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Staff Augmentation As a Driver of AI Startups Ecosystem Evolution

Surprisingly enough, 40% of European AI startups are fake, according to a recent study. Regardless of the investments that they’re able to attract, the lack of AI talent onshore slows down any AI R&D, product development and launch processes.

Why is there a talent shortage in a field as lucrative and innovative as AI?

According to a Montreal-based lab Element AI, there are fewer than 10,000 people in the world who have the skills necessary for the advanced Artificial Intelligence/machine learning research and development. Meanwhile, Tencent Research Institute reports there are only  300,000 AI researchers and practitioners worldwide. If these figures are even close to being true, we are witnessing a large-scale talent crisis. With the expanded adoption of AI, applied now in industries like Fintech, healthcare, insurance, manufacturing, warehousing, shipping, marketing, and retail, the number of job openings now significantly surpasses the number of suitable applicants. This is exactly the reason why many companies are struggling to meet the digital transformation challenge with little to no success.

The supply-demand mismatch is also caused to a large extent by the aggressive hiring policy of tech giants. Tycoons like Google and Amazon drain local jobs market and headhunt the best AI talent by paying them 3-6x more than any average mid-market company can afford. An average AI specialist salary starts at $130.000 per year; some insiders believe, large companies are offering huge salaries just to keep the experts out of a job market and avoid competition. They are also headhunting people from academia, which has already dramatically reduced the number of experts who can teach AI skills.

Needless to say, job titles like Machine learning engineer, Data scientist, Predictive modeler, Computational linguist, etc, are in tremendous demand on websites like Glassdoor, Monster.com, and Indeed.com, and the number of AI vacancies exceeds the number of applicants. In the UK only, the demand for AI workforce has increased by 485% from 2014 to 2017, which means there are 2.3 jobs for every AI expert in the UK with an average salary of £54.366.

But even apart from the evident AI talent crisis, there is a general shortage of talent globally, not only AI but mainstream tech as well. In South Korea, home of world-renowned brands like Huawei, Samsung, and LG, ranking 5th on global R&D spending, the tech and engineering talent shortage is hindering the ambition to make it to the world’s top 4 for AI leaders. In part, this situation is caused by the state of the educational system and the aging demographics. Other reasons are related to the nature of the field itself: technology is currently developing at an exponential rate, and the knowledge is already obsolete by the time students become graduates.  

Enthusiasts believe, the AI revolution has the potential to disrupt the world economy just like the invention of electricity or a steam engine. However, the digital transformation is taking longer than expected largely due to the global lack of tech talent.  

Leading global economies are now working on bridging the talent gap, approaching the problem from different angles: on government, business, and educational levels. Yet, matching the demand with supply on an AI job market will take, by some estimates, 5 to 10 years. So does it mean startups and SME’s will end up completely pushed out of the competition by tech tycoons capturing the best talent? Under these circumstances, AI skills outsourcing remains the only viable alternative.   

AI skills outsourcing as a way out for startups and SMEs

This isn’t a subject of common knowledge, but while countries like USA, UK, Israel, Germany, and South Korea are experiencing a severe shortage of tech talent, IT and R&D markets in Eastern Europe are growing faster than ever. In fact, they grow 4-5x faster than globally, and many companies in the EU and US use them as their top 1 AI R&D outsourcing location.

So what makes countries like Ukraine an attractive outsourcing haven? For developing economies of Eastern European countries IT Outsourcing (ITO) sector is one of the main sources of revenue.  

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Once a former Soviet republic, Ukraine has a high level of technical education and over 150 colleges and universities teaching strong AI and STEM skills. The country is home to over 240 IT companies generating $2.07 billion in revenue, and about 185,000 of highly motivated tech specialists with 44% employed by outsourcing/outstaffing providers. Recognized by the Global Sourcing Association as a #1 Offshore Outsourcing Destination of 2017, Ukraine has also been named as a Top Outsourcing Destination by Gartner for 7 consecutive years. Instead of waiting for local markets to finally get filled up with high-quality local talent, or until self-learning AI systems become mainstream, businesses can use territorial gaps in availability and cost of AI talent to their benefit.

Offered by most outsourcing companies, staff augmentation model allows you to add additional resources to your existing software teams matching the precise skills you need to develop your business-specific AI products. While the outsourcing provider takes care of the hard part of recruiting, hiring, taxing, and monthly payments, your team benefits from close collaboration with strong guest players.

South Korea is a spectacular example of outsourcing AI R&D to Ukraine. In 2013, Samsung Electronics had chosen Ukraine as its major European R&D Center, with more than 1,000 specialists working in two cities, Kyiv and Kharkiv on AI projects. Other collaboration points include computer vision, the development of the software for target tracking, surveillance, identification and classification devices, and development of graphical 3D interfaces and multimedia applications.

Another popular Korean brand KIA Motors is also outsourcing some of its software development projects to Ukraine. In 2017, Ukrainian-based Cards Corp. has been chosen out of over 1,500 companies worldwide to develop software for K-Startup Grand Challenge 2017, a Korean governmental IT support program.  

One of the US leading home security solutions developer, Ring launched a huge Dedicated Development Center in Ukraine and hires massively across the country. AI talents are some of the most sought-after specialists.

Highly appreciated by world-renowned brands, Ukrainian offshore AI consultants and developers are also affordable and won’t command six-digit salaries. With an average developer monthly salary rarely exceeding $3,500, augmenting your staff with qualified and motivated AI experts from resource-rich locations like Ukraine proves effective and is a guaranteed driver of AI startups ecosystem evolution. 

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