over two years, and some roles command salaries 30 % above the average tech pay . In Australia, hiring locally can cost two to three times more than offshoring to regions like Southeast Asia . Salary ranges vary by city: roles in Sydney and Melbourne tend to be far more expensive than in Brisbane or Perth . This matters because many small businesses operate on tight budgets and simply can’t match the compensation packages offered by large corporations.
Yet salary isn’t the only cost. Recruiting itself is expensive. Reports suggest the average cost per hire in the United States is around US$4 000 and time‑to‑hire is roughly 42 days . For tech roles, the total cost can be much higher – the average US employer spends around US$152 000 to recruit, onboard and train a single software engineer . This includes recruitment fees, advertising, interview time, onboarding and a ramp‑up period where new hires aren’t yet productive. For a small firm, that is a significant investment.
Competing with big tech and corporate perks
Large companies not only pay more but also offer perks that small businesses struggle to match. Remote work is one major benefit: 98 % of employees prefer at least some remote work , and 29 % already work in hybrid arrangements . The IT sector leads remote work adoption , and 71 % of remote workers say it improves their work‑life balance . Big tech firms invest heavily in flexible working, modern offices, on‑site amenities, and professional development. They also provide extensive benefits such as share options, wellness programs and generous parental leave. When I ran a small consultancy in Brisbane, I would lose candidates because they’d receive an offer from a global tech giant with stock options and a relocation package.
Competition isn’t just about pay or perks; it’s about brand recognition. Developers want to work on high‑profile projects with cutting‑edge tech. A junior engineer might see joining a household‑name company as a fast track to career growth. Startups, however, may struggle to communicate the excitement and impact of their projects. Without a strong employer brand or visible portfolio, they are overlooked by top candidates. I once interviewed a talented full‑stack developer who admitted she almost cancelled our meeting because she hadn’t heard of our company. Showing her our product roadmap and how we were improving the lives of local businesses convinced her to join – but it was a stark reminder that small firms need to tell their story well.
Retention and churn – keeping good people
Finding and hiring a developer is only half the battle; keeping them is equally difficult. Retention in tech has become challenging, with frequent job switching common among developers. The period after the pandemic saw a wave of resignations as employees reassessed their priorities . Many left to find better work‑life balance, flexible schedules or more meaningful work. I’ve lost team members because they wanted to travel or pursue personal projects.
Why do developers leave? Salary matters, but research shows it isn’t the top factor. McKinsey’s survey found that salary ranked fourth behind career growth, flexibility and meaningful relationships when choosing a job . People crave environments where they can learn, grow and connect with colleagues. When I ask departing developers why they’re moving on, they rarely mention pay; they talk about wanting new challenges or feeling burned out.
Burnout is another factor. Long hours, constant context switching, and unrealistic deadlines take a toll. If a project is poorly managed, developers end up firefighting instead of building. One article warns that small companies often assign developers to maintain ageing systems instead of investing in modern tools and processes, which makes the work less fulfilling and hampers long‑term growth . If staff feel stuck doing boring maintenance rather than learning new skills, they are more likely to leave. That churn creates a vicious cycle: more time spent recruiting and training means less time delivering value to customers.
Recruiting skills – not every HR team is technical
Even when companies can afford to pay competitive salaries, they may not know how to evaluate candidates. Many small businesses don’t have in‑house technical expertise. Human resources teams might be skilled at screening CVs but lack the ability to assess code quality or architectural decisions. An Ellow survey revealed that HR teams often struggle to identify qualified candidates and have difficulty conducting technical interviews . This leads to mis‑hires – hiring someone who looks good on paper but can’t perform at the level needed.
Mis‑hires are costly. According to hiring statistics, 90 % of tech hiring managers face difficulties finding skilled candidates and increasingly rely on contract professionals . The average time to fill a tech role is 52 days , and each mis‑hire can extend this timeline. I’ve seen companies waste months on a new developer who ultimately couldn’t deliver, only to start the hiring process again. That lost time and opportunity can be devastating when your entire product roadmap depends on a handful of engineers.
The impact of remote and hybrid work expectations
The shift to remote and hybrid work is one of the biggest factors affecting developer hiring. Tech roles are particularly suited to remote work – they require a laptop, good internet connection and collaboration tools. Forbes notes that the computer and IT sector is the top industry for remote work . Many developers now expect flexibility as standard. The same article reports that remote work improves work‑life balance for 71 % of remote employees . Meanwhile, statistics show that 98 % of employees want to work remotely at least part of the time .
