There is a tech talent shortage because, as technology rapidly evolves, tech industry executives are struggling (link resides outside ibm.com) to fill roles with high skill demands.1 The training, reskilling and upskilling of employees and prospects is not keeping pace with demand.
And be sure, tech talent is still in high demand, despite recent high profile tech layoffs2 (link resides outside ibm.com). In the next ten years, tech jobs are projected to grow at twice the rate of the overall workforce in America, according to the US Bureau of Labor Statistics and Lightcast3 (link resides outside ibm.com). From banking to healthcare, telecommunications to transportation, companies across a range of industries are undergoing digital transformations that require highly skilled tech workers.
How did we get here? In the past decade, the tech industry has seen ups and downs in hiring. Tech leaders have been trying to correct for overhiring during the Covid-19 pandemic, while at the same time continuing to increase efficiencies and reduce costs with automation and AI.
The uptake of new technologies like generative AI is shifting the types of roles and skill requirements companies are hiring. Entry-level roles that used to existed have become automated, changing what career paths in tech look like to young graduates.4 Educators are racing to (link resides outside ibm.com) properly prepare students for the new workplace and help them become familiar with artificial intelligence (AI) tools.5
At the same time, many tech employees quit (link resides outside ibm.com) or changed jobs during and after the pandemic.6 Tech workers are also valuing more flexibility in their work setup, making them more picky about accepting job offers. As a result, there are massive talent gaps and skills shortages in the job market.
A deficit in skilled people impacts a tech company’s ability to pursue new projects and innovation-focused initiatives that connect software, hardware, network, data and cloud. But unfortunately, simply ‘training faster’ isn’t a complete answer.
Because technology is advancing so rapidly, the half-life of certain tech skills is shrinking by the day. The number of new jobs created around AI knowledge, especially related to generative AI, has boomed. This includes software engineers, data scientists and developers who can build and use new AI models and tools. Technical skills in disciplines like artificial intelligence (AI), machine learning (ML), automation, cybersecurity, cloud computing and systems architecture are the most in-demand. But very niche technical skills expire or become outdated in around 2.5 years, so they need to be refreshed or updated frequently.
It’s not just large technology companies that are in search of tech talent. Other industries like legal, retail, human resources and education are also looking for skilled people with advanced knowledge of AI, cybersecurity and data. The average employee is increasingly expected to have a basic understanding of how these various technologies function and interact with their jobs or customers. Executive respondents from a 2023 study conducted by the IBM Institute for Business Values estimate that over the next three years, 40% of their workforce needs to reskill. This is due to AI and automation being integrate into operations.
Because technology is evolving so fast, companies need to continuously redefine the roles and skills they need. Companies can use a combination of different strategies in order to attract and retain tech talent to fill those roles.
There are several promising solutions to the tech talent shortage, from hiring process strategies to investments in employee education and upskilling, to creating a healthy work environment that rewards growth and keeps employees motivated.
The best solutions to the talent shortage revolve around developing people-centric approaches to operations. That means redesigning jobs in a way that amplifies the strengths of people who can work with tech, and making employees feel valued.
Here are some approaches that companies can take to bridge their skills gaps and address the tech talent shortage:
Companies must think big picture when finding, nurturing and expanding their global talent pool. Including a diverse range of people from different backgrounds in hiring practices can lead to higher levels (link resides outside ibm.com) of employee engagement and retention.7 And instead of searching for people that precisely match a narrowly defined set of hard skill requirements, companies can consider investing in younger candidates who are reliable, open-minded and willing to learn.
The proper education programs, whether it’s a degree or a certification course, can prepare engineers, software developers and computer scientists for the current demands of the tech market. Bachelor’s degrees are a good way to get up to speed on the foundational skills of a programming or data management job, but people might not always need them to be successful at a tech job. People with the right mix of experiences, certifications, badges, training programs and other credentials (link resides outside ibm.com) can perform certain roles as well as those from a more traditional educational background.
Companies should evaluate the types of tech employees it needs on an ongoing basis. Short-term solutions might include project-based outsourcing. More long-term fixes include creating programs such as internships and apprenticeships, attracting full-time early-career employees and building a talent ecosystem with specialized freelancers and long-term contractors. Companies can also partner with local, community-based organizations or nonprofits to use their expertise and access to specialized talent pipelines.
The current unemployment rate for tech jobs is below the unemployment rate for the general workforce. Reports say (link resides outside ibm.com) that the demand for tech employees will continue to grow in the next decade. According to Deloitte (link resides outside ibm.com), demand for tech jobs in the US will grow from 6 million in 2023 to 7.1 million in 2034.8
To hire the right employees for current and future goals, companies need to have effective workforce planning, which leads to higher productivity and lower labor costs. Part of the planning includes mapping out short-term project needs as well as long-term expansion plans in order to forecast skill gaps and staffing needs. Based on timelines and workload, they can evaluate whether recruiting or upskilling employees is the better approach.
