For as long as there has been an IT industry, there has been a shortage of skills. Business has always seemed to require more skilled staff than have ever been available in the market.
But there’s a recent trend that is becoming more and more common: tech companies are buying other tech companies, not for their customer bases or technologies but for their top developers. Richard Firth, serial entrepreneur and CEO of MIP Holdings says this practice is described in Stephen O’Grady’s book The New Kingmakers.
“O’Grady, a venture capitalist, has noted that developers really rule the technology market today,” says Firth. “He has made a compelling case that software adoption, hiring practices and technology strategies are far more in the hands of developers than ever before.”
O’Grady’s book says that one of the side effects of this disproportionate influence of very skilled people is that large companies will buy smaller ones just to get their “rock stars”.
“This practice is so widespread that a term, acquiring, has entered the industry lexicon because of it,” writes O’Grady in The New Kingmakers. “Even for the sceptics, it’s difficult to argue that these acquisitions are about anything other than people. In many deals, like Facebook’s acquisition of Gowalla, technology was not even part of the transaction.”
Unlike tasks requiring manual labour or linear production of work, highly skilled programmers can be ten times or even a hundred times more productive than normal ones, a phenomenon that O’Grady points out has been confirmed by Bill Gates, Steve Jobs and Mark Zuckerberg. That means spending $50m on a small company just to get its talented chief technology officer or top programmer is well worth the money.
But existing developers of all skill levels are benefiting from the huge amount of free resources and collaboration opportunities that have sprung up in the past few years.
Freelancers who used to struggle to find work are now contracting to companies all over the world. Firth says because this leaves everyone else in the global industry scrambling for the skills that are left – and this is a worldwide problem – companies should be looking to grow and mentor skills instead.
“With very few exceptions companies all act rationally, especially in South Africa,” he says. “If they need skills for a project they will, by and large, poach them. Or they will go offshore to countries like India, but this has proved to be a failure as the resources are often dispersed between really good and really poor programmers. This is how they keep up their averages.
“What we should all be doing instead is investing in education, especially at school level – before the next generation of the workforce comes into our offices – and making sure that the skills base of the country as a whole is grown.
“O’Grady’s book makes clear that the developers are more valuable than the code. If we all acted irrationally and educated and mentored as many people as possible, we would benefit in the long term.”
