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Welcome to the Talent Paradox 2017 Edition

If you thought the last several years were tough in the war for IT talent, buckle up for 2017 — things are going to heat up.

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When we first wrote about the technology talent paradox in 2014, we observed that IT organizations were being called upon to deliver far greater value, much more rapidly than in the past, and with multiple demand- and supply-driven constraints on resources. There was lingering resistance to FTE hiring, insufficient funding to attract top-quality IT talent, and expanding global scarcity of specific skills and capabilities especially in emerging digital technologies and enterprise data management (EDM) and advanced analytics.

Fast forward to 2017.

Resistance to FTE hiring has waned as companies are now striving to rebalance FTE-to-contractor ratios. Technology trends, meantime, have magnified other aspects of the IT talent paradox. Business digitalization imperatives have gained urgency and expanded from focusing primarily on products, services, and customer experience to virtually every aspect of business operations. The explosion in mobile, IoT, block chain, and other fast-advancing technologies makes it a sure bet that demand for top IT talent will continue to grow at a rate far exceeding the ability of colleges and other sources to add new supply.

Then there is the incoming presidential administration’s determination to create and keep jobs in the U.S. It is becoming quite clear that U.S. companies looking to offshore jobs risk significant — highly vocal —populist disapproval. Though the current focus is on manufacturing jobs, U.S. companies are more likely now to approach offshoring decisions with extreme caution across all industry verticals and roles.

Rising risks of trade war and anti-immigration sentiment could also affect hiring for IT in negative ways. Within the first few days of the new Congressional session, Darrell Issa (R-CA) had already introduced the Protect and Grow American Jobs Act, which is aimed at tightening rules and forcing U.S. companies to pay higher salaries to foreign talent they bring in on H-1B visas.

U.S. unemployment overall stood at just 4.7% in December 2016, while wages rose 2.9% over the year. Numbers of so-called discouraged workers — those who had given up searching for jobs — also continue to show notable declines. Plans to generate up to $1 trillion in new infrastructure spending in the U.S. economy will only heighten competition for labor in an already-tightening market. And, while many of the new jobs created by infrastructure spending will be in construction and manufacturing, there will still be related demand for engineering and technology positions.   

Regardless of macro U.S. labor market trends, the relative scarcity of desirable technology talent — at affordable costs — remains a top C-Suite concern. A recent Indeed.com survey of over one thousand tech hiring managers and recruiters finds:

  • 86% saying it’s challenging to find and hire technical talent
  • 36% categorizing tech hiring as ‘very challenging’
  • 53% hiring people who don’t meet all the requirements for tech jobs

There is also evidence that an inability to fill open positions is causing IT organizations to overwork the talent they do have. Some 36% of survey respondents believe a lack of timely hiring is burning out existing IT employees and 83% say this is hurting business via lost revenue, slower product development/market expansion, and rising tensions among IT staff.

A new article titled Winning the Digital War for Talent (Winter 2017 Issue, MIT Sloan Management Review) contends that the ability of companies to attract and retain talent is “one of the most serious — and most overlooked – digital threats” they face. Some 70% of 3,700+ executives, managers, and analysts surveyed believe their organizations need new or different talent to compete in a digital world.

The authors note also that organizations failing to provide top talent with sufficient digital development opportunities face a six times greater risk of losing talent compared to the companies that do invest. And that trend extends, alarmingly, beyond just younger talent to middle and upper management levels, which helps to explain why employee retention has become such a hot topic in business leadership conversations.

LinkedIn’s Global Recruiting Trends 2016 finds 59% of companies boosting investments in their employer brands, but just 32% focusing on employee retention as a top priority for the coming 12 months. In a response titled Why Retention Will Be The Biggest Talent Challenge Of 2017, Forbes contributor Lars Schmidt suggests: “This view may be short-sighted. As the economy continues to strengthen and job fluidity continues to shrink tenure, retention will become an increasingly important factor in determining which companies thrive and which struggle to maintain sufficient talent levels.”

Key tactics for 2017

Beyond focusing on employer brand building and talent retention, there is simply no getting around the fact that many companies will need to invest in multiple areas and to explore multi-pronged approaches if they want to win the escalating war for IT talent:

  • Fortify direct hire. According to Indeed.com, some 42% of survey respondents say they struggle with identifying HR staff qualified to recruit top IT talent for their organizations. Budgeting for and identifying strategic partners to support direct hire initiatives will be a must.
  • Explore onshore outsourcing. Diversify access to talent by exploring opportunities to open talent pipelines in new/remote locations using U.S. onshore delivery models.
  • Train & develop. In specialized technical skill areas such as data analytics/business intelligence — where talent availability is scarce regardless of location, companies need to be thinking about building workforce capabilities.
  • Tap gig economy. Fill capabilities gaps with contingent workforce in contract or contract-to-hire capacities.
  • Expand thinking around who might qualify to fill IT roles. Good questions to ask: Is our definition of a high-quality candidate too narrow? Might there be underutilized talent pools — recent college grads, military veterans, or people with significant career gaps such those who’ve taken time out to care for children or elderly/ailing parents who might now be lured back into workforce participation?

No matter how strong one’s employment brand is, great creativity will be needed amongst companies looking to hire top tech talent in 2017 and beyond. Engage with Genesis10 today to learn more about our innovative programs that can assist you in addressing your own talent paradox.

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