Small companies may not have the infrastructure or cultural experience to support remote teams. Managing remote developers requires clear communication, robust processes and trust. Without these, remote workers feel isolated and unproductive, which can drive them away. On the flip side, offering flexible work options can be a powerful draw. When I introduced a hybrid schedule at my firm, I noticed a dramatic uptick in applications. Candidates were willing to take a slight pay cut for the flexibility to work from home two or three days a week. In a competitive market, remote work can be your secret weapon.
Offshoring and the global talent marketplace
Given the cost and scarcity of local talent, many small businesses look overseas. Offshoring or nearshoring can reduce salary costs by 40–70 % and allows companies to scale quickly. Time zones and cultural differences can be a challenge, but with good communication and clear expectations, remote cross‑border collaboration can succeed.
Still, offshoring isn’t a silver bullet. You may save money, but you risk losing control over quality and long‑term ownership. When I experimented with offshoring work to a team in Eastern Europe, it initially saved costs. Yet communication lagged, requirements were misunderstood, and the code base became inconsistent. We ultimately decided to hire local developers and invest in their growth. The cost was higher, but the cohesion and long‑term knowledge retention more than made up for it. As with any strategy, offshoring should align with your business goals and capacity to manage remote teams effectively.
Building a compelling employer brand and culture
If you can’t outbid the big players, you need to outsmart them with culture. A strong employer brand shows developers why they should care about your mission. When you communicate your purpose, values and the impact of your projects, you attract people who share your vision. According to research, salary and financial factors rank below career growth, flexibility and meaningful relationships when workers choose jobs . That means you can compete by offering things that money can’t buy: mentorship, autonomy, a sense of ownership, and a supportive community.
Here are some practical ways to stand out:
- Create career pathways. Show how developers can grow within your company. Offer clear progression paths, regular feedback and opportunities to learn new technologies. During my time leading a small team, I set up a learning budget and encouraged staff to attend conferences; this not only boosted morale but also improved our technical capability.
- Foster a culture of trust. Allow flexibility in when and where people work. Remote or hybrid arrangements make it easier for parents and caregivers to balance responsibilities. Tools like asynchronous communication and daily stand‑ups help keep everyone aligned.
- Highlight meaningful work. Many developers want to see that their code makes a difference. If your product helps local businesses thrive or supports community causes, say so. One engineer told me she accepted our offer because she could see the real‑world impact of our platform on small retailers.
- Offer non‑financial benefits. Provide wellness programmes, extra holidays, or professional development allowances. It might seem small compared with corporate gyms and gourmet cafeterias, but these perks show you care about people’s well‑being.
- Build relationships. Small teams can be more intimate and collaborative than large organisations. Encourage pair programming, regular check‑ins, and socials. When people feel connected, they’re less likely to jump ship.
Streamlining your recruitment process
Time is a luxury small businesses rarely have, yet many take months to hire. Simplifying your recruitment process can reduce costs and help you capture good candidates before they accept another offer. Here are a few steps I recommend:
- Define the role clearly. Be specific about responsibilities, required skills and what success looks like. Ambiguous job descriptions scare off qualified candidates and attract the wrong applicants.
- Use practical assessments. Instead of tricky brainteasers or whiteboard interviews, offer a small paid project or pair‑programming session. This simulates real work and gives candidates a taste of your team culture. It also helps you evaluate problem‑solving skills and communication.
- Standardise interviews. Create a set of questions and scoring criteria to reduce bias. Involve a technical team member in the process to ensure candidates are assessed on relevant skills. If your company lacks technical expertise, consider partnering with a trusted consultancy or using a vetted coding test platform.
- Move quickly. Skilled developers often have multiple offers. Respect their time, schedule interviews promptly, and provide feedback quickly. A drawn‑out process signals indecision and can result in losing candidates.
- Leverage your network. Referrals from trusted contacts can yield high‑quality hires. Attend local tech meetups, participate in open‑source communities, and build relationships with university programmes. I’ve hired some of my best developers through informal introductions.
Investing in people – training and upskilling
Sometimes the talent you need is already on your doorstep. Instead of endlessly searching for unicorns, invest in developing your existing team. Upskilling current employees can be less expensive and more effective than external recruitment. Provide opportunities for training, mentoring and cross‑functional projects. Encouraging employees to learn new frameworks or specialise in areas like cloud infrastructure can fill gaps in your workforce and boost morale.
