Why is it so hard to hire tech talent?
Why is it so hard to hire tech talent?? In recent years, the extreme competition for workers with a technology skill set has become a grim reality for many companies. And as businesses continue to pursue the development of their technology teams, this can quickly become a time-consuming and expensive endeavor.
But why is it so hard to hire tech talent these days? We’ve narrowed it down to four main reasons:
- Supply and Demand
- Evolving Technology Needs
- Education Gaps
- Lack of Hiring Expertise
This talent crunch includes skills such as software engineering, machine learning, artificial intelligence, data science, DevOps, IT and more. According to a report from Bain & Company, demand for these positions has risen by an average of 274% over the last five years. Of course, tech giants like Apple, Facebook and Google take up 20% of this talent. Surprisingly, the report shows that non-tech companies hired more than half the number of the larger corporations, coming in at 11%.
As businesses continue to pursue top tech talent around the world, it’s important to understand the four reasons behind the crunch, so you can equip your company with the knowledge and resources necessary to acquire and retain top technology employees.
We live in a day and age where an entire economy is based around information and technology. Many people and countries have shifted from manufacturing, construction, retail, food, and hard labor to technology-focused initiatives.
However, despite the demand for technology climbing at an exponential rate, the supply just can’t seem to keep up. Countries that were known for their technology talent have become more expensive as resources became more limited. In India for example, the IT software and services sector alone has seen a 41% increase in demand since 2021, according to a Kaukri JobSpeak report. Additionally, the global labor skills shortage is predicted to reach 4.3 million workers by 2030, and approximately $450 billion in unrealized output in the technology, media and telecommunications industry.
With so much competition between businesses searching for tech talent, companies are struggling to acquire and retain top-tier technology workers. Even with access to a global market, many businesses just can’t seem to find a good fit. Often times, these companies resort to hiring international contractors, instead of full-time employees. Although this resolves the immediate need for talent, it can disrupt stability and decrease overall control over the work being performed.
The issues of supply and demand aren’t likely to go away anytime soon. This means businesses will need to find a way to outbid other employers with better compensation packages and immediate structure if they hope to retain their tech employees.
Technology is a constantly evolving industry. Just when you think you’ve got a handle on a software or program, a new solution enters the market. The emerging Web 3.0 and cryptocurrency technology is a prime example of this happening in recent history. As more and more people see the potential of decentralized apps and programs, the demand for people with those skillsets will skyrocket.
But whenever a new technology arises, it takes time for people to learn and adapt to the new applications. Even when existing technologies upgrade and improve, it can be difficult to workers with existing skill sets to adjust to newly developed software and systems.
If you’re wondering why is it so hard to hire tech talent, it may become even more challenging in the near future. Here are 9 technology trends to watch when it comes to evolving technology needs:
- Computing Power: With a strong cloud infrastructure in place and faster networks like 5G and 6G, computing technology can’t be ignored.
- Smarter Devices: Intelligent technology used to be limited to our phones. Now AI technology can be found in televisions, cars, cleaning robots and more. As demand for these smart devices increases, so will the demand for engineers that can develop them.
- Quantum Computing: This technology allows information to be processed in a fundamentally different way than traditional computing, making computers exponentially more powerful.
- Datafication: With so much information available, businesses need to find efficient ways to organize and present the information.
- Virtual Reality: With the introduction of the Metaverse, virtual reality is moving beyond gaming. It is becoming a social and economic hub for online interactions, which is likely to continue to gain popularity from the younger generations.
- AI and Machine Learning: Businesses have taken big steps with machine learning, implementing audio technology and tracking online preferences.
- Decentralized Technology: Blockchain technology has paved the way for cryptocurrencies and NFTs, but this technology has the potential to be used for smart contracts and other financial deals in the future.
- Genomics: Technology can now move beyond traditional hardware, making advancements in agriculture, biology, nanotechnology and more.
- 3D Printing: What was once developed for gadgets and knick-knacks has evolved into a viable industry for housing construction, plant-based meats, organ development, and more.
With education departments paying much less than the corporate sector, finding qualified individuals to train new generations of talent has become a real problem. Additionally, fewer individuals are choosing technology as their main degree.
For example, Japan – known for its AI and robotics talent – is predicted to face a growing shortage of workers in big data, AI and IoT. It’s expected that this workforce alone will come up short by about 48,000, with a shortfall of nearly 200,000 information security workers.
In India, the rapid demand for technology talent has predicted the country to reach $350 billion in annual revenue by 2025 in this sector alone, according to a report by industry body NASSCOM and McKinsey. But IT companies are already struggling to fill those roles, with India’s three biggest IT companies expected to offer 105,000 job opportunities.
With technology constantly evolving, providing effective education has become a real concern. Many graduates lack the quality and expertise that most companies are searching for. However, many countries are recognizing the need to promote the technology sector, offering incentives for workers to select that area of study. This has made countries like Poland and Costa Rica an attractive new hiring destination for growing companies seeking top tech talent.
When it comes to hiring tech talent, many businesses lack the expertise necessary to attract and retain skilled workers. As a result, these companies often choose to hire independent contractors to avoid the risk and hassle of hiring full-time employees. However, this can be a problem for businesses that hope to maintain any level of consistency. For a company to classify a worker as an independent contractor, they must meet the following guidelines:
- The contractor is allowed to work for multiple companies at the same time. They cannot be restricted to only working for your business.
- The contractor oversees managing and controlling their working status and schedule. The business can’t give them specific hours of operation.
- Contractors are usually project-based or are required to work shorter periods of time. If they extend their time with a company, it could put the business at risk of being classified as an employee.
Based on these criteria, it’s easy to see how companies would struggle to ensure long-term sustainability of their technology projects. But without proper hiring expertise, businesses often don’t have any other choice.
In order to hire full- or part-time employees, companies will need to have a legal entity established in the country of operation. They can either choose to set up their own entity, or they can work with a Professional Employer Organization (PEO) and use their existing network of entities instead. Working with a global PEO will ensure the business finds and retains the best talent for your needs, while maintaining compliance with in-country laws and regulations.
Here are a few country-specific challenges you could face if your business chooses to move forward without consulting hiring experts:
- Did you know that France has two sets of Leave Calendars, and they both expire at different times? These time off requirements can be very complicated and easily overlooked if companies aren’t working with an in-country expert.
- Do you know the difference between mandatory hiring requirements and supplemental or customary offerings? If you’re hiring a Country Manager in India, it is customary to provide a vehicle or education funding. Although not required by law, if you’re not offering these things, you may not be considered by top talent.
- Lack of compliance puts your local director at risk. Often the local director is the CEO or other executive for the company. If a local government finds out a company hasn’t been compliant, the local director could be arrested.
As we mentioned, these are just a few of the many examples of what could go wrong during the hiring process. It becomes more complicated and cumbersome with each country a company plans to expand in to.
Getting started with global expansion can be an exciting time for any organization. However, it can also expose you to various risks and challenges. With Global PEO Services (GPS), a Safeguard Global company, you can manage these risks and keep your operations running smoothly as you hire tech talent anytime, anywhere.
As laws and regulations change and update, you never have to worry about compliance. We can manage all the legal requirements and payroll for international teams, while your business handles the daily tasks. With the war for tech talent becoming ultra-competitive, it’s more critical than ever to work with a hiring partner that can help you reach your goals.
Why is it so hard to hire tech talent? Because you haven’t been working with a partner with operations in 170+ countries. Get started with Global PEO Services today.