The IT Talent Gap
In a rapidly changing landscape, tech firms and managed service providers (MSPs) alike are dealing with an unprecedented number of vacancies in their teams. What’s more concerning is that the current IT talent gap and tech labor shortage are making it nearly impossible for these critical roles to be filled. While most companies are focusing on what new cloud-based technologies they need to turn to in the wake of the COVID-19 pandemic and the Great Resignation, they overlook much more alarming truths within the industry. 73% of IT industry leaders predict they’ll struggle to recruit data scientists or fill other open tech positions. In some case, even having filled positions is not enough. The new phenomenon of “quiet quitting,” where workers tired of their jobs may do the bare minimum while looking for new careers, means that companies sometimes have less-productive workers while still ultimately needing to find replacements in the end. This worldwide labor shortage is reaching all businesses, regardless of size. Our recent report outlining small to medium-sized business (SMB) opportunity for MSPs revealed some startling stats: + Over 40% of SMBs have no internal IT staff, and most of these businesses have no more than one generalist on hand. + Increasingly, MSPs are competing against global tech firms for talent, and about 20% of MSPs surveyed said they feel retaining their staff is a challenge. Although these shortages are reaching all areas of the tech industry, specific sectors have been hit harder than others. Cloud technology experts, cybersecurity professionals, and IT generalists are all scarce in the current tech job market. What’s the impact of all this? IT companies that continue to fall short when it comes to finding talented, specialized labor begin to see drastic declines in key areas of their businesses. Failure to fill these highly-skilled tech roles makes IT companies less secure, less efficient, and less effective. With so much of our world running on data and IT infrastructure, this may be one of the biggest industry challenges of our time. IT businesses aren’t the only ones feeling the pain. This talent gap spans industries around the globe. So, the question becomes, “What can be done to bridge the current IT talent gap?” Read on as we explore the root causes and solutions.
and how to fill the tech labor shortage
The Conclusion
The Solution
The Cause
MSPs and the IT Talent Gap
Ramifications of the IT Talent Gap
Cybersecurity and the IT Talent Gap
The Problem
Part 1: The Problem
The global IT talent gap
Our shift toward a data-driven, information-based world has interconnected the global population on an unprecedented level. The struggle to attract, retain, and develop talent in the IT sphere is truly an issue that affects us all. Although the IT talent gap is felt around the globe, different regions are experiencing it in different ways and have their own unique pain points. We’ve dug into the research and profiled four key regions struggling with the current tech talent shortage and highlighted: + Where they’re struggling with talent issues + What steps they’re attempting to target them + What they think some of the root causes are Exploring in-depth profiles of each of these regions will help us better grasp the pain points the IT talent shortage is causing around the globe. With the data we’ve gathered and analyzed, we hope to provide viable solutions to this growing global challenge. Click the tabs to explore the data by region.
North America
UK/Ireland
Benelux
Australia/New Zealand
As home to some of the largest IT and tech firms worldwide, it only makes sense to start by looking to North America when it comes to trends within the industry. However, being one of the world’s leading employers in IT talent comes with its own set of challenges. In addition to an IT labor gap, there’s also an IT “size gap” in North America. Small to medium-sized tech businesses experience intense competition from mega-firms within the region regarding things like market share and profitability. Naturally, the same competition takes place when recruiting Class-A talent. In addition, North American IT leaders are beginning to have doubts about the region’s education system. Many believe that education curriculums and standards throughout the region fail to produce enough strong candidates capable of succeeding in IT roles. There’s concern on the horizon that graduates throughout the U.S. and Canada seem to lack the specialized skills and critical thinking necessary for solving the intricate IT problems of the future. This technology skills gap in the newest waves of job seekers, coupled with the exponential demand for highly skilled IT talent, presents significant problems for employers of all sizes within the region. Click on the map to learn more.
U.S.
