Navigating the volatile tech talent market is crucial, but service providers are discovering that finding talent with the needed skillsets is challenging. Read on to discover how leading IT service providers are managing the tech talent turbulence to build a future-ready workforce.
In recent years, the tech talent market has experienced heightened volatility, reflecting the rapidly changing dynamics of the technology landscape. A notable trend during this period has been the record-high attrition rates, especially in niche and specialized roles, indicating a significant turnover of skilled professionals within the industry. Simultaneously, there has been a marked increase in wage inflation, reflecting growing competition for top talent and a scarcity of skilled individuals.
The rapid advancement of technology has created a surge in demand for skilled professionals with expertise in emerging technologies such as artificial intelligence (AI), cybersecurity, cloud computing, and data analytics. However, the supply of qualified talent is struggling to keep pace with this demand, leading to a widening talent demand-supply gap. This gap is further exacerbated by the mismatch between the skills required by employers and the skills possessed by potential employees, demand for industry-specific expertise, geographical imbalances, and the untapped potential of underrepresented groups.
To learn insights into the technology talent market, key trends and emerging skills, and the current landscape, explore this session: Thriving in the Competitive IT Talent Market: Best-in-Class Approaches.
As per Everest Group’s Enterprise Pulse for Technology Services 2023 Report, the percentage of enterprises satisfied with their service partner dropped from 75% to 69%. Twenty-five percent of enterprises remain dissatisfied with the technology and domain expertise of the resource, and 30% express dissatisfaction with their service provider’s talent management capabilities. The key challenges for service providers in building a next-generation ready IT workforce include (listed in order of severity):
- Shortage of talent skilled with next-generation IT skills
- Long cycles required for upskilling/reskilling
- Low project readiness quotient for next-generation IT skills
- Difficult to integrate alternate talent (gig workers and non-STEM talent) pools in the workforce
In the face of these challenges, the call for talent readiness emerges as a strategic imperative for service providers aiming not just to survive but to thrive in the competitive tech talent market. Talent readiness encompasses more than the ability to recruit; it involves proactive measures to upskill existing employees, anticipate emerging skill requirements, and foster a culture of continuous learning and adaptability.
To assess the talent readiness of IT service providers, we recently launched the Talent Readiness for Next-generation IT Services PEAK Matrix® Assessment 2023. In this PEAK report, we have assessed 26 IT service providers’ workforce management and development practices and their ability to consistently provide quality and hyperproductive talent for next-generation IT services to the client.
In this blog, we’ll delve into the findings of the Talent Readiness for Next-generation IT Services PEAK Matrix® report and highlight best-in-class talent management and development practices adopted by service providers to stay ahead.
In response to the evolving demands of the tech talent market, service providers have demonstrated a proactive approach by making substantial investments to optimize and future-proof their talent supply chain.
- Service providers are adopting non-conventional channels and geography-specific strategies and strengthening ties with institutions to acquire talent
Service providers are increasingly adopting innovative approaches to attract and acquire candidates with next-generation skill sets. Embracing non-conventional channels, such as hackathons and case competitions, has become important to identify and engage top talent in a competitive market. Strengthening ties with educational institutions, advocating for close collaboration with academia to align curriculum with market trends, and ensuring that graduates possess the skills in demand will be paramount to shaping the next generation of the tech talent market. Additionally, there is a growing focus on apprenticeship-based hiring, helping service providers with project-ready candidates. For example, one of the leading IT service providers has reported that apprenticeship hires constitute 20% of its entry-level hiring in North America. Furthermore, service providers are tailoring their strategies to specific geographical regions, recognizing the diverse skill landscapes across the globe.
- Service providers are adopting a data and AI-driven approach to drive precision in skilling, building personalized career programs and learning pathways, and focusing on experiential learning
As per the Talent Readiness for Next-generation IT Services PEAK Matrix® report, more than 50% of the service providers mentioned that strengthening the learning and development ecosystem remains their top strategic priority.
Leaders are weighing high on experiential learning, embedding Hackathon, Codeathon, and capstone projects in the learning journey, which will involve the implementation of real business use cases within deadlines, provide the experience to work as a team, and enhance project readiness of the employee. Organizations are leveraging data and AI-based solutions to assess skill gaps and build personalized career and learning pathways to align individual aspirations with broader organizational goals.
To make the learning experience more engaging, gamification and social learning are being embedded into training programs. This not only adds an element of fun but also stimulates healthy competition, motivating employees to actively participate and excel in their learning journeys.
- Leading IT service providers are tracking a robust set of key performance indicators (KPIs) to gauge the effectiveness and impact of learning initiatives,
These metrics include tracking learning hours per employee, the number of employees advancing to higher roles post-upskilling, and cross-skilling efforts. Internal mobility is closely monitored to evaluate workforce adaptability, while an employee quotient measures overall competency and deployment. Organizations also assess success by tracking the number of niche skills acquired annually, ensuring they stay abreast of industry trends. Financial considerations, such as spending per employee per year on learning, provide insights into the alignment of investments with skill enhancement and organizational growth. These comprehensive KPIs collectively offer a 360-degree perspective, guiding organizations in refining and innovating their talent development strategies.
- Service providers are taking a holistic approach and leveraging technology to build a more engaged and motivated workforce
According to the Talent Readiness for Next-generation IT Services 2023 report, 22% of the service providers mentioned enhancing employee engagement as their top strategic priority.
In the contemporary workplace landscape, there is an increasingly pressing need for robust employee engagement strategies that prioritize various dimensions of employee well-being. This holistic approach encompasses the physical, mental, financial, and social aspects of an employee’s life.
Leaders have either built or are leveraging third-party AI-based tools to capture employee sentiments, employing advanced sentiment analysis techniques to interpret emotions expressed in various communication channels, including emails, chat logs, and surveys. This continuous tracking and analysis provide organizations with real-time insights into employee morale, satisfaction, and engagement levels. By identifying potential issues such as stress, burnout, or disengagement early on, providers are able to make informed decisions and implement targeted interventions to enhance overall employee well-being and cultivate a positive work environment.
One leading IT service provider utilized AI-based employee engagement solutions, employing a personalized chatbot to conduct pulse and ad hoc surveys and address grievances, thereby performing real-time sentiment analysis and calculating a happiness score in real time.
Beyond internal initiatives, providers are increasingly partnering with technology providers, offering platforms and solutions that can support their talent management efforts. These platforms typically leverage next-generation technologies such as AI and data analytics to enable internal talent mobility, career-pathing, and learning management.
As the pace of technology continues to accelerate, talent is going to be a critical differentiator for providers. To further discuss how you can better prepare your organization, contact [email protected], [email protected], and [email protected]
To learn more about the current IT talent market landscape, check out our session on: Thriving in the Competitive IT Talent Market: Best-in-Class Approaches.
