Addressing talent shortages in Germany, Austria, and Switzerland: What can your business do?

If you hire in the DACH labor market, you may already be aware that there is a glaring shortage of skilled professionals, particularly in tech and tech-related roles.

Long term, governments are taking steps to remedy this. But in the meantime, businesses — especially SMBs and startups — need a more immediate solution.

In this article, we’ll look at how your business can overcome the significant talent shortages in the DACH market, find the right candidates to grow your business, and even save money in the process.

Are there skills shortages in the DACH market?

It’s no secret that there are notable skills shortages in Germany, Austria, and Switzerland, with many industries — particularly in the STEM sector — struggling to source qualified professionals. This can be attributed to various factors including:

• Demographic changes

• Technological advancements

• Evolving economic conditions

• Education and qualification gaps

In Germany, for example, 570,000 jobs could not be filled in 2023. According to the German Economic Institute, this is causing the country’s economy to lose out on 49 billion euros in 2024. It’s a similar story in Switzerland and Austria, with estimates of around 110,000 unfilled vacancies in the former, and around 193,000 in the latter.

Most studies suggest that these shortages are only going to grow, too, especially as the skill sets required in key tech fields rapidly evolve. In Switzerland, for instance, industry studies suggest that, by 2035, there will be a shortfall of anywhere between 430,000 and 1.2 million workers in key roles.

How are the authorities tackling these shortages?

The German, Austrian, and Swiss governments are all aware of these issues, and have implemented measures designed to address them in recent years. These have included the passing of new laws, such as Germany’s Skilled Immigration Act, as well as reviews of existing labor policies and frameworks.

In Germany, for instance, the government introduced a new skilled labor strategy in 2022. This approach seeks to incorporate older people, migrants, and unskilled workers more effectively into the German workforce, mainly through tailored education programs and incentives.

The government is also seeking ways to better utilize the skills and qualifications of voluntarily unemployed women by expanding childcare provisions and adopting more flexible, family-friendly working models.

However, while these kinds of measures are progressive — and undoubtedly a step in the right direction — they still don’t address the short- and medium-term needs of many DACH-based businesses.

This is particularly true for smaller businesses and growth startups that are looking to expand quickly, and that require people with unique, high-level skill sets.

"Our field — ASO — is still a relatively new specialization, so people with even three or four years’ experience are incredibly rare and difficult to find. And when we do find them, they are based in other countries."

Zuzanna Forell, HR manager at Berlin-based mobile agency, Phiture

Even if these shortages were relieved in the short term, there is also still the issue of the German, Swiss, and Austrian labor markets being highly competitive for businesses. With high costs of living and a scarcity of talent, many smaller businesses may be unable or unwilling to afford the best domestic talent.

One solution — to both of these problems — is to hire abroad.

How can hiring abroad help your business address the skills shortage?

Hiring abroad enables your business to access the top talent you need without being restricted by borders. It also enables you to grow more quickly; instead of waiting for the right candidates to come to the DACH market, your business can simply go to them.

By looking abroad, your company can also gain access to skilled professionals in regions with lower living costs, leading to substantial cost savings and other financial benefits. These regions include highly attractive and often-overlooked tech hubs such as:

• India

• Mexico

• Brazil

• Taiwan

• The Philippines

To see a full list of the world’s best tech labor hubs, broken down by city, check out our free Tech Talent Report.

How much can your business save by hiring abroad?

These cost savings can be significant. For instance, the average annual salaries for a software engineer in the DACH market are currently:

• Between €58,000 and $72,000 in Germany

• Between CHF 95,000 (approx. €100,000) and CHF 102,000 (approx. €108,000) in Switzerland

• Between €52,000 and $66,000 in Austria

Conversely, in India, the average is between €5,000 and €10,000. This represents an almighty reduction in labor costs.

This disparity is even more pronounced when you consider the cost of living adjustments. As an example, take Delhi's cost of living index at 23.9 (2024). When you compare this to 101.7 in Geneva, 64.3 in Vienna, and 64.7 in Berlin (all 2024), the financial benefits extend beyond salaries into overall cost efficiencies.

"If we go to the German market and advertise for a TypeScript developer that knows Nest.js and AWS Cloud, we’d maybe get three applicants — and their salaries would each be above €120,000."

Richard Gödel, co-founder of Cologne-based lead-gen startup, meetergo

To see how much exactly you could save by looking abroad, you can use our Salary Explorer tool. It leverages verified, proprietary benchmark data that is sourced from employers rather than employees, giving you accurate, reliable salary data for different roles around the globe.

Try Salary Explorer

You can also use our free Employee Cost Calculator tool to see what the full cost of hiring will be in a particular location. We calculate your additional employer costs (including local payroll taxes and benefits contributions) to generate a more realistic budgeting picture, and fully inform your decision-making.

Want to see how much your next hire will cost you?

Our free Employee Cost Calculator gives you a full breakdown of employment costs in every country.

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How do you hire someone abroad?

Many businesses assume that, to hire someone in another country, you need to set up a legal entity there. As a result, hiring abroad can seem like a HR and compliance nightmare, putting many businesses off.

However, it doesn’t have to be. Instead of setting up legal entities, you can instead partner with an employer of record (EOR) provider like Remote, enabling you to quickly, easily, and — most importantly — compliantly hire top talent all across the world.

An EOR acts as the legal employer in the country (or countries) you want to hire in. It handles all compliance and HR obligations, but you still maintain the day-to-day working relationship with your team members as you would normally.

How exactly does an EOR work?

This way of hiring has multiple benefits, such as:

Speed of hiring. Once you’ve identified the right candidate, there’s no complex or lengthy administrative process; you simply extend the offer, and the EOR does all the heavy legal lifting. Remote, for instance, can onboard your hire in just a few days.

Flexibility and scalability. When you set up your own legal entity in a country, you can only hire in that country. With an EOR, you can hire in multiple countries, allowing you to grow and/or pivot easily.

Access to local expertise. With an EOR, you get access to local tax, law, and compliance experts (at Remote, we provide this expertise in-house, and do not work with local third parties). Our experts also provide guidance, support, and valuable insights into local labor markets and hiring practices.

Cost savings. Setting up — and maintaining — your own entities can be a costly endeavor. Working with an EOR is often far more cost-effective, especially if you’re hiring (or planning to hire) in multiple countries.

Full compliance. An EOR ensures that you are always compliant with local employment and labor laws, as well as local payroll tax requirements.

Hiring abroad with Remote

If you’re unable to find candidates with the skills your business needs — or the hiring costs are simply too high — then it may be time to start looking abroad.

To learn more about how Remote can enable this quickly and seamlessly, speak to one of our friendly team members today.

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