Dutch IT companies are outsourcing software development in order to optimize costs and combat local tech talent shortage. 79% of software development companies in the Netherlands confirmed that they will continue to outsource ICT services at the same or at an increased pace in 2020.
Due to remote work, the usage of digital services has increased sharply — online education platforms (+68.7%), video conferencing (+65%), virtual desktops (+63%), and electronic signing (55.7%) are now used more. Naturally, this entails the expansion of the software development scope for companies in these domains turning the software industry into a driving force for an increasing number of Dutch IT companies.
The Dutch IT tech scene is considered as one of the strongest in Europe. According to Holland Trade and Invest, the Netherlands has generated globally-competitive software programmers and IT consulting in a variety of sectors including business, simulation, mobility, healthcare, and safety.
No wonder that in such a fast-growing and constantly evolving environment, the Netherlands is considered as one of the four largest IT service providers in the world. 60% of the companies mentioned on the Forbes 2000 list are located in the Netherlands. These companies include Cisco, Oracle, Google, Microsoft, IBM, Intel, Verizon, Huawei, and many other global players. Amsterdam alone is home to more than 800 startups and 170 different IT companies.
Which Software Development Industries in the Netherlands Are the Most Popular?
Software development sectors in the Netherlands are characterized by the development of cloud computing and the digitization of the economy.
The Dutch IT sector is growing at an accelerating speed. Software development companies in the Netherlands specialized in producing application software (67%) and system software (33%).
Software development sector in the Netherlands (application and system software)
Additionally, there is a strong need to focus more on core business principles, improve service quality, reduce costs, get access to resources and innovations, etc. Well-trained specialists in information and communication technology are in great demand with annual job vacancy growth of 1.2%.
Employees are sought after in all types of ICT positions. Any combination of ICT with other skills (in health, security, and education) will be a viable plus.
Another fast-growing sector that is attractive to software development companies in the Netherlands is security software. This tendency can be partially explained by the rising software complexity and an increasing number of technological threats. Starting in January 2016, Dutch IT companies are required to report data about leaks and hacks that could affect other users. The Netherlands plays a leading role in the recently adopted EU Data Protection and ICT Security Directive.
The software development sector in the Netherlands is divided into corporate and local software development. Software development companies in the business sector generally provide services in data analysis and information sharing. As a result, this facilitates the growth and usage of software development in the governmental and financial sectors. In comparison, local software development concentrates on business applications and custom products.
What Are The Most Common Challenges for Software Development Companies in the Netherlands?
Finding the right staff under conditions of shortage of technically skilled talent remains the most time-consuming challenge when it comes to growing your software development company. In 2018, 46% of all vacancies for software developers in the Netherlands were difficult to fill.
In 2019, 40% of Dutch entrepreneurs mentioned a shortage of talent as an obstacle to the expansion and development of their software development company. That number is expected to increase by 54,000 in 2020.
Talent shortage growth is the main challenge for Dutch IT companies
Due to the fast pace of the software development industry and labor shortages, a growing number of medium-sized companies continue to outsource their ICT work. Other factors also contribute to this hunger for IT outsourcing: there is a strong need to pay more attention to core business principles, improve service quality, reduce costs, and have access to resources and innovation.
Why Will Dutch IT Companies Outsource More?
In general, businesses are satisfied with their ICT service providers: 86% of all 405 ICT outsourcing relationships are considered to be satisfactory, 8% are somewhat unsatisfactory, 4% are dissatisfied and only 2% are very dissatisfied.
The main reasons why Dutch companies outsource:
- Focus on core business(63%)
- Improve service quality(53%)
- Reduce Costs (49%)
- Drive innovations(41%)
- Access to tech talents(41%)
- Add more financial flexibility(28%)
Reasons why Dutch companies outsource
Companies such as Vida XL, Widget Brain, and Carerix saw software developer shortage in the Netherlands at an early stage and opted for outsourcing their software development to Ukraine with Grid Dynamics.
Lex de Groot, Software Development Manager at Vida XL says: "Now that we all work remotely, we see that our Grid Dynamics employees are an equal part of our development team."
According to the Dutch IT Sourcing Study 2020, 79% of companies confirmed that they will continue to outsource IT services at the same or at an increased pace. Cost-saving is the main motivation when scalability is also an important consideration for many companies.
Companies that opted for outsourcing in Ukraine at an early stage gained the upper hand among competitors. Arco Westbroek, Head of Products at Carerix says: "I'm really happy with Ukrainian developers. We are satisfied with the level of tech expertise, the approach, and proactiveness of our Grid Dynamics developers. "
Reinier Meerwaldt, CTO at Widget Brain, also sees the benefits of working with Grid Dynamics: "In these disruptive times, Grid Dynamics is doing a good job in maintaining the team spirit within our development team, from yoga classes to setting up home offices. The efficiency and morale of our team remain high."
Extended Development Teams with Grid Dynamics
Grid Dynamics is a digital-native technology services provider that accelerates growth and bolsters competitive advantage for Fortune 1000 companies. The company has 15+ years of experience in digital transformation and software innovation, most notably open-source cloud-native programs.
Our clients have the option of choosing the engagement model which best suits their requirements, including team extension, dedicated teams, pod teams, and remote development centers. Grid Dynamics has offices throughout Eastern Europe and Central Europe and Latin America, meaning that we have the resources to cater to the needs of companies of any size, no matter where they are located.
How to Build a Nearshore Development Team with Grid Dynamics:
- Share your preferences. First, Grid Dynamics recruiters gather all the information and requirements for your project in order to understand your business needs, and find suitable candidates that are proficient in required technologies, have the necessary background and experience.
- Recruitment stage. Once we clearly understand what type of candidate you need, we carefully examine our database in order to choose ideal developers for you.
- Interviewing the candidates. Next, the client personally interviews all of the suitable candidates.
- Start working. Immediately after the candidate has signed the offer, you are able to start working. We will handle all of the administrative and legal issues, paperwork, employee retention, and provide well-equipped working spaces, while you are able to focus more on your business.
Drop us a line to learn how you can handle the tech talent shortage in the Netherlands, receive benefits, and extend your tech expertise.