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 Q1 2024, with a 27% net positive employment outlook and 46% of UK IT and technology 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 grow by 3.24% annually to 2028. 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 77% of UK IT and tech companies reporting difficulty hiring skilled workers.
According to a Korn Ferry report, IT&T talent shortages could leave 85 million jobs unfilled worldwide by 2030 – a 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 software engineering, data and cyber security are currently the most in demand.
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. Furthermore, a mix of 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.
Lastly, 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.
Apart from intense global competition, other deep-rooted problems impact the IT&T sector’s ability to recruit highly skilled candidates
Used internationally as a bellwether of labour market trends, the Net Employment Outlook – calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire – now stands at +33%.
Coupled to the endemic recruitment issues troubling the UK’s IT and technology 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.
Demand for strong digital skills across all UK industries is hurting IT&T organisations’ search for highly skilled talent. This situation is compounded by the poor digital skills that affect more than 33% of the entire UK labour force.
The UK’s core digital sector employs 2.98 million people. However, a further 1.87 million people are employed in tech roles right across the economy. From retail and travel, to financial and medical, many of today’s jobs rely on good proficiency with technology. As these disparate industries search for workers with the digital skills to support their growth and combat natural employee attrition, they fish in the same talent pool as IT&T organisations, intensifying the competition for top candidates.
Also compounding the competitive issue is a nationwide scarcity of digital skills. According to a report using data from PwC and Lloyds Banking Group, 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
Where does this leave the UK’s IT and technology organisations?
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.
