In many cases, the rapid growth of digital transformation is stalled due to a lack of job-ready talent. An extensive Korn Ferry report proves it. The report finds that by 2030, more than 85 million jobs could go unfilled because there aren’t enough skilled people available. If left unchecked, in 2030 this talent shortage could result in about US$8.5 trillion in unrealized annual revenues. That’s a huge dent in the global economy, isn’t it?
Research firm Gartner found that 31 % of employees in the IT space actively sought out a new job between July and September 2021. A report from training company Global Knowledge said that 76 % of global IT decision-makers reported critical skills gaps in their teams.
In the same report, the researchers from Korn Ferry say that India could be the only exception to become the next tech leader; it could have a surplus of more than 1 million high-skilled tech workers by 2030. However, the situation right now doesn’t suggest the same. Organizations seem to be literally so busy with project implementation that they hardly have time to nurture or recruit the right resources. It’s a real challenge!
While it’s true that technology is a great leveler and can play a crucial role in digital transformation but it is not the only factor. Within the last two years, we have seen conventional businesses transforming into digital and this stresses the need for a skilled, technology workforce.
Today, the savviest organizations are taking on the onus of nurturing talent in order to stay competitive and future-ready. Organizations face a dual challenge when looking for both an immediate and long-term skilled workforce. Skills are important across sectors and genres of companies, which may lead to an explosive situation. To tackle this situation, CIOs, CISOs, and all other technology leaders need to be aware of what new skills they’d require and transform the way the company hires them today.
Are you facing a dearth of good quality tech talent in your organization? If yes, you are not alone. The tech talent crunch is a pervasive phenomenon. As Rishad Premji, Chairman of Wipro said in a tweet, “The technology industry in India now employs over 5 million workforces and added 450,000 new jobs in 2021…yet the talent crunch is real!”
Here’re some data points that will give you an idea of the situation on the ground:
- As per the Hiring Trends Report 2022, released by Scaler (based on a survey of 81 major IT product and services companies in India), companies value skills and experience over degrees. 80% of companies have in-house upskilling programs for employees.
- The technology sector posted over 70,000 active job openings in the first week of 2022, The Economic Times reported quoting LinkedIn data put together by Xpheno.
- In 2021, the attrition rate in India’s IT majors spiked dramatically to touch the range of 20-30 percent per annum.
- India’s tech talent demand-supply gap at 1% is the lowest compared to other major economies, as per NASSCOM, which suggests that by 2026, demand–supply gap for digital tech talent is expected to increase by over 3.5 times. This means India will see a shortage of digital tech talent by 14 to 18 lakhs.
- India’s digital tech talent is growing 5x faster compared to core IT talent. Notably, digital talent supply across key digital skills such as cloud computing, AI, big data analytics, and IoT has increased at a CAGR of over 20% in the last five years.
Abhimanyu Saxena, Co-founder, of Scaler and InterviewBit, was quoted in an interview by Free Press Journal, “If we fail to address the grave skill-gap issue in the technology industry now, the trend of high attrition rates and inflated salaries will only amplify in the coming years.”
Nurturing In-house Talent
Integrating new talent or outsourcing is an expensive affair. It is time-consuming too. From screening, a candidate to hiring and to getting the recruits up to speed in an organization can consume up to 6 months. Thus, it is important to first look at ways to develop and retain the talent in-house. The benefits of nurturing in-house talent including upskilling are:
- Fast adaptation and commitment to the company
- Reducing the hassle (cost & time) of scouting new talent
- Easy to identify the strengths and weaknesses of talent
- Easy absorption in the team since the dynamics are known
- Works well for long-term retention
“Developing talent internally goes a long way. It helps in nurturing people and increasing brand value. Recruit only when the internal skills are in real short supply. Outsourcing skills can be a good option but only for short-term projects,” says Satyavathi Divadari, Head of Security Architecture, Microfocus.
Businesses need to put in place a method to create relevance and enable high performers to learn faster, even if their capacity to learn is varied. The ecosystem is limited. There should be a mechanism to help the existing talent pool to grow. True that keeping up with the rapid technological advances and innovations is tough. One needs to train and upskill employees on technologies and platforms that are worth investing in the future. A lack of this approach may end up in a large pool of workers that are not future-ready.