Canada
The UK and Ireland, like other regions, went into a sort of “survival mode” in the IT sector during the pandemic. As things are starting to return to normal in the area, there’s been an IT talent exodus. Over one-third (38%) of UKI tech employees said they were looking to change positions in the next 6 to 12 months. HR departments throughout the area have kept their fingers on the pulse of this sentiment, as 45% of HR decision-makers stated they were worried about employees leaving once the market improves. The potential cost of this mass migration of talent could be £16.958 billion to the UK and Irish economies. Another concerning trend in the region is a disconnect between employees and HR professionals. Both groups have differing thoughts about what exactly is driving resignations in the area. Employees and HR professionals agree that pay cuts or freezes and issues like work-life balance are essential. However, HR professionals are severely underestimating the role toxic work environments play while overestimating the impact of things like employment furloughs. In comparison to the rest of Europe, UKI tech employees felt toxic workplace culture was a more significant concern (18% vs. 11%). Many UKI employees were also considering leaving their jobs due to a lack of work appreciation (29% vs. 23%) and poor management (25% vs. 18%). Even in places where the workplace may be “good,” UKI IT employees are still facing challenges. Many employers attempt to leverage the latest and greatest technology to increase their employees’ productivity. Subsequently, an interesting phenomenon is created where employees have too many tools at their disposal. 37% of UKI tech employees said they have too many tools to work with, and 36% went on to say the number of tools they have is actually hurting their productivity and workflow – further complicating the dynamic of UKI’s IT sector. Click on the map to learn more.
The Benelux region faces a different set of issues and concerns than other areas. One differentiating factor makes Benelux different in comparison to its population. While it’s true they’re dealing with the same pains of the IT talent gap as other regions, the Benelux area inherently has a smaller population to work with. As a result, they’re no stranger to navigating a scant talent pool – much like the one created by the technology skills gap. IT employers in the Benelux region are used to dealing with a small talent pool. With a small population, and the highly specialized skills needed for these jobs, there are only so many people to choose from. Therefore, Benelux employers are used to leveraging outsourcing or scaling their service delivery through automation to perform their daily operations with a “barebones” crew. This is a blessing as it allows Benelux organizations to lower core costs, focus on core business areas, and increase their scalability. While being small and agile is an advantage of Benelux firms, the region's language barrier is another hurdle to be climbed. German, Dutch, French, and English are the predominant languages in the area. Viable candidates will need to be fluent in one or more of these languages to be effective within the industry. Click on the map to learn more.
Technology and IT are some of the essential sectors of the A/NZ economy that are experiencing a skills shortage. The pains these sectors are feeling are due, in large part, to a lack of international talent. One particular survey of A/NZ IT firms found that 68% of the local tech employers were reporting labor shortages. The study went on to say that UX/UI skills, cloud-based professionals, and cybersecurity were the most in-demand. More than half of the A/NZ tech employers (64%) felt the current state of labor would affect their organization or department. Adding to their workforce problems is a significant miscommunication between employers and employees. In Australia and New Zealand, there’s a growing trend of employers and employees not seeing eye-to-eye on compensation. Here’s a brief look at the A/NZ compensation picture in the tech industry: + 76% of tech professionals said they were looking for a new job over wages. + Only 19% of employers who planned to increase salaries in their next review said they would be awarding raises over 3%. + 68% of tech professionals felt they deserved raises over 3%. In addition to compensation, A/NZ tech employees were equally concerned with career growth. 65% of the tech workforce in the region said they value being able to learn and acquire new skills in their work environment. Employers need to do more than just base wage increases to keep valuable employees happy. Experts suggest exploring initiatives like reward and recognition programs to ensure there are specific targets and growth opportunities in place for each employee. With all that said, there’s still hope for employees in Australia and New Zealand. While there’s some distance to cover when it comes to compensation, employees and employers seem to be aligned when it comes to a hybrid work environment. 58% of employees agreed that a mixed work environment is “the new office space,” and 63% of employers were onboard with employees reporting to the office only two days per week and working the rest of the time remotely. Click on the map to learn more.
