Hiring Alone Cannot Fix the Talent Problem
A combination of issues are driving the skills shortage in IT&T.
UK businesses revealed continued recruitment optimism as they entered Q3 2023, with a 29% net positive employment outlook and 43% of UK IT&T organisations expecting to expand their workforce. However, a mix of endemic recruitment problems, global competition for highly-skilled workers, and rapid technical innovation across the sector will leave many IT&T organisations struggling to secure the talent they urgently need.
Hiring intentions may be high, but a myriad of recruitment problems put the UK’s IT&T organisations at a global disadvantage when it comes to attracting new talent.
The UK’s IT&T sector is the third largest in the world, (behind only that of the United States and China), and it is projected to expand by almost 7% in 2023. But, even as the sector pursues solid growth, intense global competition for IT&T workers is leaving tech organisations struggling to secure the skills they need – with 78% of global IT&T companies reporting difficulty hiring skilled digital workers.
According to a US Dept of Labor report the global shortage of IT&T skills could leave 85.2 million developer jobs unfilled worldwide by 2030 – the fat tail of an international tech talent crunch that includes key digital skills such as software engineering, machine learning, artificial intelligence, data science, DevOps, IT and more. Closer to home, UK demand for IT&T roles has more than doubled since 2011 – and vacancies in cloud engineering, data sciences, data engineering, security operations, machine learning, and software engineering are currently the most difficult to fill.
On top of global competition - and helping to further exacerbate the UK’s IT&T talent struggle - are the extraordinarily high number of new university graduates who are not ready for the world of work. According to McKinsey, 60% of UK employers say that freshly-minted graduates leave college unprepared for a commercial career, and 40% state that the biggest reason they cannot fill entry-level vacancies isn’t a lack of people, it’s a lack of adequate skills.
Additionally, and potentially the most worrying issue of all, Gartner predicts that the talent shortages that are currently hampering the IT&T sector will persist until at least 2026.
What does this mean? It means if you’re seeking to fill an IT role, it will almost certainly fall into the ‘hard to fill’ category.
And the issues don’t end there…
Digital roles continue to drive the most demand globally with businesses in the IT industry reporting the brightest outlook for the third time this year but weakening by -7% compared with Q3 2022.
Competition for workers with strong digital skills does not only come from technology companies*. Almost every modern business now has a technology need. Which is why non-IT businesses make up 59% of IT hires. Government, energy, and financial services are among the UK’s top 10 IT hiring industries, meaning UK employers are competing with the likes of Apple and Barclays and Capgemini, alongside the NHS and Revenue and Customs – who are amongst the most prolific hiring organisations. (NHS IT job postings increased 595% in Q1 2023).
The UK’s non-tech organisations hired more tech workers in the past five years than UK-based tech giants such as Google, Apple, and Facebook combined. Source: Bain & Co.
Global competition, national competition, and the widespread need for digitally-fluent workers across every major sector is extending the time it takes for employers to secure new talent, (if they can secure any at all): While the UK’s time to hire is the lowest among 8 countries in Europe, it is still taking an average of 45 days* to fill open vacancies.
A mix of other, deep-rooted issues also contribute to the UK’s IT&T talent squeeze, driving many potential UK candidates to look outside the industry for new opportunities, or to seek roles with IT&T organisations in overseas markets such as the US, Germany, France and Italy.
Source: ManpowerGroup, June 2023
Coupled to the endemic recruitment issues troubling the UK’s IT&T sector is the hard truth that the world of work has changed. Employee expectations, their need for greater fulfilment at work, and a desire to align work with their personal values (an important reason why the company Employee Value Proposition (EVP) is critical to worker attraction and retention), have altered the playing field irreversibly. In an age when there is more IT&T work than potential IT&T workers, those who choose to work can be highly selective as to where and when they deploy their labour.
The talent shortage is compounded by the poor digital skills that affect more than 33% of the entire UK labour force
Compounding the competitive issue is a nationwide scarcity of basic digital skills. At a time when almost every job has an interface with technology – be they as varied as a delivery driver’s routing app, a care worker’s reporting system, or your travel agent’s booking processes - a report using data from PwC and Lloyds Banking Group, reveals that more than a third of the UK’s ‘digitally literate’ workforce were unable to even complete at least one of the Lloyds’ Essential Digital Skills for Work. This disturbing statistic is further supported by global research indicating that 39% of employees in the worldwide workforce say they’re not getting sufficient technology training from their employers to keep their digital skills up to date.
A difficult mix of global competition, deep-rooted recruitment problems within the IT&T sector, and a national shortage of digital skills has left the UK’s IT&T organisations facing a dilemma – demand for their products and services is high, but there are simply not enough new recruits available to meet current talent needs. Hiring alone cannot fix the talent problem in IT&T – looking within, to reskill and upskill the workers they already have, is the only sure way to boost productivity and meet projections for growth.
