And what about medium-sized companies? / Hebrew

And what about medium-sized companies? / Hebrew

IT professionals like to discuss working in a large company and a small studio. It is easy to find dozens of such comparisons from different angles, for example here. The problem is that in such battles the authors forget about the huge layer of medium-sized companies. And from the point of view of work organization, they have their pros and cons, and their position on the market. But the most important thing is that a small company is a rather short-lived thing. She has two options – either to grow up in the same “forgotten” middle school, or to leave the market. We will talk about this in this article. I will try to describe the advantages of working for a medium-sized company.

Let’s agree on the terminology

Operating with the concepts of “large”, “medium” and “small” company, I would not like to base myself on official legal definitions. In IT, in my opinion, there are other criteria, since the company’s profit per specialist is higher, because in essence the “processor time” of their brains is sold. Therefore, a team of 20 people can be a fully mature organization.

I would suggest dividing like this:

  • up to 20 people – a small company;

  • from 20 to 200 – average;

  • more than 200 people – big.

In general, Kontur.Focus counted about 200,000 IT companies in Russia as of May 2023 (however, it is not specified by what criteria the companies were classified as IT industry). It is necessary to understand that their composition is updated quite quickly. Over the three years from 2020 to 2023, almost 90,000 companies closed. At the same time, there are much fewer accredited by the Ministry of Digital Affairs – on July 25 of this year, only 17,000 organizations were notified of the extension of accreditation.

Unfortunately, statistics on the size of accredited companies are not available. Statistics on the distribution of IT companies in terms of SPARK (these are companies that indicated their main activity in the field of information technology or related to software development) according to the results of 2022 are publicly available. In total, the service counted 73,000 active companies. Of them by specific weight:

  • companies with more than 251 employees – 6%;

  • with a staff of 101 to 250 people inclusive – 7%;

  • with a staff of 16 to 100 people inclusive – 58%;

  • companies up to 15 persons inclusive – 28%.

Thus, the vast majority of industry participants (by specific weight) can be attributed to medium-sized companies in the terms of this article. Here we will talk about them.

An important point – here we will talk about studios that are engaged in development and integration, and not about product companies that scale due to the sale of one of their products (for example, Saas). In design or outsourcing companies, the number of sales, clients and ultimately revenue correlates well with the number of employees, so it is easier to generalize and draw conclusions. The more people involved, the higher the revenue (differences in the details are in the cost of these developments). And the grocery business works a little differently, especially when it comes to cloud solutions. Here, the same level of sales can be achieved both by a company of three people and by a large software manufacturer.

Conventional portrait of a medium-sized company

Medium-sized companies, as a rule, grow from small ones, when they gradually expand the range of directions.

Let’s say a small company led one direction, but later found a niche and offered the most loyal customer a second service. Having successfully sold it, she increases the staff and expands the office. When the second direction appears on the stream, the third appears in a similar way, and so on. As a result, the average company deals not with two, but with three to five directions, serving several paying customers.

As soon as the number of directions increases, there is a need for dedicated HR, secretarial and other administrative staff. In our case, at first, the person who came dealt with the documents (her task was to send, receive, scan and distribute the documents, call customers to find out when they will be sent). These were routine tasks that were easy to delegate, so we started with them.

Then HR was hired full time. For a long time, we believed that it was easier to conduct interviews in order to be able to influence the quality of candidates. But when the flow of vacancies grew, there was nowhere to go, especially when it became clear that not only technical skills are needed, but also human qualities, by which the candidate should fit into the existing team.

Later, the document specialist moved to full-time.

The development of processes begins with the expansion of the staff in companies. Without them, it is simply impossible to scale – chaos begins. And the appearance and automation of business processes within the company usually correlates with the growth of the level of customers. The better the processes are configured, the higher level customers are ready to consider the company as a counterparty. It is easier for them to agree.

It is clear that the degree of maturity of medium-sized companies varies greatly. It is important that, unlike small businesses, they are already thinking about impersonal procedures, but the level of bureaucracy of large companies is still far away.

Peculiarities of medium-sized companies as an employer

I often come across a comparison of approaches to work in small and large companies. But the situation in medium-sized companies is not at all an “intermediate” state between two extremes. It has its own peculiarities, which I would like to dwell on.

Many of the listed items are difficult for me to attribute unequivocally to pros or cons. It all depends on the point of view. However, they clearly distinguish medium-sized businesses against both small and large ones.

Range of tasks

Medium-sized companies are no longer focused on just one task like small studios. They can perform complex projects for customers – in addition to the main product, they can implement some related tools. For example, together to make not only a CRM, but also a website and a mobile application for managers to work with this CRM.