Daya Prakash, Former CIO of LG India and founder of Talent on Lease – a company that provides tech talent on-demand – stresses the need for upskilling. “In this age of cut-throat competition, skilled workforce will become a rare commodity,” he says. Prasenjit Bhattacharya, CEO, of Great Place to Work echoes his thoughts. “We need to create relevance, not just engagement,” he says.
However, there’s a flip side to having in-house talent. When we only look at developing talent internally we miss out on the best talent, which could be available outside the internal ecosystem. Also, the time and cost of upskilling are sometimes prohibitive. Another downside is that it can really affect the team dynamics in case someone is not promoted /or upskilled.
IBM Chairman & CEO Arvind Krishna, during one of his media interactions, said, “I find every single enterprise, government client we talk to is thirsting for talent, and there is not enough supply. That’s because every company, country, and government has woken up to the fact that technology is no longer a cost of doing business, technology is a fundamental competitive advantage.”
Outsourcing Talent: Key to Navigating the Future
The shortage of skilled people in the industry is well known. Also, the hiring managers today demand more from candidates than they would have in the past. Companies want candidates with exceptional experience and interpersonal skills like emotional intelligence, leadership, and creativity to help them with their future goals. Deloitte’s 2021 Global Shared Services and Outsourcing Survey says that 65% of successful global organizations incorporate both shared services and outsourcing into their operating models. And within these organizations, IT (54%) and Finance (44%) represent the top two functions where outsourcing is being commissioned.
“There would be situations such as an immediate need for resources or augmenting your existing team or niche expertise that is lacking in-house where reskilling is absolutely not the right solution. That’s where outsourcing comes in handy,” says Daya.
Outsourcing can be an excellent way to fill open positions quickly, reduce the burden of capital expenditure, and create opportunities for growth. But it’s not a one-size-fits-all approach. The benefits associated with outsourcing are many viz. It can help fill open positions quickly. It can reduce the project lifecycle. You can have an access to a global talent pool. It works wonders for short-term projects. During a crisis, it could be a life-saver since no compensation needs to be given to them if there is no work.
However, we cannot ignore the disadvantages. Managing the outsourced workforce can be tricky; sometimes counterproductive. As said earlier, it can certainly impact the team dynamics because of the cultural issues/misfit. What if you don’t get the right outsourcing partner? It can turn into a nightmare!
Promise First, Hire Next
Gartner’s survey (quoted earlier) also highlights that among the technology areas affected by IT talent shortages are computer infrastructure and platform services, network, security, digital workplace, IT automation, storage, and database systems. IT executives cited talent availability as the main adoption risk factor for the majority of IT automation technologies (75%) and nearly half of the digital workplace technologies (41%).
There’s a broad agreement among experts who say that nurturing internal talent if the need is long-term and outsourcing if the need is short-term. Organizations must do a thorough assessment of their in-house talent to find out what skills they already have and what tasks need to be outsourced in absence of the in-house skills. Once the internal abilities are mapped, organizations can strike a balance between handling tasks in-house and outsourcing.
Prasenjit stresses the fact that the combination of nurturing in-house talent and outsourcing is critical for success. He believes that there will be committed partners to take care of odd projects and peak loads. Also, compensation internally will increase and be based on a combination of minimum cost of replacement and premium for in-house knowledge and experience.
“We are encouraging people to make a tech shift and upskill. We also outsource some part of the work to relatively specialist companies. Cross-skilling is important to address immediate issues,” says Prakash Bharatam, Chief Solutions Architect, NTT Data.
“At profit wheel, we believe that mindset and people who have similar values as us are a better fit than just the technically brilliant, “says Vivek Bhargava, Co Founder, Profitwheel
With attrition rates as high as 30%, talent crunch is a big challenge. Almost every company is facing the heat. On top of it, the rising number of Unicorns are hiring so rapidly leaving little room for traditional companies to hire and retain talent. Arresting these trends is inevitable before it becomes a barrier to embracing emerging tech. CXOs have to demonstrate extraordinary perseverance to address the widening skills gap that exists in most industries. Developing and retaining talent is important, however, it is not just the only way to address the issues. One of the solutions is that companies must understand how to explore the gig economy by hiring freelancers, they need to retrain their existing team on new technologies as well as hire external talent.
Both HR and technology leaders should understand that tech skills are now the most important business imperative for sustenance and growth. It is not an easy task, however certainly not impossible either.