Australia
New Zealand
United Kingdom
Ireland
Netherlands
Belgium and Luxembourg
The lack of skilled talent is not the only problem small and large IT firms face. It’s not shocking that the U.S. has experienced some economic turmoil due to the uncertainty and “new normal” brought on by the COVID-19 pandemic over the last two years. Through those trying times, however, the IT industry seemed to press on stronger than ever. The good news is tech industry salaries continued to rise despite the economic struggles brought on by the global pandemic. Salaries within the IT industry increased as much as 14% in some major metro areas around the U.S. Part of this is because almost 100% of American companies have had to implement some form of remote work technology, even if they never had previously. While this is great for job demand in the IT sector and for compensation, the talent pool within the tech sector has yet to catch up. This environment created by the IT talent gap creates a unique, two-sided problem for American tech sector employers. Firstly, IT workers understand they’re a hot commodity – especially if they have senior-level experience in the industry. These employees know they provide skills that are hard to come by, and, as a result, they may ask for significant increases in compensation, benefits, job flexibility, or more. All this brings us to the second layer of the problem. Normally when someone tells you, “the grass is always greener,” it’s a cautionary tale to just be happy where you are. In the current tech environment, however, the grass is actually greener. IT employees who don’t get what they want are more than willing to enter the job market and look elsewhere. 72% of U.S. IT workers reported that they were interested in leaving their job and looking for a new position in the next 12 months – citing limited upward mobility, lack of job flexibility, and toxic work environments as their most common reasons. Another interesting phenomenon adding to the current tech climate is the modernization of more traditional American industries. Stalwarts of the American economy like manufacturing are now implementing various technologies and digital tools to optimize how professionals within the industry get their job done. An industry that was once considered “blue-collar” experienced 82% growth in the number of jobs requiring medium-to-high digital skills over the last decade. Compounding the problem is the fact that federal investment in workforce training has tumbled by 20% over the last decade. Only about 30% of the American workforce had access to the training they need due to this lack of funding. The lack of proper training only adds to the lack of specialized skills in the region, and widens the IT talent gap. Employees in legacy industries like manufacturing are forced to adapt to a more technology-driven work environment. Longstanding manufacturing workers may not have the skills necessary to operate digital tools and AI-powered equipment – thus, increasing the pressure on the tech sector’s talent pool to fill these roles. The U.S. is also falling short when it comes to digital skills acumen. Other countries in Asia and Europe far surpass the U.S. regarding their digital proficiency. Out of 100 countries surveyed for Coursera’s 2021 Global Skills report, America ranked 40th in business, 35th in technology, and 30th in data science. In the 2022 report, it had a notable leap to 5th, but dropped even further in technology and data science, to 59 and 48, respectively. What’s more, the Southern region of the U.S. perennially tests low in mathematics – an area of study necessary for many IT positions. Lagging skills proficiency only adds to the pain and pressure caused by the tech talent shortage. When you factor in the IT talent gap, the lack of skills, and the state of the current tech job market, America is up against some real challenges. Even though they’re feeling the same pain as other regions around the globe, these problems only stand to get worse for the U.S. as their relative IT talent pool continues to shrink in the future.
2021 was a great year for tech investment in Canada, with a lot of firms from the Great White North growing and amassing talent. While a lot of this growth has been spurred on by American companies opening offices in Canada, they’re doing so because they see opportunity. U.S. tech mega-firms are beginning to look to Canada for skilled IT labor, like Meta did in March of 2021. The major U.S. software engineering firm announced plans to open a large hub in the Toronto area. Meta’s move is slated to bring 2,500 IT jobs – both in-house and remote – throughout Canada. While this is excellent news for the development of the country, it adds to an already growing problem. Throughout Canada, IT employers are in a situation where there are more open roles than viable talent. Companies like Meta are exacerbating the issue by creating an environment where small Canadian firms have to compete directly with tech giants over an already-scarce talent pool. Larger tech companies – and non-traditional companies like banks and telecoms – can offer more competitive salaries, stronger benefits packages, and more that Canadian SMBs can’t compete with. The pressure of this increased competition is really starting to bear down on Canadian companies. 40% of companies said they lost talent to higher-paying jobs, 80% of Canadian tech companies expressed a need for more employees, and 68% said they had trouble finding and training the people necessary to fill these roles. Employers in the region have reason to be optimistic. Some tech giants, like Microsoft Canada, are choosing to lead from the front and put money and energy into solving the problem at its source. Microsoft is partnering with universities throughout Canada to ensure students get the proper training and coursework necessary to be desirable tech job candidates right after graduation. Government organizations on the federal and provincial levels are also looking to align with the initiative and provide whatever resources they can.
