The $8.5 trillion Tech Talent Shortage

January 25, 2023

As of January 2022, the US job market saw a record 11.3 million job openings. The tech industry in particular is feeling the strain of a talent shortage, causing companies to reevaluate their strategies for hiring and retaining top employees. In this article, we will explore the statistics surrounding the tech talent shortage, the business challenges it presents, and methods for successfully recruiting top candidates amidst the current job market conditions.

A survey by McKinsey & Company reveals that over 44% of well-known organisations anticipate a significant talent gap in the next five years. Currently, there are only 65 potential candidates for every 100 new job openings, resulting in longer hiring times and higher costs. This shortage of tech talent is not limited to just one country, as a global issue. In the US, even if every unemployed person found a job, there would still be 5 million vacancies. In 2022, Sweden is projected to have a shortage of 70,000 tech and digital-related specialists, while Israel currently has a 15% deficit in software developers. Russia is expected to have a shortage of 6 million skilled workers by 2039, and China's shortage could be twice as large. Japan, Indonesia, and Brazil could also have shortages of up to 18 million skilled workers.

Why do we face a tech talent shortage?

Technological advancement has created opportunities for companies to replace low-to-mid-level skilled workers with robotic process automation (RPA) solutions, resulting in cost savings and increased efficiency. However, this has also led to an unprecedented demand for workers with skills that complement new technologies. At the same time, the tech education system is struggling to keep up with the pace of technological change and produce enough graduates with the required skills.

The "Great Resignation" has also contributed to the tech talent shortage. Tech workers are leaving their workplaces in large numbers, and many companies are struggling to retain and attract them. In addition to the quantitative shortage of IT talent, companies are also facing difficulty in finding the right candidates and meeting their expectations.

The aging population is another factor contributing to the global tech talent shortage. As the proportion of older people in the population increases, the working-age population share decreases. By 2030, 1 in 6 people in the world will be aged 60 years or over and by 2050, this figure will double.

The COVID-19 pandemic has also contributed to the high demand for tech talent. The shift to remote work has led to an increased need for tech specialists as many companies went digital, changed their development strategies, and reconsidered their approaches to data security.

Finally, there is a significant mismatch between the expectations of employers and tech workers. Companies are often unwilling to train entry-level employees, and senior software developers have high demands for their workplace, such as high pay, interesting projects, and flexible work arrangements. Meanwhile, companies have high expectations for their employees, such as multiple degrees, a long list of proven technical skills, and an impressive employment history.

How to overcome the tech talent shortage

Learning and Development

Investing in the development and retention of current employees is an effective way to address the growing tech talent shortage. By providing training and skill development opportunities, companies can ensure that their employees are prepared for future roles and less likely to seek career advancement elsewhere. A mentoring system can also help employees to feel valued, which can improve their productivity and loyalty.

Bring in the experts

In addition, companies can consider outsourcing some of their recruitment and hiring efforts to experts in the field. This can include working with a recruitment agency or hiring external contractors to fill urgent needs. These options can help to eliminate the risks associated with an under-resourced workforce and provide a higher standard of service without the associated management and investment required for in-house services.

Ultimately, the key to addressing the tech talent gap is to be proactive and adaptable. By investing in the development of current employees, offering flexible employment packages and seeking professional help to manage recruitment and hiring, companies can build and maintain a strong workforce and stay competitive in the ever-evolving tech industry.