22 Nov 2019
What US tech companies should know about talent before entering EMEA
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EMEA is far from an easy market for US tech companies looking to grow, especially when it comes to finding and hiring the right talent in its tech hotspot, Europe.
What is true of EMEA is true of Europe. It is not a simple prospect for incoming US tech firms.
The common misperception is that it contains the ‘European single market’. That ought to make it easy to recruit talent and grow your business, right? Wrong, the reality is very different.
Originally created for physical goods, the European single market is incomplete when it comes to services. Within Europe, individual countries have their own distinct laws and tax regimes when it comes to services. More specifically, labour laws vary dramatically from country to country too.
In fact, the European single market simply cannot cope with platform tech companies. The failure of Europe to create a true single market for services has significantly hampered Europe’s ability to produce global digital competitors of genuine scale.
As a result, you will need to seek expert legal advice for each specific country before establishing an office there.
There will be a myriad of skills, expertise and flexibility trade-offs when establishing a development centre somewhere in Europe, for example.
Clearly, this all has big implications for digital, software, and services businesses trying to grow in the region. Ironically, these are precisely the companies that Europe will rely on to revive it’s flagging economy; Europe’s software industry is growing 5x faster than the rest of the European economy in terms of Gross Value Added, according to Atomico’s State of European Tech report 2018.
Against all these challenges, any US tech company must have a clear mission and purpose that transcends borders and languages. To do this, you will need to hire digital marketing expertise that can create a nuanced message and invest in localised marketing to communicate it.
EMEA’s talent challenges
Compared to the US, there is a dearth of tech, SaaS and Agile talent in EMEA, including Europe.
Looking at Germany alone, over half of the companies that apply software solutions report challenges in finding qualified employees. This is partly due to Tech companies experiencing smaller funding rounds in EMEA than in the US, but also due to Europe’s regulatory environment impeding cross-border growth.
The result of the lower volume of transactions is that there are fewer experienced tech leaders in EMEA, which means fewer veterans who can pass on valuable skill and experience.
The UK’s strained relationship with Europe
English is the most commonly spoken business language in EMEA, and historically, the UK has been the ‘bridgehead’ into Europe and EMEA for US Tech.
Since the Brexit vote, however, international Tech firms looking to grow in EMEA have struggled with deciding where to plant a local flag.
Three years on, the outcome is still uncertain.
Perhaps these challenges can also be a benefit for Ireland. Following Britain’s withdrawal from the EU, since it will be the only English-speaking member country.
This will be a strong pulling factor for US companies looking for a base in which to internationalise and expand. Ireland also offers a healthy technology talent market thanks to many well-established global tech companies there. The downside? High wages and living costs in the main cities of Dublin and Cork, for instance.
Time to hire (and fire) slower than the US
Across the EU, the average time to hire for a reactive job opening is between 10-12 weeks from sign -off on headcount to offer acceptance. Also, notice periods are anywhere between 1-3 months and potentially longer for more senior roles and in some markets such as Germany. Tech firms will want to think carefully about where to place their long-term bets – a wrong decision can be costly and time-consuming.
No single route to roles
Talent in different countries will favour different methods of securing their next role.
With the proliferation of social media, jobs boards are still powerful: 1 out of every 3 Europeans looking for a job uses a job board.
There are 24 mainstream job board websites in the EU 27 countries, for instance, and candidates prefer to use a localised player. An example of this is in Germany where candidates tend to favour Xing over LinkedIn. A tech company wishing to use job boards to recruit employees across Europe by using only the best local sites would need to use 24 different job boards!
The limits of in-house recruitment teams
Most Tech companies have built their own in-house executive search teams. This can be cost-effective compared with using an external partner, particularly at the junior level where the function is more straightforward, and the process is more transactional.
However, a lot of US Tech companies will base the executive recruiter in North America which is sub-optimal for multiple reasons.
Where they do base recruiters in EMEA, the teams tend to be understaffed. For example, a $60B global Technology company I have partnered with in the past has only three recruiters to cover EMEA, India and APAC. This team will be tasked with filling hundreds, if not thousands, of vacancies per year. As a time-saver, they will try to be smart and use social media. However, engaging specialised talent and senior leaders in a conversation about a new opportunity requires a degree of trust which cannot be created through online interaction. It takes years to build.
Moreover, if you are approached by the in-house recruiter representing one firm, the answer will be binary, a ‘yes’ or a’ no’. Ultimately, a US Tech firm will need to tap into local networks and local language capabilities in order to hire effectively across EMEA.
Effective and trusted recruitment partners
With the proliferation of LinkedIn, and other social networks and AI tools, it might seem strange that executive search firms are still enjoying a healthy trade.
The reason is that firms such as Odgers Berndtson will provide an effective and trusted network across EMEA with experienced boots on the ground in the different countries.
The best firms will provide objectivity to their clients and candidates, will convey the mission and purpose of the client accurately and should provide a positive candidate experience.
Ultimately, no single approach (online, in-house, external partner) is sufficient and a US tech firm looking to grow in EMEA will probably need to adopt all three hiring strategies to be effective. Ideally, you will want to partner with an experienced firm that can offer you objective advice and partner with you on mission-critical or confidential projects.