However, it should be understood that it is still far from dozens of directions, as with a large integrator. And the sphere of competence of specialists, accordingly, is smaller. Globally embedding a piece into a large IT infrastructure of a large customer, thinking about data buses, load, security and versatility, is most likely not possible for an average company. After all, at the same time, you will have to prepare a bunch of documents (redundant in the sense of small and medium-sized businesses) – passport of the object, risk assessments, specification of components, operational documentation, etc.

Money and stability

The hourly rate is higher than that of small studios, but lower than that of large companies. This factor actually stems from the fact that, unlike a small studio, a medium-sized company already has certain business processes in place, accordingly, having a certain maturity, it can afford to work with clients of a different level.

From the point of view of an outside observer, a medium-sized company is a more reliable counterparty than a small studio. It employs more people, the turnover, accordingly, is also higher, and the inflow of money is more stable. A company cannot “disappear” or become unresponsive. She will not stop working on the project because of the care of a key employee.

However, the possibilities here are not limitless. An average average company (pardon the pun) is far from a big business. We often hear from customers that the big ones only work with the big ones. This is due to the fact that before signing the contract, it is necessary to pass all rounds of checks by security services, dozens of approvals, etc. All this is time, and not every medium-sized company will have the resources to wait so long for a valuable client. Sometimes mediums manage to start working with large ones, but this is the exception rather than the rule.

Flexibility and bureaucracy

Another factor follows from the presence of basic processes – less flexibility against the background of small companies. Agreement procedures take longer here, there are certain rules that do not change for the client. Although at the same time the desire to adapt to all the wishes of the customer is less, this approach is more stable.

There is more bureaucracy than in a small company, but still much less than in a big business.

How it works in an average company

Unlike small studios, medium-sized companies already have a more or less stable staff. And work is generally more comfortable than in small studios.

  • Responsibilities are already somehow divided between employees (all the more so as there are basic processes). Here there are fewer opportunities for experiments, since the areas of influence of specialists are still limited. At the same time, there are fewer conflicts of interest.

  • The flow of tasks for each employee is completely clear and predictable, as is the salary. The payment of money depends on the receipt of payment from a specific client, even if he provides a significant share of the company’s turnover.

  • An average company has the resources not only to pay salaries on time, but also to increase them periodically. It is really possible to build a career and increase income here.

  • Also, a medium-sized business has the resources to hire new people to complement the team (testers, devops, etc.). That is, all these tasks are not assigned to existing employees, but are delegated to specialized specialists.

At the same time, the company has not yet had time to form an attitude towards employees as a resource, as happens in large businesses, where even key specialists are separated quite easily. There are other nuances against the background of a large company:

  • The activity of each specialist does not have time to become overgrown with bureaucracy.

  • An individual attitude is preserved. Perhaps the atmosphere does not resemble a startup or a student dormitory, but it is still easy to breathe.

Most often, a medium-sized company cannot offer the same amount of additional bonuses as a large business – health insurance, fitness, foreign language courses, etc. Instead, he can agree to individual conditions (both in terms of work and compensation). And the opportunities for growth without a formed layer of managers are wider. For example, being a good salesman, there are chances to lead a new direction. Of course, this is not the case in every company, but in the conditions of business expansion, most people need proven people.

What the choice actually looks like

Above, I talked a lot about the peculiarities of medium-sized companies against the background of small and large ones. But when choosing where to go to work, you need to understand that small, medium and large companies are not entities carved in granite. Medium and large businesses can exist for a long time, but a small business has two options – it either becomes medium or leaves the market. Apparently, this is a feature of the Russian IT market. There are practically no examples of how a small company, like a small cafe somewhere in old Europe, works for years without changing its segment and ambitions.

It is clear that some companies grow faster, others – more slowly. Nowhere without it. But here the IT market itself is constantly changing, so a small studio has to spin and adapt. Otherwise, she simply cannot stand the competition with her peers.

If a small company behaves actively enough, new tasks and opportunities appear constantly. Sometimes there are not enough hands to process them. But the laws of survival work here: either you or your competitor will take the task. Whether it is worth hiring a developer for the sake of a one-time task (or whether there will be other tasks for him later), each business owner decides for himself, taking into account other conditions and restrictions. These are certain risks. But doing nothing in this situation is also a risk, because a competitor may go to expand the staff, thereby luring the main customers.

We developed in approximately this way – we started with a project implemented by a couple of programmers. Then the number of projects increased, new developers began to be hired. Since they need to be provided with projects, they began to sell more actively, and then learned to implement related tasks that are solved by testers, technical writers and devops. They began to recruit them, and now also project managers. So we ourselves did not notice how we moved to another level.

Instead of output

In my opinion, the choice between the two extremes – small and large business – seems far-fetched. On the one hand, the market has a huge pool of medium-sized companies of varying degrees of maturity, where you can find the culture you need. On the other hand, I would generally consider small companies as a temporary phenomenon.

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