Building a startup is as much about people as technology. The UK labour market has shifted dramatically since the pandemic. By October 2025, 27% of workers in Great Britain were hybrid, splitting their week between home and workplace, while 13% worked fully remotely. The UK has one of the highest adoption rates of hybrid working after Canada, with an average of 1.8 remote days per week. Hybrid workers are more likely to hold higher-level qualifications, have full-time jobs and be based in London and aged 30-49. For startups, this means that top engineering and product talent increasingly expect flexibility. The question is how to deliver it without sacrificing cohesion, creativity and security.
The skills shortage
The Institution of Engineering and Technology's 2025 survey paints a sobering picture: 76% of engineering employers struggled to recruit for key roles, only 61% felt their workforce was fit for the future, and 45% believed the education system was not preparing students adequately. Skills shortages span automation, cyber security, data engineering and software engineering, with 38% citing automation skills and 34% data engineering as most needed. Moreover, 50% said lack of time prevented upskilling staff, and 58% used AI in some form yet only 18% did so regularly. These numbers underscore the challenge: there simply aren't enough qualified candidates, and employers have little slack for training.
Hiring strategies for 2026
Founders should think beyond traditional recruitment channels. Apprenticeships and graduate schemes can bring in early-career talent who can be trained in specific technologies. The Skills England report on AI skills emphasises the importance of transferable competencies and notes that overly technical training programmes deter non-technical staff and women, while limited provision outside major hubs restricts access. Remote and hybrid working can help tap talent from regions such as Manchester, Birmingham or Edinburgh, where cost of living is lower and loyalty may be higher. Partnerships with universities to offer industry projects or sponsoring hackathons can also create pipelines.
At the same time, founders must be honest about trade-offs. Remote work widens the talent pool but can hinder serendipitous collaboration. The House of Lords' inquiry into hybrid working recommended establishing anchor days for teams to meet face-to-face and providing training in inclusive hybrid meeting practices. For early-stage companies where product direction changes rapidly, more time together may be essential. Flexible working policies should therefore be explicit about expectations: which meetings are mandatory in person, how time zones are managed, and how performance is measured.
Retention and culture
Once talent is on board, retaining it requires meaningful work, growth opportunities and a supportive culture. Encouraging cross-functional knowledge sharing addresses the IET survey finding that 57% of employers share knowledge with retiring staff but far fewer do so systematically. Mentoring programmes, brown-bag sessions and documentation help institutionalise knowledge. Flexible learning budgets allow engineers to attend conferences or take online courses; the cost can be justified against the difficulty of hiring replacements.
Compensation remains important. Equity stakes are a powerful tool for early-stage companies, but founders should couple them with clear communication about vesting and exit scenarios. Remote-first employees may face additional costs for home offices; offering stipends for equipment and co-working spaces shows commitment to their productivity and well-being. With hybrid workers often concentrated in London, startups outside the capital can compete on lifestyle and housing affordability while matching London salary benchmarks for senior roles.
Conclusion
In 2026 the war for talent is not just about salaries; it is about flexibility, purpose and continuous learning. Founders who invest in inclusive recruitment, support hybrid working with the right policies and tools, and create a culture of growth will stand a better chance of building the technical teams required to deliver production-grade products. Those who neglect these elements risk being left behind in a labour market that now values autonomy and development as much as pay.