Companies Brace for Tech Talent Shortage

Companies Brace for Tech Talent Shortage

The post-pandemic scenario might see huge spike in demand for IT talent and salary hikes for specialised skills, but quality remains a concern

Talent is becoming a key imperative to deliver on enterprises’ digital transformation mandates. Business leaders have realised that talent holds the secret to their future value and success. The COVID-19 crisis, with its massive pressure on organisations to digitally transform overnight, has caused business leaders to wake up to talent shortage in these areas and step up their training in critical technology.There is a paradox in the situation. On one hand we have organisations that are facing acute shortage of new-age skills –especially around digital dexterity, on the other hand the work-from-home trend has suddenly expanded the available pool of dispersed resources, as location is no longer a barrier to accepting job offers.

In a ranking of risks over the next three years for CEOs, a KPMG survey ranked Talent Risk –which involves recruitment and retention as well as the well being and health of staff – at the first position. A steep rise from its previous ranking of 11th!The skill shortage is anticipated specifically around technologies like artificial intelligence, machine learning, blockchain, Internet of Things, cybersecurity and data analytics. The shortage of these skills in India would become acute next year, say recruitment experts.

The demand for new-age tech professionals in India in 2020 is estimated at 4.4 lakh, while the supply is projected to be 2.4 lakh, according to TeamLease Services, an HR consulting firm. This is a double-edged sword because the demand-supply gap would push up salary hikes by35% to 60% for such skills.It could even go up to100%-plus for skills like data science and machine learning, per TeamLease executives as quoted in mainstream media. However, even though major firms would be ready with the remuneration package, dearth of talent in the market could lead to recruitment of whatever candidate is available – leading to quality concerns.

Because of all such complexities, enterprises have adopted a subdued approach to talent management even though workforce planning is thought to be crucial. This poses additional challenges to talent availability and readiness. And then there is the eternal lack of alignment between the academia and the industry, coupled with high demand for technology talent across industries and functions.All these factors are making enterprises redefine their workforce planning initiatives, reveals a recent Everest Group research.

Companies around the world have already moved most of their operations online. They plan to reduce office space recruiting and retaining staff is now their top priority since the pandemic struck.The report from consulting firm KPMG showed 80% of business leaders had accelerated their digital expansion plans during the lockdown as they adjusted to staff working remotely and dealing with customers online. There was uncertainty about how much of the shared workspaces should be shifted away in favour of working from home.But eventually 69% planned to reduce their office space in the short term. An overwhelming 73% said the shift to working from home had increased the pool of job candidates.

For the benefit of companies that want to remain future-ready with regards to workforce strategy, the Everest Group has done extensive groundwork to track 1,150+ hard skills across various IT services. The study took into consideration both current and unmet industry demands. Any company is welcome to use this detailed skills taxonomy, and also the Talent Performance Framework designed by Everest, to plan their current and future talent requirements.

The Everest Group survey revealed that 86% of enterprises consider talent shortage to be a key barrier to achieving their desired outcomes, citing the following:

  • An acute shortage of qualified applicants with requisite skills
  • A lack of technical skills in existing workforce, given the rapid change in technology
  • Poor project readiness (like proficiency levels and industry contexts)
  • High attrition, particularly in niche skills such as AI and data analytics.

IT talent shortage already troubles 69% of enterprises, and everyone expects that the COVID-19 pandemic and the resultant global recession will worsen the problem. According to Everest Group, 75% of enterprises believe there will be a talent shortage for key roles in IT, analytics and special skills areas post-COVID-19. It is also anticipated that the current recession will not create a surplus of technology talent. In fact, 67% of enterprises think new skills gaps will emerge as a result of the structural changes in business occurring in response to the pandemic.

Acknowledgement:Winning the War for Talent: An Enterprise Guide to Building a Sustainable Workforce Strategy – A State of the Market Report sponsored by the Everest Group, 2020.

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