The wave of resignations striking our post-lockdown economy is leaving many firms short-staffed and ill-equipped to take advantage of buoyant demand created by government stimulus packages.
Among digital agencies, not all are experiencing resignations, and not all have difficulties finding developers. However, a disconnect has arisen between workers’ job expectations and the conditions employers presently offer. For digital agencies seeking to expand, it will be crucial to recognize and meet these new expectations.
At the White Label Agency, we’re well-placed to observe trends in the digital economy. As a supplier of WordPress development services to digital agencies, we have nine years of hindsight and presently maintain an ongoing relationship with over 300 clients. Here’s what you need to know about what they’re telling us.
Developers still want options for remote work.
As the US economy went into lockdown in March 2020, digital agencies shed contractors and put off new hires. When they came recruiting later that year, the candidates they found weren’t yet keen to return to the office.
They’re still not keen. In a July 2021 survey of 4,000 professionals, Upwork Chief Economist, Dr. Adam Ozimek, found by mid-2021, over three-quarters of respondents had mixed or negative feelings about returning to the office. However, almost a third of respondents felt so strongly about the issue that they’d rather take a pay cut than be forced back. With over two-thirds of professionals working from home in whole or part during July 2021, most employers are listening to this demand.
At The White Label Agency, our clients observe this sentiment among their developers. Over the foreseeable future, remote work is here to stay.
The distinction between remote work and freelancing has blurred.
Digital agencies led the transition to remote work during the pandemic. The downside of this free work form: developers begin supplementing regular employment with freelance work. The addition becomes easy for a developer rehearsed in remote work without the burden of a daily commute. From the developer’s perspective, there’s little difference between remote work and freelancing. Agencies now find themselves competing for their own developers’ time.
Data from Upwork, the largest freelance marketplace, show the uptake of freelancing. They reported 59 million Americans freelancing at the end of 2020, equating to 36% of the workforce. During 2021 a further 10 million were considering making the shift.
Developers are rushing site builds and are less likely to provide ongoing maintenance.
Among the growing cohort of freelance developers, task preferences are shifting – away from ongoing maintenance to new site builds.
With plenty of jobs on offer, developers are prioritizing new website builds. These are typically high-value projects which can be completed within a few weeks. Meanwhile, it’s harder to get developer commitment to ongoing site maintenance. It’s seen as time-consuming, without quickly translating to billable hours.
With developers less intent on supporting sites post-completion, there’s less incentive for attention to detail during builds. This can ultimately affect website performance and make future maintenance problematic. To agencies, this poses a significant problem. Reliable, well-maintained websites are essential aspects of customer satisfaction.
Experienced developers are hard to find and cost more
Front-end web development has become a stepping stone for developers who seek to move on to higher-paid roles.
Many industries now compete for developers. As a result, the agencies we work with at The White Label Agency regularly see experience leave for higher-paid positions in software and app development.
The majority of work in web development today is over user-friendly, front-end Content Management Systems – WordPress, Shopify, and Squarespace. These simplify creating websites, and more junior roles are created. But once developers gain experience, they move on to the whole stack and back-end development. Most such openings are in software and apps. These industries are growing fast. For example, the mobile app industry saw job growth of 12% in 2020, during which employment in the broader economy contracted by 5.3%.
As experience departs web development, there’s more pressure on the remaining senior staff. They often shift into mentoring and tech lead roles and become less available to clients. This is an essential aspect for agencies to consider, as a customer liaison in development projects needs the experience to do well. Misunderstandings are typically costly. At The White Label Agency, we manage agency liaison through a dedicated customer support team during project work. This removes pressure from junior developers and ensures projects are completed on time, to spec.
Hiring junior developers help many agencies contain staff costs, but they must be prepared to pay more for staff with experience.
Data from the Bureau of Labor Statistics shows wage growth for web developers lagging behind that of the broader economy. Ad postings on freelance marketplaces also attest to the competitive hourly rates offered by web developers. However, agencies should be aware of the importance of retaining senior developers, and they need to be prepared to pay more for them. In addition, experience is essential for agencies offering clients a high degree of customization. Experience is also vital for agencies planning to expand their development teams in leadership and mentoring roles.