The UK’s booming tech sector has only highlighted the need for skilled workers. 80% of leaders in the digital sector of the UK economy say that the post-pandemic priorities have hurt employee retention. 40% stated that qualified employees are being lured away by higher-paid positions. Leaders in the region’s IT space are looking for various skills, but four stand out in particular. In order of demand, they are: + Proficiency in cybersecurity (wanted by 46% of UK tech employers) + Big data/analytics (36%) + Technical architects (33%) + Developers (32%) Fortunately, the UK government is getting on board to help employers fill these roles. By 2030, Her Majesty’s Government (HMG) pledges to increase the number of people completing training in high-value, in-demand skills throughout the entire region. This initiative would help bridge the IT talent gap by 200,000 workers in England alone. Additionally, 80,000 of that 200,000 would be coming from the lowest-skilled areas of the country. The UK government can’t do it alone, though. Employers also need to jump on board and do their part in solving the region-wide tech talent shortage. An often-overlooked challenge adding to the issue is that nearly every business has some sort of tech component – even in industries that have previously been “offline.” Since virtually all businesses have IT roles that need to be filled, the amount of open IT positions throughout the UK can be overwhelming. One solution UK employers have started to implement is cross-training their workforce. Over half (54%) of UK employers say they plan to implement some sort of cross-training focusing on IT skills, and 52% say they plan on offering tech-centric apprenticeships. While having employees who are able to jump in and perform tasks across disciplines is helpful, it’s only a temporary solution. Asking an employee to fill multiple roles can eventually lead to burnout, so employers in the region should only view this as a stopgap as they look for more long-term solutions.
Like the UK, Ireland’s cybersecurity sector has been affected by the tech talent shortage. According to one Irish study, 42% of respondents said they don’t even have enough staff to perform the necessary daily operations to keep their organizations secure. And 5% went so far as to identify themselves as being “significantly understaffed.” But, what’s causing these companies to be hit so hard by the country’s IT talent shortage? Industry leaders in the region suspect the following reasons: + Candidates lacking the desired attitude, skills, qualifications, or experience (49%) + Too much competition from other employers (42%) + Candidates lack the required attitude, motivation, or personality (37%) + A lack of the desired technical skills (34%) The good news is there’s light at the end of the tunnel. Ireland has a massive influx of college graduates to work with. The 2020 graduating class was the highest single number of grads in one year in the country, with 81,461 people completing a graduate or postgraduate program. To add even more promise, more than 6,700 of these graduates received science-related degrees, and 5,600 had an Information Communication Technology (ICT) concentration. While this bodes well for the future of Ireland’s tech talent gap, there are still some hurdles. Most of these graduates will need additional training and experience to contribute to solving the IT labor shortage. Although they don’t provide a viable solution just yet, there is hope on the horizon for the Emerald Isle.
Belgium is unique compared to other countries struggling with the IT talent shortage. Most other developed countries are expecting more significant population shortages because they have much older populations. Although the Belgian population should decrease less than other countries in the coming years, having a much smaller population to begin with will still cause struggles finding workers in the marketplace. In June 2021, there were 170,000 vacancies in the Belgian job market. This marked the highest number of open roles since the statistic was first tracked in 2012. There are jobs available, but very few people have the appropriate skills or training to fill them. In the case of Luxembourg, their country relies heavily on investments in the financial, space, and logistics industries. These industries generally require a highly-specialized workforce that Luxembourg’s population can’t support. As a result, the country’s economy relies heavily on an immigrant workforce. Almost twice as many immigrants hold graduate degrees in comparison to Luxembourg’s native population, and two-thirds of their jobs are for “white collar” workers. It's evident that outsourcing will play a significant role in both countries’ success dealing with the IT talent gap. 83% of Belux companies plan to continue their IT outsourcing at the same rate moving forward. Only 39% of these companies are outsourcing their cybersecurity services, but of those, 94% are happy with their results. More of these jobs may leave the Benelux population since outsourcing is already a significant part of their work culture, and so many firms are seeing positive results – indicating outsourcing is a viable solution for solving the cybersecurity talent gap.
