Whole Europe, if not say the entire world, is anticipating the next crisis. Anxiety and tension are in the air – quite literally. Transavia has been facing staff shortages, which resulted in several flight cancellations. Schiphol and several other major European airports were unable to proceed with a check-in process in the usual time frame due to being severely understaffed. Even the tech market that seemed invincible a few years ago has been experiencing turbulent times and is preparing for a slowdown in productivity.
Some of the key players – startups and fresh unicorns alike – have been filling feeds with breaking news: the major Berlin-based startup N26 has lost over 300 of its employees within a year and another giant, Klarna, reported laying off approximately 10% of their workforce this May. Moreover, falling turnover makes a smooth Bol.com IPO unlikely: inflation and the war in Ukraine have made Bol's turnover fall by 7 percent in the first quarter.
The last resort – Venture Capitals – announced that they are proceeding with a more selective approach to investing. According to the latest data based on the 34 VCs‘ responses, valuations have come down sternly, particularly at the latest stages. Investors explain it by the drastic repricing in public markets.
The upcoming technical slowdown is a two-edged sword: the first is the desire to cut costs and reduce staffing. But, on the other hand, there is a lack of qualified staff to perform certain types of jobs.
The historian and scholar at the Institute for the Future, Jamais Cascio, came up with the concept of the BANI-reality, the new world that has come to challenge the already outdated VUCA concept. Similar to VUCA, BANI is an acronym made up of the first letters of the words that describe the state of the nowadays society best: Brittle, Anxious, Non-linear, Incomprehensible. This world has emerged from the context of global and environmental changes that got sped up by the pandemic in 2020.
As a rather logical outcome, nearshoring has been established as one of the key solutions in the decentralized and disintegrated BANI-world, where „remote“ has become the new reality. The mentality of „hire from anywhere“ is now, in the context of the productivity slowdown, embraced on top of the „work from anywhere“ mentality that has become big in VUCA-world. Freedom and flexibility are the decisive parameters when it comes to business.
According to the latest data, the brain drain is starting to reverse. Many professionals in Eastern European countries are not striving to move to the West; instead, they seek success in their country of origin. Nowadays, Eastern European countries invest heavily in innovation and collaborate with the world’s leading universities. A number of strong incentives to support the „local“ market have popped up, and several cities in Eastern Europe are on their way to becoming technological hubs. Not even mentioning the solid technical education of most IT and tech specialists there and the fact that the overall culture gap is much smaller for the European specialists than for those in Asia.
We published an article on the advantages of hiring remote specialists from Eastern Europe at the outbreak of the first lockdown. Today, more than two years later, it still remains a very relevant – maybe even more so – standpoint. Back in March 2020, we conducted comparative cost research of one hire in Kiyv and in the Netherlands. As simple as it is: remote software developer from Eastern Europe is almost twice cheaper, with the quality of work being comparable.
It is safe to say that the cost difference will be even more dramatic in today's world, facing a slowdown in productivity. Even large enterprises opt for using remote dedicated teams; for the growing companies and startups, it appears an even more logical strategy, at least in terms of investment distribution and keeping the business on the wave. When nearshoring, you reach higher cost-effectiveness compared to internal staffing: there is no need to pay for benefits and additional perks for employees; you only pay for the end result, not for hours.
The deeper the productivity slowdown – the higher the relevancy of workforce outsourcing. Likewise, the more fractured and diversified the global environment – the more acute is the need for nearshore. In a recent article, we went through the benefits of nearshoring: the new reality requires looking beyond the local region and tapping into enormous uncovered resources. On the one hand, it’s a way to outcompete your peers; on another – to unravel the company's growth potential.