Clear and Present Danger: IT Talent Shortage is Growing More Severe

Ask any IT recruiter about the state of their industry and they’ll tell you the same thing: “along with increasing demand for services, talent is the number one …

talent shortage

Ask any IT recruiter about the state of their industry and they’ll tell you the same thing: “along with increasing demand for services, talent is the number one factor for business success.” But, like gasoline in an engine, if the talent reserve dries up, the machine stops in its tracks.

The fear of an IT talent shortage is nothing new, but recent data shows that the situation in the Americas could be getting worse, so companies will need to develop new recruitment techniques and retention strategies in order to thrive and survive.

Concerning Results

According to a new information technology workplace trends guide from global HR firm Randstad, the inadequate supply of IT talent has this year been considered the second-biggest threat to U.S. companies’ ability to meet targets, second only to increased competitive pressures. Not just that, but employee turnover rates are on the up, with 41% of surveyed IT companies reporting an increased number of abandonments in the last year.

Part of the reason for this is demand: IT professionals know about the talent shortage and know they are in short supply, and the resulting confidence empowers them with the freedom to explore new employment opportunities. In fact, the study finds that nearly two in five IT workers will seek new employment this year. This explains why just decision-makers are more worried about turnover than they were a year ago, naming “talent being recruited by competitors” as the top concern; 70% reported that their employees were tempted to leave by more desirable employment offers.

Right Jobs, Wrong People

In specialized areas of IT, certain roles just don’t have enough suitable people for the task. Take user experience (UX) as an example. Today’s consumer demands a better UX from apps and software due to expectations of seamless functionality and user-friendliness, arguably arising from the dawn of the iPhone. Companies have admitted that UX was not prioritized on previous systems, and are predicted to re-write 50% of them in the next five years. The problem is that talent for this niche area of the industry has to possess the right mix of technical, psychological, and artistic skills in order to be anywhere near good enough.

Ironically, cybersecurity is also at risk. A recent report from Intel Security and the Center for Strategic and International Studies revealed that around 209,000 cybersecurity jobs went unfilled in the U.S. last year, with one in three respondents saying the shortage makes them prime hacking targets. Even worse, one in four said the lack of sufficient talent had led to reputational damage and the loss of proprietary data.

Furthermore, IT recruiters have become highly specialized in their search for employees. For many IT decision-makers, finding experienced, qualified talent that fits culturally is like finding a needle in a haystack. Of those surveyed in Randstad’s report, 89% said they struggled to find people whose skills matched the job requirements, with relevant on-the-job experience being the number one skill that people are lacking. Meanwhile, 83% said they struggled to find people with a good cultural fit.

Nearshore Comparison

Nearshore tech companies are experiencing a similar trend. According to the Nearshore Americas State of the Nearshore 2016 study, talent shortage is a major hindrance to growth in many markets. Nearshore insiders are concerned about rising costs where the demand for IT talent is outstripping available workforce, which in some markets is leading to rapid wage gains in the ITO sector. Furthermore, 45% of survey respondents said that talent shortage is preventing software development firms in Latin America from growing into major global companies.

Uruguay is of particular concern. The Uruguayan ICT sector only employs between 12,000 and 14,000 people, figures which are crippling the country’s IT service exports. According to a report by the country’s IT chamber, IT exports to the United States fell 42% in 2014. Today the U.S. accounts for just 23.1% of the country’s IT exports.

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New Recruitment Strategies

So what are companies doing to improve their recruitment efforts on the quest to find and retain valuable, qualified talent? According to a survey by cloud security vendor SkyHigh Networks, many IT executives believe that hiring collegiate majors and providing in-house training could help overcome the skill shortage, while others think that it would take years for training programs to ease the crisis.

Randstad found that most IT firms consider staffing and recruitment firms to be the most effective way to source the right talent. In addition to working with a staffing partner, the increasing availability and capabilities of digital tools for talent management also give companies an opportunity to improve recruiting, screening and other aspects of the employment life cycle.

The study advises companies to take an aggressive hiring strategy in order to avoid losing market-savvy professionals to competitors. Don’t take shortcuts, but don’t drag out the process either, as candidates will lose interest. Reflecting on past recruitment successes and failures will also help to avoid repeating mistakes, while clearly stating the job requirements before taking someone on will reduce resentment and disappointment on both sides.

If the nearshore IT sector is to maintain the same thunderous pace, companies need to continue embracing new employment strategies and reviewing entry requirements. If the brain drain trend continues, it may be time to fit more roles around the available candidates, instead of obsessing over the perfect fit. But at what point does service quality suffer as a result? This balancing act will continue to define the industry until companies make quantifiable steps toward changing it.

What is your opinion of the talent shortage? How does your company find and retain talent? Which particular roles are you having trouble filling? Let us know in the comments below.

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