If you’re tired of hearing about the tech talent shortage: buckle up. Tech layoffs may be making headlines, but the reality on the ground looks different for tech leaders. Tech talent continues to be in high demand, and short supply. According to Gartner, this will continue until at least 2026 based on forecast IT spend.
The threat of a potential recession has put significant pressure on CIOs, CDOs, CTOs and other technology leaders, who feel crunched to deliver returns on technology and data investments, streamline costs, and modernize business systems. Organizations that are ahead of the curve on digital transformation are more flexible and resilient, meaning they are better positioned to come out of an economic slowdown stronger.
Every industry today is a tech-driven industry, and without the right talent, it’s impossible to keep up. This widening gap between demand for tech talent and supply of tech talent is costing employers significantly as they compete for a small pool of candidates.
So what’s behind the persistent tech talent shortage? Three things that are within a company’s control:
1. Outdated recruitment strategies block the candidate pipeline.
Many companies try to solve a modern problem with outdated tactics: asking employees for referrals and relying on job postings, many of which include unnecessary requirements like college degrees or years of experience for what are actually entry-level positions. This approach no longer works.
According to General Assembly’s 2023 State of Tech Talent report, 91% of HR leaders are concerned that recruitment and hiring methods will not be enough to fill their open software engineering, data analytics, data science and UX design positions in today’s labor market. On average, they report that hiring for these roles can take seven weeks and cost just under $30,000 per role.
Relying primarily on referrals reinforces homogeneity in your workforce. Relying only on job postings to source applications means passive candidates who aren’t actively applying to new roles are overlooked. Degree and experience qualifications for junior roles further limit the pool of prospects and trample your DEI initiatives.
We found that almost half (45%) of companies still prioritize college degrees as a top factor for determining candidates’ skills, despite the fact that multiple studies have found they aren’t indicative of future performance. Hiring managers consider this qualification over others that could be more relevant, including past work experience, samples of past work, and other education or certifications.
While many companies have made large and bold commitments to diversity over the past three years, long standing hiring practices that prioritize talent with traditional backgrounds have undermined these initiatives. According to our research, only 27% of applicants for tech roles come from diverse backgrounds. A better approach to recruiting junior tech talent can save companies money and future-proof digital transformation efforts, while ensuring diversity goals are met.
2. Tech roles have high rates of turnover.
Because tech professionals are in such high demand, they can easily secure a new role when they become unhappy. This can quickly become expensive for employers, with one report finding that turnover can end up costing up to 300% of an employee’s salary.
An alternative approach to hiring can help reduce turnover and build a loyal, engaged workforce. For example, General Assembly’s Recruit-Train-Deploy solution helps companies hire non-traditional talent in contract roles. This ensures a steady pipeline of qualified junior talent with little risk for employers. Ultimately, after full-time employment offers are extended to these candidates, they have a deeper sense of loyalty to a company that is willing to train and develop them, leading to lower turnover rates in the long term.
Prioritizing talent development is also key to retaining tech talent at more senior levels. Software engineers, for example, are highly motivated by continuous learning opportunities. According to a study by Hired, 69% say it’s what drew them to the career. Technology is always changing, and developers need to constantly be learning to remain effective and competitive. Upskilling initiatives that teach them new skills can give them the chance to solve exciting new problems. Similarly, internal mobility programs that provide exposure to new functional areas and a clear path to advancement can boost employee satisfaction and retention rates.
3. Inadequate training and development makes employees’ skills obsolete.
Hiring managers often structure job postings to focus on specific skills they require. Unfortunately, with tech roles, there simply aren’t enough candidates that have the most in-demand skills. With this approach, companies overlook a possible resource they already have access to: existing employees.
Existing employees who have high potential can be upskilled or reskilled to fill open tech roles. For example, a business analyst could become a data scientist, or a graphic designer could learn UX. Developers working on older projects could learn more modern programming languages so they can support emerging initiatives as legacy platforms are phased out. This approach means your workforce is always evolving with your priorities, making the possibility of widespread layoffs less likely.
Need to backfill entry level roles after your employees move up? Instead of competing with other employers for the same pool of college graduates, consider programs like Recruit-Train-Deploy, which can bring in fresh, high potential talent to learn on the job.
Investing in training and development to bring your workforce into the future might sound labor-intensive, but it will pay dividends and bring down your overall cost of talent in the long run.
If you are a technology leader grappling with the ongoing talent shortage, you don’t need to stay stuck in the same cycle. If the above challenges sound familiar, it’s time to take action:
- Prioritize workforce development: Invest in training and development programs that upskill your workforce and prepare them for roles of the future.
- Expand candidate pools: Consider candidates from non-traditional backgrounds, including those from diverse communities and non-technical backgrounds, by implementing skills-based hiring and modernizing your recruitment tactics.
- Partner with training providers: Bring on trusted training providers, like General Assembly, to access a diverse pool of candidates with relevant, in-demand skills and build a consistent pipeline of junior tech talent.
Need help addressing your talent shortage? Contact us today for actionable solutions.