Why Do SaaS Companies Struggle To Retain Top Talent?

I recently researched the churn rate by industry, and found that the technology industry has one of the worst employee retention rates.

Jolene Risch, Recruiter and Retention Consultant | Source: Courtesy Photo
Jolene Risch, Recruiter and Retention Consultant | Source: Courtesy Photo

I recently researched the churn rate by industry. (As a recruiter and employee onboarding consultant, I should know these things.) I found that the technology industry has one of the worst employee retention rates.

At first, I scratched my head.

Customarily, tech companies strive to give their employees the best benefits packages, they aren’t afraid to pay a premium for talent, and they offer some of the most flexible working options of any industry. So why are tech companies struggling to keep their people, and what can they do about it?


Changing times

Several industry changes have created serious (and exciting) challenges. First, technology positions used to be outsourced as contractors. Now companies have brought their tech talent in-house, creating new demand.

Furthermore, technology has developed at an accelerated rate, with immense growth in the number of technology and SaaS companies that exist—which means new jobs are created consistently in a talent shortage.



Since there’s a massive shortage of tech talent, competition has never been intense. These days, work from home flexibility, unlimited PTO, and beer on tap are standard expectations. Competition is stiff across industries, non-tech alike, that compete for the same SaaS talent.

Technology has become an integral element of most businesses and industries, which means now we’re at a point in history where a majority of companies need to fill technology roles. The silver lining is a positive evolution of company culture, however, the constraint of a limited talent pool will impact how industries experience growth over the next few years.

This is why retention has become a focal point. It’s no longer just about the money a company will lose with high employee turnover, but the compounding effect of lost growth opportunity that turnover will cause.


Inclusivity and talent pool adjustment

There are two ways SaaS and tech companies can resolve retention problems: inclusivity efforts and expanding the talent pool.



When pay, benefits, and workplace flexibility are the same between companies, the determinant to whether an employee stays with a company comes down to employees feeling they belong.

To be clear, belonging is not as simple as an employee having friends in the workplace. Employees feel like they belong when leadership:

  • acknowledges and appreciates their unique contributions,
  • invests in professional development,
  • encourages additional responsibility,
  • and when employees feel accepted and respected by their peers.

All employees want to feel important. They need to know their efforts and contribution matter in the larger scheme of things.

If an employee feels like they are simply a number, they will often leave for a situation where they feel they can make a difference.

Inclusivity is one of the most powerful ways to increase retention rates. It all begins with fostering a relationship with employees. An employee’s need to feel important and fulfilled is non-negotiable when it comes to building true loyalty.


Talent pool

When it comes to increasing the talent pool, tech companies need to get innovative. More than any other time in the past 20 years, education has become irrelevant to many positions—tech included.

While candidates need certain skill levels to fulfill their duties, it’s no longer as important they have a degree. Technology has become an integral part of life, and many people have taught themselves coding and technical engineering.

If companies can look more at cultural fit and values alignment, with skill assessment not getting confused with degree-holding, more tech jobs can be filled and held longer (especially when companies are willing to regularly invest in their employee’s development).

By combining these two approaches, SaaS companies can create powerful teams with immense loyalty, that stand the test of time.


Jolene Risch is a leading recruiter and retention consultant, working with and guiding value-driven business owners, companies, and corporations to recruit the RIGHT top talent (ones that fit and stay), using the Profitable C.U.L.T.U.R.E. Method™. She uses her over 20 years of experience in communication, organizational psychology, leadership, and sociology, specializing in recruiting and retaining top talent for increased performance and profitability. Her work has been featured in publications and media outlets such as Entrepreneur, Addicted2Success, YFS Magazine, Thrive Global, and more. 


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