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IT Talent Shortages Leading to Increased Outsourcing Needs

As you’ve probably witnessed, the last year or two have been different, to put it mildly. With a global pandemic, a rise in remote workers, and an ever-growing amount of tech ‘boomers’ retiring — a return to normalcy doesn’t look like it’s coming soon to the IT sector. And while there’s no one sole reason for the shortage — rather, it’s a culmination of factors occurring simultaneously — the impact is making waves throughout the tech industry worldwide.

Is There A Shortage of Talent In the IT Industry?

Before we answer the overarching question, we first have to inspect a few of the biggest indirect culprits resulting in staffing shortages. Because while it’s true that there’s a shortage of IT talent, the reasons for that shortage are of more concern as they result from several factors. From current professionals aging out to companies offering fewer incentives for highly trained staff in different tech sectors, and an ever-widening skill gap makes up a large portion, to be sure.

How We Got Here

Back in September, Gartner surveyed IT executives about new technology adoption. The results showed that the biggest problem IT firms faced was a shortage of qualified workers. One of the six tech sectors surveyed, IT automation, showed that only 20% new adopted tech continued ahead in the adoption cycle. The survey also revealed that implementation cost and security only affected 29% and 7% of new emerging technology, respectively. However, talent was again the biggest hurdle for companies to overcome — it was the reason 64% of new emerging technology wasn’t progressing as expected.

According to Gartner research VP Yinuo Geng, the problem isn’t just a talent shortage, but the problem is being amplified by an ongoing hiring boom. Geng stated, “The ongoing push toward remote work and the acceleration of hiring plans in 2021 has exacerbated IT talent scarcity, especially for sourcing skills that enable cloud and edge, automation and continuous delivery.”

Which Tech Sectors Does This Affect?

This problem of talent scarcity isn’t really about a shortage of people, but rather a shortage of ‘the right’ people for the constant technological growth we’re currently experiencing — a technology explosion, if you will. In the aforementioned survey, Gartner asked IT executives about:

  • Compute infrastructure and platform services
  • Network
  • Security
  • Digital Workplace
  • IT Automation
  • Storage & Database

Since most IT-related job hiring is falling within these six categories, companies are investing heavily amongst them all with 58% of those surveyed stating they’d be increasing investments in emerging technology in 2021. In 2020, that was only 29%. Gartner also said that many of these shortcomings were made visible by the COVID-19 pandemic. This includes beefing up systems resilience and implementing larger thresholds in critical infrastructure.

Resilience made up 63% of emerging cloud technology investments with a key focus on software tools for enterprise resource planning (ERP) and multi-cloud configurations. Gartner also concluded in their findings that 64% of survey participants plan to increase investment allotments within the security sector, more than double the 31% in 2020.

The Increase of Outsourcing

So we’ve got an increasing amount of new technology without enough skills crossing over to meet this extraordinary labor demand — in comes outsourcing.

For years, the US has been shipping many industries to lower-cost countries like India, Mexico, and China. And while the tech sector’s unemployment rate seemingly never rises above 3% — even during a pandemic where millions of Americans were laid off — there’s just not enough employees to feed the hiring frenzy.

According to CSET, “Two-thirds of graduate students in AI-related programs are international students, and the number of domestic graduate students in these programs has not increased since 1990.” And with Silicon Valley practically relying on qualified candidates, which are overwhelmingly international or foreign-born, the positions that need filling are outsourced.

There’s a bit of a silver lining in all of this, although, for the average IT worker, it needs to be viewed from rose-tinted glasses. In the United Kingdom, the London School of Economics says there’s a burst of productivity resulting from outsourcing. With all of the money saved on expensive labor, companies are able to take those proceeds and reinvest them back into newer jobs.

This doesn’t really solve the problem for those who are having their jobs seemingly taken from them. And while the term, “It comes with the territory,” can seem a bit harsh, the reality is that this technology drives the world, and money sets the GPS.

The Future of IT Jobs

It’s unclear if the majority of tech jobs will ever return to being solely US-based or if we will continue to see more and more jobs being outsourced. With companies revamping their infrastructure to accommodate a predominantly remote workforce, we expect that trend won’t change for the foreseeable future.

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