Johannesburg, 21 Nov 2018
I can smell holiday season in the air, yet for many South Africans, the festive season looks rather dismal, says Anujah Bosman, CEO of Chillisoft.
Coupled with South Africa's technical recession, we are facing a 27% unemployment level. This year we have had and can expect retrenchments from Internet Solutions, Liquid Telecom, T Systems, Liberty, Group Five, BCX, Telkom, Eskom, SABC and other major employers.
In this last quarter there has been an outcry in social media about the heartlessness of being retrenched so close to the festive season. The reality is there is never a good time to be retrenched, unless you have maintained your skill levels, and salary levels are below or have kept pace with the market.
Retrenchments have become the norm in the software development industry, where we follow the boom and bust economic model. In software development, the loss of a long-standing contract is often cited as the reason for retrenchments. The early warning signs of contracts going wrong are usually missed by employees who are directly contributing to the value chain, since they are too far removed from decision-making structures.
The focus on the resultant unemployment hides a greater problem that has severe consequences for the industry. While retrenchments cause unemployment, the greater concern is the large workforce that earns lucrative salaries without having industry-relevant skill sets. The future employability of these individuals is continually compromised and many individuals will struggle to adjust to a lower salary.
As an employer in the software industry, how did we get to this situation? Greed, the fallacy that software delivery is resource-based and the "bums on seats model". Greed, because companies prioritise short-term profit for their shareholders, which is achieved by heavily "resourced" long-term contracts that are time and materials based. Companies employ individuals specifically to service these contracts and they do not invest in any skills development or cross-skilling. The company does not test whether or how the business can absorb the new hires if the contract ends. This model mines skills but does nothing to replenish skill sets. From the employee perspective, according to Gartner (see figure 1), most South African software developers value compensation, work-life balance and stability. Long-term time and materials contracts provide these factors for a while. However, the hidden cost to employees are outdated skills, limited skills that are vendor-specific, inflated salaries that don't match their skill sets and the misperception of stability or long-term employment.
As an industry, it is time that we change the economic models of how we earn revenue from developing software. Billing by the hour for time spent on projects where the employer has little or no impact or investment in the individual's skill levels is unsustainable. This model prevents individuals from investing in their learning or keeping their skills up to date.
The "bums on seats model" is antiquated and does not promote skills, performance or accountability. It also alludes to the resource mentality where there is a belief that an individual with good skills is easily replaced, which we know is untrue. We need to move to models that cater for the investment in skills while managing software delivery. The economic and performance models must be team-based because software delivery is about the team's performance.
In an industry where seniority and career pathing is almost non-existent, it is easy for an employee to succumb to the golden handcuffs that are synonymous with software development. In my experience, large software consulting companies retrench every five to seven years. This is the operating model of how profit is maximised in a software development sector. As a software developer, you are a knowledge worker and you are accountable for your career path and growth. You need to create your own stability by being accountable for developing a portfolio that demonstrates your skill level and your software professionalism.
There is also a misperception that larger corporates provide stability and career growth prospects and are therefore more favourable over SMEs. In my experience, it is easier to earn more in a larger corporate than a SME; however, the diversity and depth of technical skills that are acquired in an SME outstrips those that you develop in a long-term contract. It is also worth noting that all employers are subjected to similar factors, albeit to different extents. Chillisoft, disparagingly labelled as an "SME", has never retrenched since its inception in 2005, and it enjoys an average staff retention of 10 years. Chillisoft has never retrenched because it has always prioritised learning and the sustainability of skill sets over short-term profit.
Chillisoft also services long-term contracts; however, the company doesn't confuse contractors with employees. A Chillisoft employee is paid well and is paid to participate in weekly deliberate practice so as to maintain skill sets. Please contact peter.wiles@chillisoft.co.za or Anujah.bosman@chillisoft.co.za to discuss why the company's pricing and team augmentation models benefit business and employees.
Chillisoft is currently recruiting senior and intermediate software developers for its Johannesburg office. Please refer to Chillisoft's Web site for the latest vacancies.
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