Some 75% of all fintech startups fail within two decades, yet it is still expected to be an almost $700 billion market by 2030. Like many other verticals, one of their big pain points is a shortage of IT talent.

Bryan DiGiorgio, founder and CEO of 1840 & Company, says a lack of IT talent causes delays in product development and launches, which leads to increased costs.

“The labor shortage just delays projects in getting out, and they become more expensive, and for startups, those are the two big issues that don’t contribute to their success,’’ DiGiorgio says.

Fintech startups that 1840 works with have come to realize they don’t need IT workers physically onsite and that has given the firm the ability to cast a wide net, he says.

“We’ve been [sourcing] a lot of fintech talent out of Nigeria, and we’re there because we saw cost increases right as the war in Ukraine started,’’ he says, adding that talent costs grew significantly in emerging markets in Europe, as well as in India. “Frankly, the untapped market from the tech space seemingly, was Africa.”

Today, 1840 is working with front-end developers, back-end developers, and application and website designers in Nigeria and Kenya because of the “good cultural fit,” DiGiorgio says. The company sources talent from about 15 countries for other types of positions as well.

1840 typically doesn’t fill gig positions, so the typical length of engagement for an outsourced employee is at least one year, he says.

“Generally, clients will start with a couple of positions and then expand a team over time,’’ DiGiorgio says. “One of the things that’s different with emerging markets is, as we move to this 100% remote work-from-home environment, historically, these individuals would travel an hour to an hour and a half for their commute to work,” due to the high cost of living in cities. This can involve having to take multiple buses in places like Africa, “but literally, every emerging market is similar,’’ he says.

This becomes a huge time-saver on top of the wages the firm pays, which averages $7 an hour in Africa for developer and designer positions, DiGiorgio says.

In terms of how 1840 finds and vets these workers, “we’re always in the market sourcing candidates,’’ he says, and they utilize various job boards and sites. The firm is also starting to build its own technology to do global sourcing.

“We’ve found that most of the recruiting platforms out there are designed specifically to help employers find employees in one country at a time and we’re sourcing the same positions in multiple countries,’’ DiGiorgio explains.

The pandemic really paved the way for IT talent firms to look to emerging markets, he notes. “You just need good, quality talent and now, [companies] don’t care where they live … that’s really been what our model has been built on.”

DiGiorgio adds that, “The interesting thing is, while we singled out fintech, our business model is fairly ubiquitous to most industries. It may depend on what skillsets [companies are] looking for.”

However, some companies have a predetermined notion of where they want to source talent. There is a “big push from U.S. clients,” for example, for workers in Latin America because of similar time zones.

Latin America has traditionally been a stronghold for IT talent, and most recently, outsourced positions in LATAM have increasingly focused on software development and innovation, according to recent research from commercial real estate and investment firm CBRE.

LATAM’s tech talent workforce has boomed in the past five years, and average wages are about 38% of those in the U.S., the firm said. Its research shows that São Paulo, Mexico City, and Santiago are the three largest Latin American tech talent markets, and San Jose, Costa Rica, is the fastest-growing.

Real estate costs are also relatively low, making Latin America an even more attractive option for tech talent employers, CBRE said.

Overall, “we still source most of our IT talent out of Africa,’’ because that is where the most economic wages can be found, DiGiorgio says.

A 2021 report by IT staffing and software outsourcing company Tunga found that Africa is one of the best places to find software developers. While noting that countries such as Mauritius and South Africa are “attractive and safe choices,” their IT talent is more expensive, the report said.

Nigeria and Egypt “have enormous populations and large tech talent pools, and high English proficiency,’’ as well as moderate salary levels, according to the report. It also cited “promising outsiders” such as Ghana, Senegal, Uganda, Rwanda, and Cameroon. Ethiopia and Tanzania, the Tunga report said, are “late-bloomers” with “a lot of unlocked potentials.”