Should You Hire from Outside or Upskill Your Current Tech Team?

Embracing new technology is one of the healthiest things you can do for your company—as long as you do it strategically. Technological advances let you stay ahead of the competition, pivot quickly, meet business needs, and expand your offerings to win new customers and make the most of existing ones.

But new technologies also demand new skills. Technology today is advancing at a faster pace than ever, and every year there are new skills demanded of your team, giving you two options: hire from outside your organization or provide training to ensure that at least some of your current employees have the skills to move into positions that open up.

Bringing on new tech talent is expensive, but there’s also a fairly steep cost usually associated with training your current team members. Which factors are most important for you to consider when you’re deciding which way to go?

Let’s look at some of the more important considerations as we weigh the pros and cons of upskilling vs. hiring new tech talent.

A Little Planning Goes a Long Way

To bring down costs and make sure you’re prepared, it’s very helpful to define the skills you need to get your organization working up to speed with its current and new tech tools. Doing this as far ahead as possible will deliver the most benefits.

Clarity at this stage will give you a realistic picture of what you have, compared with what you need and where you need to go.

Be as specific as you can. For instance, let’s say you’re planning to start working on several new features or integrations for an existing product. Based on this, you determine that you will need a DevOps engineer and two cloud architects. However, the project is not beginning immediately; at this point, you’re planning six months out, so you have plenty of time to assess your current capabilities.

This opens up a few possibilities. You may already have somebody on board with experience in DevOps engineering who is currently working in a lower-level position, in which case you could relocate that person to the new project and hire someone at a lower cost for their current position. Or, you might identify a few developers or software architects on staff with the potential experience, interest, and talent to move into a cloud architect role—if only you had a way of supporting them with the appropriate training.

This kind of planning will help you set realistic expectations for staff and also determine your budget, including potential hidden costs. For example, beyond the costs of advertising, recruiting, and onboarding new staff, or the cost of training current employees if upskilling, hidden costs might include decreased productivity due to being understaffed during a recruitment or transitional period.

Nevertheless, the more time you take to plan the transition, the fewer surprises you’ll have—and the less it could end up costing overall.

Onboarding New Experts: Pros and Cons

Once you’ve done some advance planning and set clear expectations in terms of the skill stack your team lacks, it becomes that much simpler to turn to today’s fast-paced job market and narrow the candidates down to exactly the right ones.

Pros of Hiring from Outside

• Theoretically, you get someone who knows your tools “out of the box.” This promises a shorter learning curve, though that doesn’t always translate in reality.
• Candidates arrive with enthusiasm and best practices from previous positions.
• They can aid in knowledge transfer to other employees in your organization.

Cons of Hiring from Outside

• We’re in a “seller’s market” in which top candidates can pick and choose companies, roles, and benefits, so you’ll probably pay a premium and may experience high turnover as new hires move on.
• If you cannot afford a more senior person, you may get an entry-level person with the required skills on paper, but without much experience.
• Whoever you hire will be unfamiliar with your business, culture, strategies, assets, customers, etc., so you’ll still have to spend time bringing them up to speed.

Churn is one of the biggest problems when you’re hiring new personnel. In fact, according to the U.S. Bureau of Labor Statistics, when you hire a college grad for an entry-level job, about half will leave that position within the first two years. Thinking about bringing on someone more senior? Costs to recruit a single senior developer can easily exceed $50,000.

This makes it difficult, particularly for smaller businesses trying to compete in this seller’s market with large enterprises offering lots of perks and possibilities for advancement.

Upskilling In-House Talent: Pros and Cons

While hiring somebody who already has the skills you need seems like an obvious choice, don’t overlook the excellent possibilities you might have among the employees already working for you.

Pros of Upskilling from Within

• Fosters atmosphere of continuous learning and innovation
• Boosts morale within your organization
• Improves employee loyalty and allows for succession planning 

Cons of Upskilling from Within

• It can be costly, with some U.S. companies spending over $1,000 per worker per year on training.
• Without a strategic, focused approach, this money may be wasted: training the wrong people, duplicating efforts, adding skills you don’t really need.
• Building employee skills means they are more employable by other companies, and you could face poaching of your talent.

Whether or not to invest in training your team will very much depend on the assessment of current capabilities within your organization, along with the interests and willingness of your employees. This will take some advance planning, but could also have greater payoffs in the long run.

Example: Strategic Training

Earlier, we mentioned the example of your company determining strategically that it will need two cloud architects and a single DevOps engineer in six months’ time. It’s relatively easy to calculate the costs and weigh the benefits of both approaches.

Costs of Onboarding 3 New Employees:

• You’re probably all too familiar with the hassle of filling empty slots on your team:
  • Advertise the positions
  • Conduct screening calls and multiple interviews
  • Provide training and briefings (familiarizing employees with your brand, your systems, and your processes)
• According to a survey by Glassdoor.com, the average company spends $4,000 recruiting a single employee, which does not even include wages (especially the higher wages that new hires for in-demand tech professions can demand).
• Total cost: $12,000 (minimum)

How do we know it’s a seller’s market? Over half of employees in the Glassdoor.com survey said they spent two months or less searching. And for popular tech positions, it’s often much less (the Glassdoor.com survey was conducted across a range of industries). 

Remember also that hiring from outside may create a loss of morale within your organization, especially if your current employees are either being replaced or bypassed to bring someone new on who already has the skills.

Costs of Upskilling a Current Employee:

• With a trusted training partner, you’ll walk through a painless three-step upskilling process:
  • Assess your team’s current tech skills
  • Determine your project’s goals and skill requirements
  • Provide customized training for relevant individuals
• All of this is available with Cloud Academy’s enterprise plan for just $660 per employee for a year. 
• Total cost: From $1,980

Now, multiply those savings at scale across your IT, engineering, development, and product teams. In many cases, upskilling gives you a simplified, cost-effective path, filling your most challenging roles with individuals you already trust and who have proven their loyalty to your organization.

Even if you have to increase employees’ salaries to include these new responsibilities, tasks, and tools, taking strategic steps to upskill your team will improve morale overall and demonstrate your deep commitment to your team, a commitment that they are likely to repay in loyalty.

Building Your Skill Stack, Growing Your Business

Your organization needs to constantly add to its in-house skill stack, adapting to the new technologies that are going to give you an edge over the competition and create innovative offerings that stand apart from the crowd.

As we’ve seen, the two best ways to do that are either to hire new talent from outside or to upskill your current team members. Neither of these choices is necessarily right or wrong. Instead, you need to determine what’s best for your organization, especially taking into consideration the directions in which you’d like to change, adapt, and expand.

Whichever path you choose, you’ll need to consider issues like how to keep employees engaged, motivated, and positive about growth and change. And with a little preplanning, you’ll also eliminate surprises like hidden costs along the way.

When you connect with an enterprise partner that brings in vast experience in upskilling, you’ll generally spend much less than bringing on new hires. That’s especially true at scale. So if your strategic objectives include major transitions to new cloud-based systems or processes, partnering with Cloud Academy will let you assess your team members and create a careful plan for the transition—creating a predictable, achievable way to meet strategic objectives while saving money.

Addressing the Tech Skills Gap

When you take a step back, you can get some comfort in the understanding that all industries are having trouble finding talent to reach their goals. It doesn’t matter if you look at retail, healthcare, or the service sector—there’s a huge challenge to get the right workers, and this issue compounds in the fast-moving field of technology. So now that you understand the problems more clearly, how about taking some definite steps towards addressing the issues with your workforce? What if you could actively narrow your organization’s tech skills gap in a predictable and scalable way? Download our white paper to learn how.