Developer Shortage Turned into a Bubble

In Pikkar`s judgment the work of developers will be replaced in one way or another by artificial intelligence. Before that, the highest paying engineering jobs (Head of Product, etc) are taken outside of Estonia as in Thorgate’s case it will be more efficient to hire them elsewhere. “I am a strong patriot to a certain extent. But at some point I will no longer be able to stay as competitive internationally, and there will be pressure to move our activities to Norway, for example, where it is cheaper to keep employing my top workers, as funny as that may sound. We are currently considering Denmark and a few other places which may not seem to be cheaper countries at first glance. But if we add the closeness to our clients and partners to the calculation, it makes it hard to justify Estonia over others. The top 10% of the jobs of the Thorgate team, along with the accompanying employment taxes will thus leave Estonia and move to our satellite offices,“ Pikkar said.

According to Pikkar, the state must understand that entrepreneurs do not talk about imposing a ceiling on the social tax because they are trying to save money. “Quite the opposite: I am one of those entrepreneurs who would be glad to support bringing back the business income tax.“ In Pikkar`s view it could be reasonable to bring back a tax on business profits, to a moderate extent. „We are not a cheap outsourcing country that needs to avoid the tax to push up foreign investments.“ Pikkar stressed that enabling and motivating the creation of high-salaried jobs is not just a favourable factor, but a necessity.

“If this is not undertaken in the near future, all the better jobs will move away from here, and lower-salaried positions – such as junior developers – will simply disappear at some point. That puts us in a bind: if we impose a ceiling on the social tax, we`ll stay afloat, and at some point we will continue to be an e-state, but if we don`t do so, then what kind of talk can there be of an e-state 5 or 10 years from now?

Pikkar added that when and how abruptly the work of developers will begin to be replaced is a separate topic for discussion, but he is firmly convinced that it is coming: “Of course things are not so black and white, but the fact remains that the work of an ordinary developer will one day be just as valuable as some other average job, and it will no longer be driving innovation.“ Therefore, Pikkar claims that we should be considering the possibility that the easier part of a developer`s job should be taken over by artificial intelligence, and the developers could then create more value than they had up to now.

Thorgate does not bill itself as an IT firm, but as a digital production company, where instead of writing code the focus is more on the product and creative work: “The goal of artificial intelligence for the future is also to make the best possible product, but to build the best product, one needs creative thinking. You have to understand things that the computer will not be able to understand some time from now: business trends, the ways people think, brands, PR, and the technical knowledge that goes along with it.“

Their developers are also responsible for doing their work as wisely as possible. “At Thorgate ideally the goal of the developer is not to write code,“ Pikkar added.

When subcontractors in the other countries lose their jobs will not affect our economy and we have mitigated our risks in this sense, Pikkar said. "But it is sad that in society as a whole and in Estonia we have not alleviated these risks and the government does not realize that people in these top 10% technical job positions aren’t paid 2-3 times average salaries, CTOs and Product Managers often earn five times the average salary."

According to Pikkar, for example, Italy is one of the countries that has made this mistake and gone crazy with social tax. "Northern Italy is actually a very decent center for innovation, but if you ask a technology company whether they would consider moving their production or headquarters there, no one will say yes."

In Pikkar`s view, IT companies that are built like IT-workers` farms with a focus on a large number of workers will eventually come to a point where they will be reduced to a minimum; there will be cuts, and at some point half or even 75% of such jobs will disappear.