In this quickly evolving tech age, the demand for top-tier digital talent has been at the forefront of the tech talent race, especially in the past few years. However, the problem has now escalated into a general talent shortage, leading to more turnover, higher salary expectations from employees, and more frequent outsourcing across all types of jobs.
A 2022 report by KPMG that surveyed 2,200 technology executives and industry experts deduced that more talent is required to ease the adoption of digital technologies.
In a fall 2021 survey by Fortune and Deloitte, 71% of CEOs anticipated that skills and labor shortages would be 2022’s most significant business disrupter. In the present, that nightmare has become real.
So, it wouldn’t be farfetched to think that the tech talent shortage is going to grow exponentially if no practical steps are taken by tech businesses, as according to a new report from Korn Ferry, the global tech talent shortage is expected to reach 85 million unfilled jobs by 2030.
Many organizations are struggling to recruit the right kind of tech talent, more so with the hiring processes that have become tougher.
- 1 What is a talent shortage?
- 2 In a world full of talent, why is there a dearth of it in tech?
- 3 How can tech talent shortage affect businesses?
- 4 How can tech companies respond in a more effective manner?
- 5 How can remote hiring help address the tech talent shortage?
- 6 How can you hire remote tech talent easily and cost-effectively?
- 7 Conclusion
What is a talent shortage?
Simply put, a talent shortage happens when the demand for specialized individuals in their fields far exceeds the availability of those resources. Although it may seem like a problem that can easily be addressed, these shortages can have far-reaching impacts on industries and even on the global economy.
Because of a shortage of employees, the overall productivity of an organization is bound to decrease, and in some cases, even force businesses to consider the unfortunate option of shutting down. Employees are also more likely to leave when offered higher salaries and better benefits from competitors seeking skilled talent.
Source: World Economic Forum
In a world full of talent, why is there a dearth of it in tech?
Open your favorite social media app, scroll down for a couple of minutes, and the greatest takeaway everyone will unanimously have is that the world is brimming with smart, intelligent, and creative people. Why, then, are we experiencing such a shortage in an industry that should be booming with talent?
There are a few reasons for that:
- Aging population: Baby Boomers – the generation born between 1946 and 1964 – make up approximately one-third of the workforce. With most retiring or about to retire in the coming decade, there will undoubtedly be a deficit in the skilled labor force. Additionally, according to an assessment by McKinsey and Co., millennials are unprepared for the workforce, adding to the problem of finding skilled people.
- Technological advancement: Rapid developments in technology have contributed to replacing low-to mid-level skilled personnel with robotic process automation (RPA) solutions, which makes it possible for companies to cut costs and achieve quicker and more efficient outcomes. But this, in turn, caused an unexpected demand for employees who are well-versed in new technologies. Because technology is taking giant leaps every day, the tech education system simply cannot keep up and graduate enough students with the required skills.
- The Great Reshuffle: One of the aftereffects of the Covid pandemic was employees voluntarily leaving their jobs due to a number of reasons such as poor wages, the rising cost of living, limited opportunities for growth, lack of benefits, and hostile work environments. In 2021, 48 million people left their job, and companies were unable to convince them to stay.
- High demand for tech talent post-Covid: When the world switched over to remote work during the pandemic, many companies went digital and reworked their whole development strategies, which led to high demand for tech specialists.
- Lack of diversity: The tech industry has been heavily criticized for its lack of diversity. We have seen that some of the best tech talents belong to underrepresented groups. In these groups are the people with the expertise that most companies are looking for, yet they are unaware of where to find them.
- Mismatched expectations between employees and employers: Most companies aren’t keen on hiring entry-level employees, while senior developers have high expectations, such as flexibility, greater pay, and stimulating projects; demands that companies are often unable to meet. Organizations too have high demands, in which they expect employees to have multiple degrees, a whole list of skills, and years of working experience.
How can tech talent shortage affect businesses?
Businesses can take a serious hit when it comes to the lack of availability or shortage of suitable tech talent.
- Decreased growth and development: For any CIO, the greatest challenge is that without capable talent, it is most difficult to grow and compete with other businesses.
- Unable to attain their true digital transformation: This is perhaps the greatest barrier, as talent shortage becomes a hindrance in adopting emerging technologies such as Robotic Process Automation, the Internet of Things, Artificial Intelligence, Virtual and Augmented Reality, and blockchain.
- Unattained revenues: It is estimated that by 2030, tech talent shortage could contribute to $8.5 trillion in unrealized annual revenues, surely a cause for concern for CFOs.
- Greater hiring costs: 69% of companies in the US struggled to fill up roles in 2020. In the UK, €7.6 billion are spent annually on temporary staffing, recruitment fees, and training, a whopping 39% jump since 2017.
How can tech companies respond in a more effective manner?
Where does the limited talent pool go when the demand for them is so high? To those offering the most perks, of course. Over the past year, salaries for cybersecurity professionals have increased by 16.3 percent. Data scientists and DevOps engineers have had the most significant salary increases, at 12.8% and 12.2%, respectively.
As leaders, we must possess the ability to think out of the box by delivering benefits that cost the organization little but can improve employee experience tremendously.