Compared to many other major tech regions, the Netherlands is consistently hailed as one of the top countries regarding work-life balance and overall quality of life. Unfortunately, although it’s an attractive place to work, this hasn’t solved the IT talent shortage in the region. For every tech worker in the country, there are 26 unfilled job openings, and only 6% of the total workforce are ICT staff. Within the region, the most desired positions are software developers and data scientists. In fact, the Netherlands has the second-highest need for software engineers globally, based on recent statistics. The data science field is feeling a similar strain. According to LinkedIn, the data science sector of the Dutch economy experienced 6,353 job openings from January to December 2021. Furthermore, the data shows that this demand increased as the year went on. The Netherlands’ data science job market had less than 600 vacancies until August 2021. From August to December, however, there were over 600 additional open positions. Outsourcing will be a major part of the Netherlands’ success, much like Belgium and Luxembourg. 80% of Dutch companies surveyed say they will continue to use outsourcing to their advantage in the coming years. Here are some stats that help provide a quick snapshot of what the Netherlands’ future IT workforce will look like: + 48% said they were looking to increase cooperation with remote tech professionals, the highest number in all of Europe. + Nearly half of all Dutch companies outsource cybersecurity talent, and 65% reported being satisfied or very satisfied with the result. + The Dutch financial sector is predicted to rely the most on remote tech talent, with 64% of companies having outsourcing plans. Although the hope would be to start to fill more of these roles from within the Netherlands, strong and successful outsourcing campaigns are a good stopgap for helping the region overcome the pains of the global tech skills shortage.
Australia is one of the regions hardest hit by the IT talent gap. They have a huge deficit to make up when it comes to their tech workforce. One report shows that Australia will need 6.5 million newly skilled or reskilled employees by 2025. Essentially, the Australian tech labor force would have to grow 79% from its current state. Migration and quarantine restrictions during the pandemic are partly to blame for the vast technology skills gap the country faces. Before COVID-19, Australia relied heavily on international talent migrating to the area. Unfortunately, lockdowns and travel restrictions prevented Australian IT firms from exploring that avenue as effectively as they would’ve in the past. Skilled migration has always been a large part of the country’s tech sector, but countries like China and India, where many of these workers come from, may increase incentives to stay and work in their home countries. As if the global IT labor shortage hurting people coming in wasn’t bad enough, it’s also affecting people going out – as in, more Australians are leaving home in pursuit of tech openings abroad. Specialized Australian talent is continuously being “poached” by overseas firms struggling to plug holes in their own IT workforces. Despite these issues, the Australian government remains optimistic. The country’s leadership has its sights set on being “a world-leading digital economy and society by 2030.” Multiple initiatives are being launched to that end as the country considers and enacts legislation to develop and retain talent – especially for public sector positions. Australian leaders want to attack this problem from both sides. In addition to public sector programs, leaders within the country want private sector companies to pitch in and help. These companies will be called on to heavily invest in internal training and development to help the country overcome the IT skills gap and stay competitive.
Like Australia, the restrictions and limitations enforced during the COVID-19 pandemic drastically widened the IT talent gap in New Zealand. Currently, over 1 million New Zealand workers will need some sort of digital skills training in the next 12 months. This includes both employees newly entering the workforce and those who are currently on the job and need to be reskilled. Some of the country’s biggest areas of need are cloud computing and cybersecurity. Roles in ICT, electronics, and communications eclipse all other areas in terms of skills shortages. These areas have been experiencing a sustained, long-term lack of skills both within New Zealand and around the globe. In New Zealand in particular, the labor shortage has gotten so bad that the government is stepping in and relaxing restrictions. According to the New Zealand government, if you apply for a long-term skill shortage list (LTSSL) job and meet the list requirements, your work visa may be expedited. You may be granted permission to take a position in the country without your employer needing to show that there are no New Zealand natives interested in the position. This Essential Skills visa received only allows workers to work in the country temporarily, so employers may still need to find more permanent solutions. To help combat this issue, the New Zealand government has launched a campaign to institute a Digital Transformation Plan. This plan is an all-encompassing initiative that will include input from New Zealand’s industry leaders and Māori representatives to leverage a sub-sector focus to change the country’s narrative concerning technology and innovation.
