The threat of budget cuts in IT departments remains a distinct possibility in the coming months as economic conditions deteriorate - but it isn’t the key factor keeping IT leaders awake at night.
According to numerous surveys of IT decision makers, finding and retaining tech talent trumps all other concerns by a large margin. We are still in the midst of a crippling skills shortage, one that is expected to act as a barrier to digital transformation all over the world for the rest of the decade.
That’s despite headlines announcing mass job losses at Silicon Valley tech companies. A Gartner analysis last month confirmed that insiders know - the companies responsible for the 10 largest layoffs, Amazon, Microsoft and Meta among them, employ 150,000 more people in total than they did at the start of 2020.
“It’s critical that business and IT leaders do not misinterpret this current wave of layoffs,” says Mbula Schoen, Senior Director Analyst at Gartner.
“There will likely be more swings and volatility as the market works its way through economic turbulence, ongoing pandemic adjustments and a shift in prioritization of skills. However, the tech talent crunch will continue long after current turbulence has subsided.”
The Same Problem… Virtually Everywhere
The reality, not just in pure tech companies, but in organizations that employ technology as a key business enabler, is that competition for skilled tech workers remains intense and will only grow. IDC Research estimates the global shortage of software developers alone will reach 4 million by 2025.
Failing to secure the right talent can have a crippling impact on efforts to modernize and build out new computer infrastructure and platform services, networks and cybersecurity, the digital workplace, and storage and database systems.
But it is most pronounced in the area of emerging technologies - artificial intelligence (AI), Internet of Things (IoT), metaverse, robotics and decentralized ledger (Web3) technologies. In those categories the tech talent pool is even shallower.
But Innovation Won’t Wait!
The Computer Industry Association (CompTIA) tracks job postings for tech-related roles and has identified an upward trend in hiring for new areas of technology.
That’s because businesses can’t afford to slow their pace of innovation and adoption of new technologies, given the imperative to develop compelling new products and services, achieve operational efficiencies and gain a competitive advantage over rivals.
“The workforce issue is perennial, but critically important,” CompTIA notes.
“As companies jockey against competition, they will need to up their game by hiring employees skilled in job roles in demand, such as those in data, cybersecurity and emerging trends. Software acumen, specifically development skills, will also play a larger role in the channel’s typical talent needs in 2023.”
Cloudflare’s Senior Vice President, Janet Van Huysse says the tech talent shortage is indicative of the “critical skills gap that exists in most industries today.”
“Not enough people within an organization have the skills that are necessary for business growth in the modern age," she says.
The Damage Done
Given the central role of technology to economic activity, the tech talent shortage represents a very tangible problem. The type of activities that fall into the IT category accounted for 1.7% of GDP in 2021, but also enabled a digital economy that represented a further 8.5% of GDP. The IT category is growing at 47% year on year, the highest rate of all business categories.
With domestic talent shortages and lingering issues around securing tech worker visas, American companies are looking to software outsourcing to meet their talent needs. While outsourcing has typically been associated with the desire to lower labor costs, the reality in 2023 is that tech outsourcing companies from Croatia to Costa Rica are being drawn on to supplement software teams employing emerging technologies to answer business problems.