tech has a serious talent shortage: fact or fiction?
Whether you’re a job seeker or an organizational leader, chances are you’ve heard some talk about a so-called “talent shortage” in tech. But what are its contours, exactly? Where is this shortage being felt most acutely? And what can be done to remedy it moving forward??
Let’s answer those questions from a few different angles, then turn to look at potential next steps — as well as their broader implications — for professionals and organizations alike.?
demystifying tech’s talent shortage?
You’ve heard tech has a talent shortage. But how bad is it, really?
Exact numbers vary, depending on your source, but the unemployment rate among tech workers is believed to be about 1.7 percent at the moment — or less than half that of the labor force at large.?
Which doesn’t sound so bad, but it’s not the whole story. Not even close.
First, there’s the demand side, which is where tech employers across the board are approaching a precipice. One recent survey foregrounds some of the contradictions at the heart of it:
In sum, there’s a finite pool of talent, demand for it is skyrocketing and the way forward isn’t clear.?
Second, you need to take a more granular view. Zoom into the most in-demand areas of tech expertise, for instance, and what happens? The unemployment rate just doesn’t shrink, it gets infinitesimally small. Among cybersecurity professionals, for example, the unemployment rate is now somewhere in the vicinity of 0.2 percent .?
Meanwhile, for full-stack engineers, the volume of job postings went up 312 percent in the last year alone. And with so much noise, qualified candidates for roles like these aren’t just going to be difficult to find, but nearly impossible to reach as well.?
You can see the fallout from all this playing out on a macro level, too. One example: organizations opting to forego the talent market altogether in favor of a more direct approach — a phenomenon known as “acqui-hiring.” The idea in a nutshell: If sourcing qualified tech candidates is now nearly impossible, why not simply acquire a talent-rich company for the express purpose of securing its employee base (rather than, say, controlling its products or services), instead? In fact, acqui-hiring was one of the factors behind last year’s 10 percent increase in IT and business-services deals.?
Of course, such a strategy is only really tenable for large, resource-heavy enterprises. For smaller players, it’s going to be a non-starter. How can these firms compete??
If you think the answer is to simply increase compensation levels, think again. As you’ll see, tech salaries are already higher than they’ve ever been, with outcomes that aren’t necessarily ideal for employers.?
tech salaries in focus?
Is there any kind of silver lining to be found in the supply-and-demand dynamics of the tech talent market today??
From the standpoint of tech recruiters, there sure is, and it’s actually silver: Their salaries are up an estimated 30 percent across the board.?
Naturally, though, recruiters aren’t the only ones reaping the benefits. Surely, similar salary gains are trickling down to tech workers, too, right??
They are, and yet research suggests these employees aren’t exactly feeling the love. For example, even with the average tech salary now north of six figures — $104,566, a new all-time high — almost half of tech employees feel that they’re underpaid. Perhaps that’s why tech’s turnover rate — 13.2 percent — is higher than any other sector.
Tech roles currently experiencing the highest year-over-year upticks in compensation include:?
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What’s behind such dramatic year-over-year gains??
Surging demand among employers, together with limited supply in the talent market, is the most obvious answer. But it isn’t the only one. In fact, you can see any number of different ripple effects playing out right now, in some cases driven by compensation policy decisions made by the biggest players in the field.?
Take Amazon, for example. The company recently announced it was more than doubling its maximum base salary for employees, from $160,000 to $350,000. And that, of course, is on top of signing bonuses, perks and benefits, flexible work arrangements, stock options and other incentives.?
Meanwhile, you’ll also discover that salaries today vary a lot based on where tech employers are located in the country — which is a somewhat curious finding, given the prevalence of mass remote work within the sector. Just look at the differences in average tech salaries across the five highest-paying locations from 2021 , for example:
Would you have expected that salaries in the tech sector differed so dramatically depending on an employer’s location? Yes or no, differ they do, indeed. And the picture that emerges is anything but a monolith.?
What does it entail for job seekers and organizations going forward??
the path forward: challenges and opportunities?
The lack of available tech talent threatens to derail the business plans of many organizations right now, as we have seen. Yet for job seekers of all kinds, especially those interested in building careers in the tech space, these very same dynamics point to a wealth of new opportunities.?
Let’s look at both sides of that coin in closing.?
takeaways for talent?
For anyone trying to break into the tech space, now is the time to do it. Not only are powerful forces of the labor market on your side, but the tools you need to cultivate the right skill set are increasingly at your fingertips.??
What’s more, you may not even have to take initiative on your own. Indeed, tech employers across the board are increasingly attuned to the value of upskilling and reskilling programs, both as a solution to the ongoing talent shortage and as a way to retain talent. In fact, this is top of mind for almost three out of four organizational leaders today.?
Perhaps still more importantly, early wins with reskilling and upskilling initiatives are now being reported across industries. Some banks and financial services companies , for example, have built pathways that enable employees without IT backgrounds to come out on the other side in technical roles like business analysts, software developers, quality assurance analysts, quality engineers and more.?
Obviously, that’s great news for you if you’re eager to gain a foothold in tech. Just don’t delay. Take action today and you can strike while the iron is hot.?
takeaways for tech employers?
The tech talent shortage is real. Very, very real. And at a moment when recruiting tech pros backfilling vacancies is currently a challenge for 73 percent of tech employers, finding the right path forward isn’t going to be easy. After all, tech salaries can only be raised up to a certain point — and even then, those gains in compensation might not be fully appreciated by your workforce, as we have seen.?
One thing, though, is clear: To overcome such a crippling talent shortage, tech employers will need to more effectively leverage the estimated 70 million or so U.S. workers who have acquired relevant tech skills through alternate means than a traditional four-year college degree. Above all, that’s going to require that organizations do two things:?
In terms of next steps, talent development programs should be looked at as a viable option, too, one that may be able to deliver more immediate near-term value for talent-strapped tech employers. But either way, the ball is clearly in their court, and the future of the business may be at stake.?