The global IT services industry has emerged from two-plus years of a global pandemic to establish itself as even more vital to the success of enterprise IT organizations. As corporate IT looks to manage unrelenting demand for technology-enabled change in a challenging talent environment, outsourcing partnerships have proved pivotal.
“Companies are finding it exceedingly hard to find skilled talent especially in the US and Europe, and consequently outsourcing (and offshoring) are becoming important for companies to access talent in labor markets such as India,” says Jimit Arora, Partner at Everest Group.
Information technology giants Tata Consultancy Services (TCS) and Accenture reported record net employee addition in the last one year with over a lakh increase in headcount by each, indicating strong demand and business momentum in the coming quarters. Employee addition is one of the key measures indicating the business outlook.
According to Yugal Joshi, Partner at Everest Group, a global research firm, hiring is indeed a strong indicator of demand. However, service providers do not reveal their hiring trends globally, but are generally focused on India.
The IT services industry is facing a severe demand and supply imbalance for talent. This, in turn, has led to an increase in pricing by 15% for time and material (T&M) projects where clients pay only for time and resources spent.
During the height of the pandemic, many companies pushed their service providers to reduce pricing and so, some hikes are a reversal of that too, said Yugal Joshi, Partner at Everest Group, a global research firm.
Why Inclusivity is Essential in Building Your Tech Talent Workforce
March 24, 2022 |
11:00 AM CDT | 12:00 PM EDT
The boom in hiring for engineering and IT skills has been met with a global imbalance between the demand and available supply of these needed skills. To navigate the talent shortage challenge, businesses are revamping their strategies and putting a greater focus on initiatives like inclusivity to find talent. Targeting marginalized and excluded groups and even exploring new geographies provides businesses with the opportunity to uncover and acquire new tech talent.
Join this LinkedIn Live session to learn:
How businesses are turning to alternative sources of talent to meet the tech talent need
What businesses should be doing to search for tech talent
In 2021, IT workforce attrition rates increased by 10% across roles and regions – and time to hire took two to three times longer than the norm. The current global IT talent shortage will be a long-term challenge, with the possibility of lasting the next three years.
Organizations need to arm themselves with the resources to develop world-class talent capabilities to find and keep talent.
This expert panel discussion reveals the implications of the IT talent shortage and five success-driving actionable steps for IT workforce executives to build a fit-for-purpose IT workforce in the mid- to long-term.
The panel explores the following topics:
Why the global IT talent demand-supply gap will be a multi-year phenomenon
The lessons learned from the intense IT talent scramble in 2021
Strategic imperatives and options that IT workforce development teams and leaders need to know
For the past several years, the talent war has had a special emphasis on the demand for high-end digital talent. Today, the challenge has become a widespread talent shortage and has spiraled into rising attrition rates, higher internal salary demands from employees, and increasing outsourcing rates across job skill sets.
With such a massive shift, what viable options are available to mitigate the impact of the talent shortage?
Join this panel as our experts explore the effects of the talent shortage and dive into topics including:
The reasons behind the talent shortage and why there’s not a quick fix
The rising attrition rate and implications on outsourcing service rates
Regional pricing trends and future pricing outlook
Sneak peeks from our 2022 Key Issues study: It’s Not a Talent War, It’s a New Reality
With the cost to secure IT talent internally and through third-party providers only continuing to rise, attracting and retaining technology workforce will require immediate and long-term tactics. Participate in our study to identify best-in-class IT workforce development strategies in leading global organizations.
The cost of hiring top-tier IT talent is escalating by the day. The persistent skills shortage has been exasperated by increasing post-COVID digital transformation spend and pent-up business demand, creating an intense short-term talent scramble.
Despite enterprises using known offensive (attraction) and defensive (retention) tricks, a demand-supply gap of 15%+ for critical roles in cloud, data, automation, agile, and security is being seen across regions. Offering compensation corrections and counters, bonuses, flexible location options, or job rotations are keeping companies in the race, but more ingenious measures are needed.
Insights to win the short-term battle
Enterprises are realizing that classical attraction and retention strategies are being relegated to “common differentiators.” Many enterprises are starting to max out on the stretched end of their annual IT workforce budgets – even as attrition levels spike beyond 30 percent for key roles.
We see this scramble persisting over the next 3-6 months. However, as pointed out by our CEO Peter Bendor-Samuel recently, fulfillment of pent-up demand and potentially increased cross-border talent movement is expected to start narrowing the demand-supply gap from the current dizzying levels as we enter 2022.
Here are a few novel approaches enterprises can take to alleviate workforce challenges to a certain extent, especially around access and time-to-hire:
Relax shortlisting criteria: Recalibrate technical competency thresholds (e.g., the stringency of HackerRack test ratings and additional technical rounds), within reasonable limits, to broaden the talent funnel in the short term. Consider increased training at the start and onboarding graduates with dedicated training investments
Involve business and operations: Follow the lead of best-in-class enterprises by having:
IT engineers, product managers, and agile coaches – actively recruit and scout in online communities
Senior IT and business leaders – elevate brand value and excite prospective candidates via informal discussions
IT teams – screen candidates to cut down shortlisting efforts, especially for critical/complex roles
Team members – approach candidates before the on-boarding to build rapport
Upskill rapidly: Stagger skilling and training for new employees joining the organization and existing employees switching roles to reduce deployment time (e.g., from 8-9 weeks to 4 weeks)
Focus on internal mobility: Re-evaluate internal career progression designs and create better growth opportunities for employees by properly mapping competencies, clearly articulating alternative roles/paths, and incentivizing critical skills development
Explore alternative channels: Expand staffing partnerships, leverage hackathons/online competitions, proactively reach out to developer communities (Hacker News, Github, Stack Overflow, and Reddit), and engage with boot camps to improve channel access
Hire location-neutral: Hire talent remotely with no requirement of the work location to tap into the broad IT pools and push decisions on Work from Home (WFH) or visas for later. Consider pods, satellites, and Centers of Excellence (CoEs) to access niche skills
Increase referral premiums: Jack up referral premiums by 50 to 100 percent, especially for critical positions
Award retention bonuses: Offer retention bonuses with a time lag of only a few months to counter immediate attrition
Staying ahead in the long-term talent race
With IT at the front and center of every business, enterprises across industries are inevitably competing for the same target talent pool. With demand expected to outstrip supply, only enterprises that take their tech workforce destinies into their own hands will survive. And the planning and structural interventions required to drive IT talent self-sufficiency need to begin today, if not already.
If you are interested in learning how other organizations are addressing the IT talent shortage, Everest Group is currently conducting an extensive study to identify best-in-class, or Pinnacle, IT workforce development strategies in leading global organizations. Take the survey
We will share a complimentary summary analysis of the survey results highlighting how your organization compares against the peer group with respect to capabilities created and business outcomes achieved.
