The IT skills shortage is a pressing issue for organizations everywhere, and it is expected to cost companies approximately $5.5 trillion by 2026. From product delays and a shrinking edge in the market to missed opportunities, it’s hard to downplay the impact of the challenge. While the shortage has made itself apparent, it’s important to examine whether it is a lack of available talent or rather, a gap in necessary skills. A closer look at the issue would convey that the current hiring challenge is not a general talent shortage, but a high demand for specialized expertise, which has intensified over the past two years.
All eyes on high-growth areas: What skills are the hardest to find?
As a ripple effect of inflation and rising interest rates, investment in tech is shrinking, prompting companies to get pickier about who they hire. Consequently, many are structuring their teams around specialized roles over more generalized skills. This means that the focus is getting narrower than back-end, front-end, or full-stack developers.
Over the past two years, the demand for remote back- and front-end developers has decreased by 10% while roles in DevOps, architecture, and security have seen 50%, 100%, and 600% growth, respectively. Hiring specialized talent within high-growth fields like Blockchain, DevOps, and Data Science has undoubtedly emerged as a priority for companies right now, reflecting a notable shift toward niche expertise in roles that drive innovation and deliver technology-enabled business capabilities.
Discussions about skills today inevitably circle back to the explosive growth in demand for AI-related expertise. With generative AI roles seeing a jaw-dropping 1300% increase over the past two years, it’s clear that companies are racing to fill these positions. The spike in demand for machine learning (80%) and data science (250%) roles cannot be overlooked either.
The skills gap in areas such as AI and machine learning, generative AI, cybersecurity, analytics/BI/data science, automation, and APIs is hindering the ability to meet business objectives in 2024, with a moderate to severe impact. These are also the same skill sets where companies face intense competition in recruitment efforts. Given this growing list of difficult-to-hire skills, it’s no wonder that CEOs have identified the talent shortage as having the most damaging impact on the business outlook.
The impact of the skills shortage goes beyond skin-deep
When companies invest heavily in technology but lack the skilled talent to capitalize on it, they are left with unfulfilled potential and wasted resources. If an organization is facing difficulty in implementing new technologies, it’s one of the most telling signs of a skills gap.
For instance, organizations may struggle to migrate their existing systems to the cloud without proper expertise, leading to delays and technical issues. Cloud environments, requiring specialized knowledge to secure data and applications, can become vulnerable to cyber threats, data breaches, and compliance failures if not managed with expertise. Recent findings reveal that the skills deficit adds an average of $1.76 million in additional breach costs, highlighting why skills in areas like cloud security, threat intelligence analysis, and incident response capabilities are in such high demand.
Modern software development increasingly demands expertise in specialized areas such as Kubernetes, DevOps, or machine learning frameworks that many candidates lack. The talent shortage extends beyond development into quality assurance and software testing, where gaps in expertise can lead to undetected bugs and features that fail to function as intended.
This gap can lead to significant delays in project timelines as companies struggle to find the right talent or train existing employees. The result? Missed opportunities, slower time-to-market for new products, a diminished competitive edge, and other challenges. As the technology and software market evolves at breakneck speed, companies barely have time to adapt internally, let alone spend extended periods searching for talent.
How can companies hire software engineers when they are so hard to find?
Evaluate the job requirements
More often than not, job descriptions are overloaded with requirements that aren’t essential to the role. Organizations must continuously evaluate and refine what truly matters in the context.
Does the role require so many years of experience or can someone with the calibre be given a chance? Are unrealistic expectations keeping deserving candidates from getting shortlisted or even applying?
Formally trained talent is becoming as rare as it gets, with educational programs struggling to keep up with technological advancements and the skills they demand. By prioritizing skills over credentials and years of experience, companies can open up opportunities for high-potential candidates who possess the necessary technical knowledge and a keenness to learn. Many talented software engineers come from non-traditional backgrounds or self-taught paths, bringing fresh ideas and unique perspectives to the table.
Organizations are also breaking free from the conventional step-by-step progressive career progression model and are hiring executives from a pool of early career workers on the basis of their expertise or aptitude in niche sectors. This is a practical move, considering that it’s unrealistic to expect someone to have years of experience in emerging fields that are still in their infancy.
Look beyond local talent pools and traditional tech hubs
Focusing hiring efforts locally can be inefficient, as companies are less likely to find suitable candidates for specialized roles from a narrower pool. Additionally, relying solely on traditional tech hubs may cause companies to overlook regions with growing and diverse talent.
By expanding the search to include emerging markets, companies can tap into skilled candidates who may have been previously underrepresented. For instance, although India has long been and continues to be a favored hotspot for hiring tech talent, data shows that emerging markets like Pakistan and the Philippines are rising in prominence across the Asia-Pacific market.
Borderless hiring is the way to go. When companies are vying for top talent, the ability to quickly access new job markets can provide a critical advantage. With solutions like Employer Of Record (EOR), companies can draw from a broad global talent pool while sidestepping the complexities of administrative tasks, including locally compliant employment contracts, streamlined onboarding, and visa support— all without the need to establish a presence in every country they hire from.
Conclusion
The difficulty in hiring has pushed organizations to move away from everything that makes traditional hiring approaches ineffective today. As educational institutions lag way behind in the game of skills, organizations are taking matters into their own hands. From hiring individuals with self-taught skills to aggressively upskilling and cross-skilling employees through experiential learning and simulations, organizations are trying their best to navigate the pressures of the talent crisis. By embracing adaptive hiring practices, companies are working toward overcoming the talent crisis and building a future-ready workforce.
Recruitment strategies are shifting; as geographical boundaries and rigid educational requirements lose their relevance, the ability to source talent from anywhere in the world substantially boosts the chances of finding the right fit.