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How can SMEs and startups compete with tech giants for talent?

By January 30, 2020 March 2nd, 2020 No Comments
SMEs and startups compete with tech giants for talent


The competition for tech talent is heating up!

If you own a startup business or a small-medium enterprise, you probably face this challenge already.

How do you attract and retain the right talent?

There’s a war for talent out there!

We were short of three million STEM workers in the US alone.

By 2030, there will be a shortage of 85 million qualified employees across multiple domains.

With traditionally non-tech domains steadily converging towards tech, the impact will be higher.

All these points towards one critical challenge that no business can avoid – shortage of a talented workforce.

There is no way around – we have too many ideas at any given time and too few people to make it happen. Good reasons for that too.

Competition with the tech giants

There is an acute shortage of tech talent, that’s established. Startups face the brunt of it though. They have to compete with the tech titans.

Titans like Google and Facebook play it hard while acquiring top talent. This Princeton university case study shows how Google paid a whopping $3.5 million to retain an employee when Facebook tried to hire them.

Tech titans can spend an enormous amount of money to retain the right talent. Startups and SMEs are affected whether or not they want it. The tech giants not only offer money, they offer a compelling Employee Value Proposition. The EVP includes various perks like insurances, vacations, benefits, and mentorship.

Not to mention, their brand alone can line up candidates. Brand names like Google, Amazon and Twitter are alone sufficient to lure some of the top candidates.

Startups can never compete with that.

Competition with the tech giants

Competing with the tech giants

Global market and internal factors

It’s not only the tech giants that pose a challenge for startups. As of 2019, there are at least 30.7 million small businesses in the United States. Over 1700 startups registered in 2019.

The numbers have two things to say.

One, the competition for the right talent. All these companies are trying to attract talent and thus increasing the competition.

Two, the indirect effect of the spike in the number of startups is the reduction of the talent pool. The highly talented, innovative people want to start their own companies. With the global business environment favoring startups and SMEs, talent is flocking towards starting up.

There is a reverse wave too. Some of the top techies shy away from startups and SMEs due to heavy workloads, multiple roles to handle and the unstable finances of the company.

What are the challenges that startups and SMEs face?

For startups and SMEs, recruiting the right people is crucial yet challenging. It’s not enough to attract and hire top talent, retaining them is also essential. If you’re running your own startup or SME, you’ll relate to these challenges.

Challenge #1: Lack of experience in hiring

Startups and SMEs don’t need nor can they afford dedicated talent acquisition teams.

Startups are short on manpower as is. The core team is made of overworked individuals working on absolutely essential and unavoidable functions. As talented as they might be, hiring talent is not their thing. They neither have the specific expertise to attract great talent, nor can they dedicate time to manage or retain the talent.

It’s no wonder startups are always at a disadvantage in the talent acquisition war.

Solution: Leave it to the experts

When you want something done but you can’t do it yourselves, what would you do? You will delegate or outsource that bit to someone who can.

What if you could do the same with tech recruiting?

You can find and hire top talent without talent acquisition teams too. There are several companies that help with tech recruitment. Some specialize in hiring for growing startups too – companies like Crewscale can connect you with top talent across the globe.

Challenge #2: Lack of competitive pay

Tech employees are one of the top paid workforce in the world, as is.

When the demand for tech talent is high and the supply is less, the candidates have greater bargaining power. This is a pain-point for startups – especially if they haven’t been funded yet.

When they cannot compensate candidates like corporations do, startups end up losing top talent due to lack of funds.

A closely related challenge is the pay negotiation. Tech giants have dedicated teams for looking into all the hiring functions, including negotiation. Startups lack these negotiation skills, adding to the low bargaining power to begin with.

Solution: Offer incentives and perks

Startups can offer its unique perks too.

You can offer your talent to vest with you in the forms of stocks, whose value appreciation in the future might be tremendous. Monetary benefits like paid health insurance for extended family, travel and vacation assistance, reimbursement for technical events,and access to tech journals can be managed too.

The perks could be non-monetary as well: opportunity to work on impactful projects, flexible working hours or even a great cafeteria! Remote work is a great way to attract talent too.