New Demands are Here to Stay
The new demands we see from workers are the new norm. That’s the message from industry commentators and the latest data from the Bureau of Labor Statistics.
Morgan Stanley’s Chief U.S. Economist Ellen Zentner believes the pandemic has caused a prolonged undersupply of labor. She points to: an early retirement bulge, workers, relocating away from job centers, and a mismatch between the skills needed and those on offer as production shifts direction: the outcome – is more bargaining power for job-seekers.
Data from the Bureau of Labor Statistics shows the undersupply of labor is worsening at an increasing rate. Hiring yield (as measured by #hires / #job openings) for October 2021 was down 5% on the previous month after falling 33% over the past 12 months. This metric has trended downwards since mid-2009.
Successful hiring is increasingly challenging for digital agencies due to being made additionally harder by rapid demand growth and fast-changing worker skill requirements. Therefore, they need to address these challenges actively.
Strategies for Agencies
1. Let your developers go remote
Letting developers go remote will benefit some agencies but not all. It appears clear that workers want the option to go remote. For many agencies, this may serve as the retainer they need to keep in-demand developers. Beyond staffing, remote work also offers potential efficiency gains.
If your developers want to go remote, let them. They’re in hot demand, and chances are they know it. Moreover, with most digital agencies now catering to remote work, they’re also hiring further afield. As a result, more vacancies are open to developers than ever before.
2. Match increased pay with the increased challenge
Replacing experienced developers in today’s labor market will likely be costly.
Typically that’s not what they want – they want more of a challenge. So if they’re genuinely adding value to your team, don’t dismiss this. Give them extra challenges which warrant extra money.
Employees want to know that their employer is investing in them. In addition, web developers are generally a young workforce; they’re after opportunities to learn new skills to develop. That’ll be more valuable for them throughout their career than a slight pay rise.
3. Make use of freelancers
At The White Label Agency, we see agencies turn to outsource. This primarily affects development and other roles, such as content creation and design. Agencies are more open about outsourcing. On entering the industry nine years ago, almost all the agencies we worked with kept quiet about outsourcing. Today, they’re less concerned about clients finding out. Everyone seems more used to the idea.
Outsourcing benefits agencies in many ways. It provides instant scalability, allowing the addition and removal of any expertise without going through the normal process of recruiting and laying off employees. This is especially beneficial in an industry where workloads are irregular and unpredictable, skill demands are broad and constantly shifting, and jobs often need to be completed fast. Outsourcing also results in cost savings for agencies as they can reduce HR commitments and access competitive hourly rates, regardless of location.
Two forms of outsourcing are becoming popular among digital agencies: hiring a freelancer via a freelance marketplace and enlisting the services of a white-label agency. Each has its benefits.
Freelance Marketplaces are the most popular alternative. They connect agencies to a global labor pool, providing an unparalleled breadth of choice, skills for every niche, and the most competitive hourly rates. The largest freelance marketplace, Upwork, saw revenue growth of 24% in 2020, while the second largest, Fiverr, grew revenue by 77% in the same year.
4. Enlist a white-label agency
White-label agencies, such as The White Label Agency, are a good option for agencies seeking a low-risk, one-stop shop for their long-term development needs. They employ their permanent teams of developers, made available to clients on a project or ongoing basis. Their services are typically comprehensive: new website builds, ongoing site maintenance; dedicated developer hire; and website design.
White-label agencies surround their developers with a support structure not typically available to developers working freelance or at smaller agencies. This provides unique benefits:
Senior developers oversee project management, shifting risk away from customers.
Liaison staff enhance the quality of customer interaction and guard against miscommunication with developers.
Recruitment personnel and development academies are used to vet new developers to ensure they meet a certain standard.
Senior developers and in-house training programs are used to upskill developers continually. These are assets that lone freelance developers and in-house developers at smaller agencies often lack access to.
Are you considering outsourcing and want help determining whether white-label outsourcing is right for your agency?
Contact us at The White Label Agency.