Government and industry programmes can also help. In many regions, there are subsidies for training apprentices or recent graduates. Partnering with universities or coding bootcamps gives you access to eager learners while helping them gain real‑world experience. When we hired a young graduate on a three‑month internship, we paired her with a senior developer and saw her contribute meaningfully within weeks. By the end of her internship we offered her a full‑time role; she’s now one of our most valuable engineers.
Navigating AI and automation
The 2025 labour market is in flux due to artificial intelligence. Reports show companies cautious about hiring while investing heavily in AI . AI eliminates certain roles but creates new ones such as machine learning engineers and AI ethics specialists . For small businesses, AI can help in two ways: automating repetitive tasks and assisting in recruitment.
Some firms worry that AI will replace developers, but the reality is more nuanced. AI coding assistants can generate boilerplate code or suggest improvements, freeing engineers to focus on design and problem solving. Chatbots can triage customer support queries, letting developers handle only complex issues. However, you still need skilled people to integrate and maintain AI tools . As AI adoption grows, demand for developers knowledgeable in machine learning, prompt engineering and data security will rise . Small companies that embrace AI wisely can punch above their weight by automating low‑value tasks and making room for creative work.
In recruitment, AI tools can screen CVs, match candidates to roles and even conduct initial interviews. This speeds up hiring and reduces bias, but you should use these tools with care. AI can inadvertently reinforce biases present in training data. Combining automated screening with human judgment ensures you don’t overlook promising candidates. Ultimately, technology should support people, not replace them.
Personal reflections from the field
Over the past two decades, I’ve hired and worked alongside hundreds of developers. I’ve run large corporate teams and small agile squads, and the same patterns keep resurfacing. When budgets are tight, it’s tempting to cut corners – offer lower pay, skip training, squeeze more hours. Every time I’ve done that, it backfired. People burned out or left, and we ended up scrambling to hire again.
Conversely, when I invested in people and built a culture of trust, we attracted talent despite offering modest salaries. During the early days of my consultancy, we couldn’t pay anywhere near what the big banks offered. Instead, we promised flexible work, meaningful projects, and a clear path for growth. We hired a junior developer fresh out of university who was brimming with curiosity. Within three years he became our lead engineer, guiding new hires and shaping our architecture. That’s the power of focusing on people before technology. You create an environment where they grow, and your business grows with them.
Another lesson is transparency. I once lost a brilliant candidate because I avoided discussing salary until the final interview. She felt her time had been wasted. Now, I’m upfront about compensation, benefits and expectations from the start. I also encourage candidates to ask hard questions. Hiring is a two‑way street – you’re interviewing them, but they’re also evaluating you. Honest conversations lead to mutual respect and better matches.
FAQ
Q: Why is it so hard for small companies to hire developers?
A: A combination of factors makes hiring difficult. There’s a global shortage of qualified developers, and large companies scoop up many with generous salaries and perks . Small firms also face a skills gap, where job requirements change faster than candidate abilities, and recruitment processes are long and costly .
Q: How can small companies compete with big tech for top talent?
A: You may not outbid big players on salary, but you can offer things they don’t. Focus on career growth, meaningful work, flexibility and a supportive culture. Many developers value these more than pay . Be transparent about your mission, provide learning opportunities and use flexible work policies to attract candidates.
Q: Is offshoring a good solution for small businesses?
A: Offshoring can reduce costs by 40–70 % , and it can help you scale quickly. However, it isn’t a cure‑all. Managing teams across time zones adds complexity. Quality control, communication and long‑term knowledge retention can be challenging. Offshoring works best when you have processes in place and the capacity to manage remote teams.
Q: What benefits do developers care about most?
A: Beyond pay, developers value career growth, work‑life balance and a sense of purpose . Remote work options are particularly popular – almost all employees want at least some remote work . Providing mentorship, a clear career path and meaningful projects can be more compelling than lavish perks.
Q: How long does it take to hire a developer, and how can we speed it up?
A: The average time to fill a tech role is about 52 days . You can shorten this by defining roles clearly, using practical assessments, standardising interviews, moving quickly and leveraging your network. Simplifying the process helps you secure candidates before they accept other offers.
Conclusion
Hiring good developers as a small company isn’t easy, but it isn’t impossible either. The market is competitive, salaries are high and the talent gap is widening, yet there are practical ways to stand out. By focusing on culture, flexibility, clear communication and people‑centric leadership, you can attract and retain skilled engineers even on a modest budget. Develop a compelling story about your mission, invest in training, streamline your recruitment process and embrace remote work where possible. With patience and intention, you’ll find the right people to help your business thrive. Ultimately, small companies that prioritise people over technology will overcome the hiring challenge and build teams of loyal, talented developers.