Challenge #3: Lack of recruitment methodologies

There’s a reason why you should get your hiring process right, beyond being efficient. As prospective employees, the candidates assess your company based on your testing and interview process. A company with a systematic, innovative approach to recruitment obviously creates a positive impression on the employee’s mind.

The tech giants who have decades of operational experience have a well-defined recruitment process. They have tried, tested over the years, perfected the art of attracting talent. They also have a multitude of tools at their disposal for interviews, coding assignments, and assessments.

Startups don’t have any of these luxuries.

Testing candidates itself is such an overwhelming challenge that you’d rather stick with the smaller but testified talent pool among your network and referrals. Not that there’s anything wrong with that, but you’d want to expand your horizons at some point. Or at least have the choice of selecting your candidates.

Closing the circle, you don’t have the testing capabilities.

Solution: Remote assessment tools

If you’re stuck in this cycle, it’s high time you find an assessment tool, they can help you conduct a highly structured and transparent assessment.

There are several tools available for tech screening assessment, and paired-coding. Without burning a hole in your budget, you will be able to conduct a highly effective, transparent, and systematic hiring process.

Personally, I’d recommend Talscale, though I have to add that I could be biased here. We built it for this exact reason, to assess candidates on situations parallel that of the project they’ll work on, project-based assessments. The kind of assessment that startups if not the entire industry desperately needs.

Challenge #4: Lack of brand value

I’ve said this before already, and I’ll say it again.

Brand names attract talent.

We humans are always attracted to big names – one of the huge advantages tech giants enjoy. Over the years, they have created such a reputation that there are people who consider working for them a privilege. Given their value proposition, it probably could be too.

Every company that isn’t a brand has to face this challenge. You need great employees to become a great brand, but the candidates prefer joining only an established brand. It’s more of a chicken or egg problem.

Solution: Offer a Great Employee Value Proposition

Your key to compensate for the lack of a brand name is your EVP.

EVP is a term used for all the compensation (monetary or otherwise) that a company offers to a prospective employee. It’s not only essential to provide great perks, but you also need to capture that in your EVP statement so you can communicate it to your future employees.

It should include information like career growth opportunity, flexible hours, organization culture, work-life balance, mentorship opportunities, to name a few. You can read more about employee value proposition here.

Challenge #5: Employee Retention

Acquiring talent is not just sufficient. Retaining employees is more crucial than actually hiring them.


When an employee doesn’t accept your job offer, there isn’t much damage to your reputation. However, when an employee leaves during the first year, it sends a message about your organization, internally as well as to the world outside.

As a startup, you cannot afford that to happen! Studies show that 23% of new hires quit their job before their first work anniversary. With so many opportunities the top talent has, it’s hardly surprising.

There are several reasons that lead to early employee turnover. The organization culture, the workload, lack of support or onboarding, mismatched profiles, wrong job descriptions – so many factors influence the decision.

It’s much more difficult for startups and SMEs when people quit. It affects your organization financially as well as cripple the operations. Your employee retention can be nothing short of its best version and this should always be a priority for startups and SMEs.

Solution: Great onboarding, assistance, great culture

Startups can define and shape their own culture, that’s an incredible advantage!

When the organization is small, it’s easy to incorporate the core values of your company into the day to day activities. That, in turn, becomes your company’s culture.

Great organization culture is essential for retaining employees. Preparing an excellent employee onboarding strategy is a first step towards retention. In addition to onboarding, you need to offer challenging projects that will help the career growth of employees.

Your employees need to realize that they can develop their skills and grow for them to want to stay with you. Most importantly, your organization should provide an environment that is conducive to your employee’s growth.


While startups and SMEs face various challenges to hire tech talent, they are not without solutions. The unique nature of a startup itself can be effectively used for attracting top talent.

So, if you are looking for recruiting some great talent this year, start with a hiring strategy and explore tools like remote hiring and assessment software. Create a great EVP and nurture a unique culture. Be innovative and create a remarkable employee onboarding program.

Run your startup to your advantage and you can undoubtedly outrun the tech titans in the race for acquiring the right talent!


Raghu Bharath

About Raghu Bharath

CEO by day, techie by night, Raghu is always ready to converse about technology, startups and how to make ideas go big.

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