With new IT hires, companies must plan ahead to invest in continuing education opportunities that will allow them to develop and update their skills, keeping them valuable to the company in the future.
In the hiring process, recruiters can use AI to help them expedite the timeline for finding eligible skilled workers. This is achieved by identifying high-priority skill gaps and key vacancies, analyzing and prescreening qualified candidates, and tracking applicants that go through the system. Running analytics on past recruitment data can be used to improve the quality and diversity of the candidate pool.
Outside of talent acquisition, AI-powered solutions that can also automate and streamline HR tasks, help with new employee onboarding, and free up HR professionals to focus on more strategic initiatives.
Generative AI is having significant impacts on the American workforce, but rather to augment and support skilled people who are able to work creatively and responsibly with the technology. These skilled humans remain central to every organization.
Due to competition, tech workers tend to switch jobs to increase their earning potential. Retaining qualified employees can be as important as recruitment when filling the talent gap. Inadequate staffing, chaos in management and tedious bureaucracy can cause existing employees to feel burnt out and overworked, leading them to resign.9
AI might improve the employee experience by making jobs feel more meaningful and less menial. It might democratize niche fields like code development, automate repetitive tasks and consolidate redundant roles. It can even suggest new career paths for current employees like applying and managing AI tools. But companies should also listen to employee feedback on how they would like to work with technologies like AI.
By reducing unnecessary hierarchy and giving software engineers freedom to solve problems from different angles, it might make the work environment feel more collaborative and supportive. Good people managers who are communicative, empathetic, and have a degree of technical fluency are important to keep everyone organized and on task. Effective employee experience management increases productivity and job satisfaction.
Other ways to improve retention include providing opportunities for remote work, supporting employee health and a positive work/life balance, and encourage employees to participate in outside projects that can help them grow their skillset. Promoting collaboration across different disciplines in the tech industry can promote best practices and lead to crowdsourced advice about how to use new tools ethically and properly.
One of the easy solutions to adapt to the constantly changing goals of the company is to invest in ongoing training for current employees. Retaining talented tech workers with the capacity for growing and learning means companies save time and money otherwise spent recruiting and onboarding new employees.
To develop internal candidates with the right foundational skills, companies can reassess the talents and skills an employee offers beyond their current role and projects. These skills can be identified through hackathons, team challenges or digital playgrounds designed for testing new ideas and experimenting with new products or services.
Soft skills like problem-solving, relationship-building, empathy and creativity are also critical to identify. Those can likely be strengthened through in-person experiences, training and a good mentoring program. AI can be used to better match mentors and mentees based on backgrounds, interests and what they want out of the relationship.
Upskilling, which builds out employee skill sets through training and development programs, can minimize skill gaps and prepare employees for changes in their job functions. AI upskilling can help employees in organizations that are beginning to use AI agents to support human employees on projects, like consulting companies or law firms. But even with their advanced knowledge synthesis capabilities, AI tools heavily rely on humans to provide context, dictate prompts and interpret results. Those are all skills that employees might receive training on how to do.
There are plenty of AI-powered tools and services that can assess current employee performance and identify areas for upskilling or reskilling. Generative AI can create more customized learning journeys for each employee that combine a general foundational AI education along with specific instruction tailored to the learners’ jobs.
Managers can encourage employees to participate in open source communities and pursue opportunities for external certifications. Providing resources for education in emerging technology areas can create a clear path for skills development and build a culture of curiosity, growth and loyalty among employees.
Holistically addressing the tech talent gap helps companies mitigate shortages and move more steadily toward their goals. Fostering an educated, involved and diverse tech workforce will allow everyone in the tech ecosystem to flourish.
1. Tech talent is still hard to find, despite layoffs in the sector (link resides outside ibm.com), Deloitte, 14 August 2023
2. Despite Big Layoffs, Tech Workers Are Still in Demand (link resides outside ibm.com), Wired, 11 November 2022
3. State of the tech workforce 2024 (link resides outside ibm.com), CompTIA, March 2024
4. Generative AI and the future of work in America (link resides outside ibm.com), McKinsey Global Institute, 26 July 2023
5. Colleges Race to Ready Students for the AI Workplace (link resides outside ibm.com), The Wall Street Journal, 5 August 2024
6. After the Great Resignation, Tech Firms Are Getting Desperate (link resides outside ibm.com), Forbes, 11 February 2022
7. Why Inclusive Hiring Practices Are Still Important—And How To Implement Them (link resides outside ibm.com), Wired, 6 September 2023
8. Navigating the tech talent shortage (link resides outside ibm.com), Deloitte, 11 June 2024
9. Retention Is The New Recruitment (link resides outside ibm.com), Forbes, 10 April 2024
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