Brilliantly engaging services that won’t break the bank include flexi-hours, ESG initiatives, and increased input on the firm’s direction. We must also remember that flexibility must take management style into account as well. A perceived lack of trust hinders employees from functioning autonomously, stifles creativity, and kills employee engagement.
Here are a few steps we can take to address the talent shortage:
- Upskilling: Training and upskilling your developers by running educational programs and training them in technologies best suited for your business is a sure-shot way to ensure your company doesn’t experience the tech talent gap. Training entry-level employees can also be more cost-effective than hiring senior developers.
- Flexible work environment: Take the learnings from the Covid pandemic and put them into practice: people like to feel like they’re the boss of their own timings. Help them attain that sense by providing them with flexible work arrangements, such as part-time or contract work, to attract more candidates.
- Broadening the talent search: Companies can expand their talent search by looking for candidates from non-traditional backgrounds, such as people with liberal arts degrees or from underrepresented groups. The results will leave you pleasantly surprised.
- Retention: Discover what your employees want by conducting surveys and creating environments aligned with the findings.
- Partnerships with educational institutions: Companies can form partnerships to help train the next generation of tech workers and identify potential job candidates.
- Employee Referral Program: Companies can motivate current employees to refer their friends and family to work at the company, increasing the pool of potential candidates.
- Hire smarter: Partnering with a tech talent vendor can not only speed up the process but make it nearly half as cheap as well.
How can remote hiring help address the tech talent shortage?
Businesses that are thinking ahead and are keeping the preferences of their employees in mind are the ones that are sure to be ahead of their competition. We now know that hybrid and remote work is what most employees are looking for, which makes remote hiring a sure-shot way of ensuring that one’s business doesn’t have to suffer the fate of a talent shortage.
Hiring remote workers and outsourcing IT and administrative functions are becoming more practical and cost-effective options as technology becomes more ingrained in business processes.
Especially post-pandemic, workforces in professional services, information technology, marketing, and sales are now quite capable of functioning effectively, even if geographically dispersed.
Employers now have more options than ever before for meeting their talent needs and addressing skill gaps, thanks to the proliferation of online technologies, which have made it possible to hire remote workers from around the world.
Since this choice allows for international hiring, employers now have access to new markets and domain-specific expertise from anywhere in the world. Remote hiring, a burgeoning trend, has made it possible for companies to have a physical presence in the countries they want to conduct their business. Organizations stand to gain a lot by having an insider on their team who is fluent in the local language and familiar with the market.
Cloud and mobile computing technologies provide remote workforce access to be able to work from anywhere in the world at any time. Businesses can also manage their work better and facilitate the remote workforce with the help of video conferencing, presence, mobile accessibility, business VoIP telephony, cloud productivity software and so much more.
Business VoIP solutions lower the cost of international calls and provide valuable tools for companies, such as call queuing, presence, and mobile app access. Businesses can now use the services of a remote IT technician located anywhere in the world to provide after-hours assistance. In addition, hiring a sales representative in China allows firms to attend trade shows without sending their sales staff or incurring costs.
Although remote hiring isn’t the ultimate solution to talent shortages, it does give companies more flexibility in filling jobs that don’t require an on-site presence.
How can you hire remote tech talent easily and cost-effectively?
Did you know that it now takes several months to fill an IT position because of the severe dearth of qualified candidates? However, due to the rising trend of remote work, 64% of employers are more open to considering candidates who are not based in their office.
However, 21% were concerned that early-stage hiring would see an increase in drop-out rates. Furthermore, 62% agreed that businesses would have to make more significant efforts to differentiate themselves.
Recruiters now have access to a great pool of talent anywhere in the world. Managers can pick and choose those candidates based on who will work best with their organization and geographical limitations have become a thing of the past now.
Even though remote work has very much established itself as a present scenario that is here to stay and evolve, many organizations still aren’t equipped enough to make sound decisions on remote hiring, mainly due to a lack of experience and expertise. Finding, hiring, and retaining qualified software developers is a mammoth task in itself, and doing so with remote talent, is even more significant.
Online hiring platforms such as Remotebase, Turing, and Toptal can help bridge the gap between companies and software engineers. These organizations serve as marketplaces for the best software developers who are highly qualified and talented. Remotebase also offers a two-week risk-free trial and no upfront charges. Not only do you get your hands on the best talent out there, but you save a plethora of time and resources, so it’s a win-win.
Geared with the knowledge of what’s causing worldwide labor shortage, you can take multiple steps to reduce employee turnover and improve your company’s appeal as an employer of choice.
Especially for a tech company to stay relevant, it is imperative that they make more efforts to retain their current talent, along with exploring and hiring global talent, providing career advancement opportunities, demonstrating a commitment to diversity and inclusion, and offering training to both new and current employees.
To meet their demands for technical talent, businesses should not rule out outsourcing development teams, adopting the out-staffing model, or turning to freelancers.
We keep hearing how tech is the future. Look around you and you’ll see that the future is here, and it’s up for grabs for those who know how to stay abreast with the latest trends.
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