Pavan Vyas has a major problem: growth.
He is the Managing Director of Rush Digital, the company that developed the Covid-19 tracker application. But rather than sit back and enjoy his success, he has other issues on his mind.
He needs to hire 15-20 more employees if Rush is to continue his growth path, but hardly anyone is applying.
Across the country, the lack of local talent in software development and design was holding back the growth potential of New Zealand’s tech sector, Vyas said.
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“Talent has become the number one problem in the tech industry.”
Things had recently gotten worse due to the poaching of local Silicon Valley talent with paid plans that blew up New Zealand offerings.
“A graduate engineer at a technology company in the United States is paid $ 150,000 per year, plus stock options. The big US tech companies are looking at New Zealand and saying “for that money I can hire a very experienced engineer,” Vyas said.
A recent case of setting up a large tech company in New Zealand was seen when Google announced the creation of a local software engineering team in Auckland.
But Google, currently with 262 employees in New Zealand, is not alone.
Linkedin data shows Microsoft has 417 New Zealand-based employees, Amazon has 346, and Apple has 249.
Sajeewa Dayaratne, vice president of engineering at Coretex, also said members of his team have been approached by foreign companies looking for remote workers.
Dayaratne is looking to hire 14 more people, but said many candidates have pulled out of the domestic market by comparing New Zealand wages to offers from overseas.
“A software engineer graduating from New Zealand envisions a salary of $ 50,000 or $ 60,000. In the United States, the starting salary is $ 150,000, excluding signing bonuses and shares. It’s impossible to compete, ”Dayaratne said.
And it’s not just the big players who are poaching local talent, Dayaratne said.
“The companies targeting New Zealand talent aren’t even well known. These are small tech companies in Silicon Valley who find it easier to work with remote workers for a fraction of the cost, ”Dayaratne said.
But according to Vyas, the poaching of talent will have a detrimental impact on the entire tech industry.
“The risk is that New Zealand becomes a place that just creates intellectual property for other countries, and we don’t own any. If that happens, we will fail to transition to a knowledge economy, ”Vyas said.
Brad Olsen, chief economist at Infometrics, said this is a key issue for the local tech industry.
“If we see New Zealand talent producing for foreign companies, then we are not exploiting the full economic potential of this resource,” said Olsen.
Olsen said the potential for a “weightless export” industry such as software, running at full speed, was vast.
“With knowledge-intensive production, we are not using a physically scarce resource, we are thinking of technological gains and human capital. This has much greater potential for long-term growth, ”said Olsen.
Graeme Muller, managing director of NZ Tech Alliance, said that as international companies put their salary offers in New Zealand, it pushed up salaries in tech.
NZ Tech research shows that, on average, a salary in the tech industry has increased by 30 percent in the past 12 months. Before the increase, it was already the highest paid sector.
As local talent moves overseas, New Zealand software companies must look overseas to find the talent they need to grow their business.
“The big local software companies have to employ people remotely because we can’t get them into New Zealand. So we are seeing hundreds of software roles leaving the country as they move to other countries, ”Muller said.
Jack Coleman, founder of Double Yolk is one of the people making it easier for the New Zealand tech industry to access offshore talent.
Coleman recruits software developers in India and sets them up to work remotely for New Zealand companies.
In recent months, demand for its remote workforce has exploded, Coleman said.
“The magnitude of this shortage is staggering. Previously, we had an average of 12-15 full-time software developers placed at a time. Last month it went nuts. We’re up to 60 developers, and we plan to be well over 100 by the end of the year, ”Coleman said.
Coleman said the demand for tech talent is a global phenomenon.
“Americans also have a shortage. Even in India it is getting harder and harder for us to hire developers, we are competing with Microsoft and Paypal. From a global perspective, there is such a demand for software developers, ”Coleman said.
Coleman believes that a bigger problem than poaching Silicon Valley talent will be if the lack of local talent holds back the growth of local businesses.
“You might not be able to have developers here now, but let’s not hinder development, don’t hinder innovation. Let’s connect with India and continue to grow and buzz New Zealand businesses. But we need developers, there’s no way around it, we need more people, ”Coleman said.
Muller believes that until a solution is found, whether that is by fine-tuning immigration policies to allow more tech talent in the country, or by forming a talent pool in the sector, the industry will not. will not be able to function to its full potential.
“It delays the next wave of game development studios, the next wave of SaaS,” Muller said.
Muller also believes the current remedy of recruiting talent from overseas will have long-term negative impacts.
“The success of having a digital sector is that we have very well paid people sitting in New Zealand, creating intellectual property, and being taxed and developed in New Zealand,” Muller said.
“If you have a New Zealand company that is increasingly staffed overseas, then it effectively becomes an American company, tax and intellectual property are sitting there,” Muller said.
“In the long term, unless this is resolved, we will see companies that do good things for our economy and can lift an entire sector, these companies will have more and more emphasis on offshore,” said Muller.