3 Senior Developers in Eastern Europe Walk Into a Bar...

The IT market situation in Eastern Europe

3 senior developers in eastern Europe walk into a bar...

... followed by 500 recruiters with job offers in hand.

That's the whole joke.

Sorry, I know you were expecting a better punchline, but the IT market in Eastern Europe is no laughing matter! Demand for software developers in Eastern Europe has never been stronger, and employers seeking to hire developers need to understand the market in order to recruit and retain talent.

Disclosure of vested interest: The author of this post, Sasha Bondar, is the founder of Reintech, a remote tech talent sourcer based in eastern Europe. This article serves to educate, not advertise, but a link to Reintech's website will be provided at the end of this article, for any interested readers.

Note: The term "Eastern Europe" is used several times in this article. For purposes of the subject at hand, eastern Europe refers mainly to Ukraine, but the situation described can be extrapolated to Poland and other countries in the same geographic area.

What's the situation, and how did we get here?

By the spring of 2020, the majority of the world had begun to grapple with the effects of the COVID-19 virus. By summer and fall of 2020, the impacts on the employment market were in full swing; many companies chose to downsize new projects or scrap them altogether. This led to many developers losing their jobs, with little prospect of immediate re-hiring. The trend reversed in early 2021, when the COVID-19 vaccine was beginning to become more readily available and the end to the worldwide pandemic-induced recession was in sight. The number of open positions increased drastically (see graphs below)! However, the number of responses from candidates dropped significantly, which led to major challenges in hiring candidates. We were in the midst of what might have been the most radical reversal of supply and demand that the eastern European tech industry had ever encountered.

What do the data tell us?

Note: All data and graphic representations of data are credited to Djinni Analytics.

In February, the number of jobs online surpassed the number of candidates online, and since then the gap has only widened. A year ago, there were 21k candidates and 6.5k jobs on Djinni, today there are 16k candidates and 22k jobs.

On average, candidates got 14 message requests from recruiters in June, up from 6-8 at the beginning of the year. Demand is highly uneven: 5% of all candidates receive 40% message requests, with an average of 50 proposals each.

The average number of applications per job fell from 3.3 in January to 2.4 in June. Most vacancies with the title Senior receive less than one response per job, the record is Senior DevOps with 0.1 (!) response to a job. Exception: vacancies for PM, BA and UX where demand still exceeds supply. 

Salaries for the top 5% of hires increased from $4,500 six months ago to $5,500 in May-June. The average salary for hiring remained unchanged due to the large number of hires of junior specialists and specialists from related categories (Design, PM / BA, HR, support, marketing).

A year ago, 20% of jobs were marked as “remote”, now there are 70% of them, and we will probably see 80% by the end of 2021.

What are the effects on the region?

One of the most noticeable changes in the second half of 2021 for developers in eastern Europe has been the meteoric rise in salaries. Having watched this situation develop (pun intended), I believe the reason for this to be directly tied to the rise of work-from-home. The market for software developers in Eastern Europe heated up a lot when work-from-home became widespread, and many companies started trying to hire software developers directly through LinkedIn, Djinni, and so on, bypassing the middlemen.

In the not-so-distant past, when US companies would hire developers in Eastern Europe, the compensation would be adjusted based on the cost of living of the developer's location. Generally, this meant that software engineers in Ukraine would be paid less (often much less) than their software engineer counterparts in San Francisco or Seattle, for example. Now, with the market in such incredible demand for Eastern European developers, Eastern European compensation is much more comparable to US-based compensation packages. Five years ago, I gave a talk in Ukraine to an audience of people who were considered pursuing software development as a career. At the time, I mentioned the possibility of making as much as $50/hour USD at the high point of one's career. Now, in this market, $50/hour USD is not so rare...

Thus, developers can view many different job offers from a unique position of strength. For Eastern European developers, changing jobs in this market is like selling bitcoins; they haven't even had a chance to agree and companies are already offering twice as much money!

Companies that act as middlemen between hiring companies and job-seeking developers are not immune to the current situation; currently, demand is high and supply is low. There is a great deal of competition from companies who come to Eastern Europe from the United States to hire developers directly. 

How are companies responding?

The Three Stages of IT Market Development

1. The company publishes a vacancy, specialists respond, the company chooses.
2. The candidate publishes the profile, the companies respond, the candidate chooses.
3. Candidates go nuts, companies go nuts, no one has time to choose anyone, an offer is received by a random person who happened to be near the office of the company. 

Companies seeking to hire developers in Eastern Europe face an uphill battle; developer demand is as high as ever, and there is a very limited supply of available developers for hire. There is nothing that companies can do to affect the market's high-demand state, but some companies have shrewdly realized that they can compensate by intervening on the supply side. Such companies have launched training programs to teach software development. These training programs are in many ways similar to the coding bootcamps of the US, but with even stronger interest in hiring candidates upon graduation/completion. Students in these programs might not only have offers from the companies training them, but from outside companies, too! The companies that have the capital and bandwidth to run training programs are often the larger companies, but some medium-sized or smaller companies are using this approach as well.

Smaller companies have a harder time recruiting and retaining due to the intense competition for candidates, so recruiters often have to think creatively to attract candidates... Take this recruiter, for example; he wrote a song to a candidate to try to interest them into applying for a role!

What does it all mean?

This incredibly hot developer job market in Eastern Europe is unique not only because it's unprecedented, but also because of how quickly it came to be. All of these changes essentially happened over just six months! There is also a possibility that the trend could reverse; some would say that this market is on top of a bubble right now, with many startups forming from cheap investment money, and lots of projects of limited usefulness being funded that could quickly disappear, and so on. 

If your company currently employs developers based in Eastern Europe, I strongly encourage you to raise your developers' salaries to match the market rate right away. Don't wait for them to ask for a raise and then start negotiating – it's probably less effort for your developers to get a new job that pays better than to haggle with you. If you need to hire developers, you shouldn't expect to just offer a huge salary for a specialist and not worry about the market. You should still choose your candidates attentively, otherwise you could end up hiring someone like this...

Contact Reintech to get your remote development team started with a company that is based in eastern Europe and has a proven record of connecting companies with developers.