The Great Resignation – or what some have come to refer to as ‘The Great Re-Evaluation’ – continues to dominate headlines and create major challenges for technology executives and hiring managers. While U.S.-based employees quit their jobs in record numbers in the second half of 2021, another 23% of employees are expected to seek new jobs in 2022, according to a poll conducted by ResumeBuilder.com.
And while compensation continues to be a central challenge – with many tech professionals receiving 50% or even triple digit salary increases – many employees became more introspective during the pandemic about the type of company they want to work for and whether that organization conveys their values.
I recently attended the regular breakfast virtual meeting of the group of CIOs from the Society of Information Management Capital Area Chapter (SIMCAC) to discuss this matter and share the experiences and the challenges that we are facing as technology leaders
It was a great conversation with CIOs and tech executives sharing some of the tactics and solutions that their companies were implementing to attract and keep talent. There were some very creative ideas and solutions, such as offering employees flexible working hours, with 4-day work weeks and Fridays off/get-the-job-done type arrangement regardless of working hours; providing three weeks of vacation for new employees and, of course, bonuses and raises as part of an acquisition/retention package. There were CIOs that shared how their companies simply could not compete to keep or to hire new talent due to the high salary demands.
The general agreement was that we are in different times due to the pandemic. Others suggested that we might be in a bubble like the 2000s Dot-Com bubble that initially included major IT labor shortage, but then, it went back to ‘normal.’
So, are we in a tech labor bubble? If so, is it similar the 2000s bubble? Was the tech talent shortage in a bubble at that time? Did the pandemic create this bubble and, now that it seems to be fading, will the bubble resolve itself and we go back to `normal?’ And in the interim, what are we as tech leaders supposed to do to address this major challenge? Many of these questions are not easy to answer, but I will give it a shot and will share some of the ideas that came up during the SIMCAC meeting.
The Current State – and Beyond
Some might argue that the pandemic is weaning, and that we are close to going back to normal. This will resolve many issues including the tech talent `bubble’ that will burst, demand will decline, and life will go back to `normal’.
While I do believe — and hope — that the pandemic is easing, at the same time, I believe that the long-term impact of the pandemic will continue to generate high demand for more digital lives, products, and solutions from all of us. This demand will continue to grow and will even accelerate. I strongly believe that there is no going back to the pre-pandemic, highly analog lives that we had.
It is possible that we have bubbles in certain technology areas such as in blockchain due to a possible bubble in the demand for NFTs and in Decentralized Finance (DeFi). But that would be a smaller market segment, especially when we talk about enterprise IT. For the record, I do believe that blockchain, DeFi, and NFTs have a promising future and will play a big role in the future of the metaverse and other technologies, but that is a separate topic that I addressed in another article.
The reality is that we are in a transformed digital world that will require far more tech and tech-savvy talent. According to a Korn Ferry article that is based on study called 2030: The Very Human Future Of Work, there will be a global human talent shortage of more than 85 million people by 2030. “In tech alone, the US could lose out on $162 billion worth of revenues annually unless it finds more high-tech workers.”
Meanwhile, The Great Resignation is leading to the rise of the freelance talent. Techies can now work when they want, from where they want, and at the price they want. With high demand for freelance specialists, the price for this talent is going to be high, and in my opinion, will continue to grow even higher.
So, what is a tech executive to do about this shortage in tech talent? I believe that the solution goes beyond providing fringe and financial benefits that some companies are trying. Providing flexible working hours, more vacation benefits, and salary increases are indeed good steps. But this is only sugar-coating the problem and doesn’t acknowledge that we need a new and fundamentally different approach to address IT talent sourcing and IT sourcing in general (I distinguish between the two – with one, you need to hire employees or individual contractors to be part of a team the delivers the IT solution. The second is outsourcing the IT solution to a partner).
I believe that the very first thing that CIOs or tech executives should do is simply budget far more for IT talent, somewhere between 10%-21.3%, and probably more depending on the position and geographic location. Accepting this fact, planning for it, and communicating it to the CFO and other executives, is the very first step we should take. There is no way around it.
CIOs can benefit from creating a simple communication plan or talking points with facts about the IT talent shortage that include current and future technology needs for the organization. Having specifics related to projects and IT operations and the talent required to deliver them along with the projected costs will be critical points in the communication plan. A casual conversation might not do it, but facts and figures are harder to argue with. I would also suggest providing options with a prioritized list of projects and the ones that could be cut if budget cannot be increased.
The second and the more important thing that we all need to do is to rethink IT sourcing strategically and beyond the traditional tactical moves. By that I mean addressing the demand side of IT or the need for digital products and IT solutions in a more comprehensive way by creating an omni-sourcing strategythat involves multi-faceted tactical approaches as suggested by CIOs and tech executives colleagues at the SIMCAC meeting. Here is what the SIMCAC group proposed and recommend:
Try and push the business demand for IT solutions back to the business (to the extent possible) by providing technology tools and platforms such as configurable SaaS solutions and low code platforms that can be handled by smart and tech-savvy business teams
Get out of the undifferentiated heavy lifting of IT infrastructure management and push it to specialized companies and preferably to the cloud providers
Invest in reskilling and upskilling programs for IT personnel, and other business employees.
Identify existing or new partners and contractors who have the capability, capacity, and commitment (I call them the 3 Cs) to deliver the work to avoid having to hire the specialized talent directly
Look into nearshoring and offshoring partners who can help with lowering IT costs. But make sure to build a strong governance structure to ensure that the near or offshoring sourcing model is successful
Apply untraditional approaches to talent acquisition, including hiring on-demand consultants using platforms such as Fiverr, Upwork, and LinkedIn. LinkedIn is planning to launch a service called LinkedIn Services Marketplace that will compete with Fiverr and Upwork
The above recommendations and ideas came up during the SIMCAC CIO meeting and I credit the strategic CIOs and tech leaders who participated in the conversation. I am sharing here the wisdom of the highly talented and experienced crowd.
The pandemic has been the great accelerator of many technologies, and it made decades worth of work happen in few weeks. Yet its impact will continue for decades to come, including the demand for more digital products and even higher demand for tech talent. Tech talent will continue to be hard to find and difficult to keep. There is no question that 2022 will continue to be the year of the shortage in tech talent and it’s likely that this will continue for many years to come. So, let’s all get ready for the `new normal’ including addressing the tech shortage challenge.
Key Takeaways:
Accepting the new reality and acknowledging that there is a shortage in IT talent that it is not going away any time soon — that it is not temporary — and it will continue for the foreseeable future and beyond.
Clearly communicating the IT talent shortage and the higher costs associated with the talent shortage to the executive team — primarily to the CEO and the CFO — that the shortage in IT talent means higher cost from 10% to 20% and even more.
Creating an omni-sourcing strategic plan that includes the six (6) recommendations listed above.
