Skills Shortage Forces US Retailers to Hunt For IT Services Providers

As the universal shortage in skilled technology workers continues to be a challenge, retailers in the US have found themselves forced to source IT services from external providers, according to IHL Group, a global research and advisory firm.

“The rapid retail transformation being forced by Amazon and Walmart, combined with scarcely available IT talent is forcing retailers to increasingly look to outside partners for IT services,” said Greg Buzek, President of IHL Group. “This is specifically true in the areas of digital transformation, strategic IT consulting, and general IT outsourcing.”

IHL expects retailers to spend over US$183 billion on IT solutions in 2018, also forecasting that the retail IT services market will grow US$31.4 billion to US$117 billion annually by 2021.

The services that are gaining the most attention include application development, systems integration, infrastructure-as-a-service (IaaS), and software-as-a-service (SaaS).

The research group predicts that the fastest growing areas over next five years will be digital transformation (+224%), strategic IT consulting (+184%), and IT outsourcing (108%). Store-level IT investment is also expected to rise 5.8% this year over 2017 levels.

Retailers are reportedly spending more on IT services because they are expecting a surge in retail sales in the months to come.

Considering another report from IHL, retail grew over US$220 billion in the US and Canada in 2017, with retailers projecting even stronger growth in 2018, including a 4.8% growth in sales at stores.