While the IT talent gap is an immense issue, causing similar pains in multiple corners of the globe, solving the cybersecurity talent gap is a sub-issue that’s just as important. Cybersecurity is one of the major IT sub-sectors on everyone’s radar. Over 60% of SMBs have experienced a financially damaging cyber attack in the past 12 months. Despite this overwhelming need, cybersecurity continues to be one of the hardest-hit sectors of the IT talent gap because it’s a necessity within all industries. According to the State of SMB Cybersecurity in 2022, 78% of organizations across all industries said they plan to increase their cybersecurity spending over the next year, and 31% cited broad level pressure in this area vs. 14% in 2020. Additionally, 94% of organizations said they’d be willing to move to a new cybersecurity provider if they offered the right solution for their business, and 39% said they’d even be willing to pay more for a company that could provide said solution (vs. 30% in 2019). This worldwide interest in cybersecurity is intensifying for several reasons. The biggest reasons are an increase in the number and effect of digital attacks. Also, many industries are calling for increased compliance legislation – necessitating more in-depth cybersecurity protocols. Now, the question becomes: with this increased demand, how does the IT talent gap specifically play out for the cybersecurity sector? For one thing, although the number of open cybersecurity positions dropped from 3.12 million to 2.72 million in October 2021, the cybersecurity workforce gap actually grew during that period. What makes this even odder is the fact that cybersecurity professionals get a high level of job satisfaction from working in the field. Data from one study shows that 2021 was the best year for cybersecurity workers. Employees in the field showed a job satisfaction rate of 77% during that year, the highest job satisfaction rate in the history of this particular survey. Experts credit the dynamism and challenging environment inherent to cybersecurity as one of the main reasons for this level of satisfaction. The biggest concern for the cybersecurity IT sector is increased demand in the space being met by a shrinking talent pool. In 2021, there was a 14% increase in demand for cybersecurity jobs. Talent supply, on the other hand, didn’t increase to match. With cybersecurity being such a top-of-mind interest for most organizations, this supply has no choice but to rise to meet demand in the industry. If cybersecurity is in demand, and people enjoy doing cybersecurity work, why the gap? The gap in this particular IT sub-sector has to do with the “back-to-office” question. Only 15% of cybersecurity pros expressed interest in returning to an office environment full-time. This lack of desire to return to an office setting has led to an above-average wave of resignation within this industry. It's important to note that changes to the job itself had a hand in this resignation wave. In the wake of the global pandemic, it wasn’t just cybersecurity pros going remote – everyone did. Countless numbers of cybersecurity client accounts going remote means a nightmare for industry professionals. More headaches and more security risks made it even more demanding for experts in the field to do their job. Naturally, other cybersecurity workers left for other reasons. Some cited lack of growth opportunities, poor work culture, burnout, and acquisition concerns as their reasons for leaving. Regardless of their reason, the resignation was overshadowed by much bigger issues within the industry. Creativity here is essential for finding ways to keep up with that demand and find that steady stream of industry professionals. Cybersecurity conferences like IT Nation Secure allow MSPs the opportunity to network with like-minded individuals to bounce ideas off each other and gain access to diverse, innovative solutions. Next we'll dive into the MSP specific challenges with the talent gap
Cybersecurity and the IT talent gap
MSPs occupy a unique space in the greater IT conversation. Many major firms rely on MSPs to avoid having to build out internal IT teams. Almost half (40%) of organizations have no internal IT staff, and those that do typically don’t have more than one IT generalist on-hand. Even though it would appear there’s a lot of opportunity for MSPs, they’re still struggling with their own talent gap issues. As time goes on, MSPs are forced to go up against giant IT mega-firms for talent more and more. 20% of MSP providers said it’s a struggle to retain quality talent in the space. The work environment MSP staff are forced to operate in may also be contributing to this phenomenon. A growing trend in the industry shows the productivity of MSP teams being undermined because of workplace tools. MSP employees either don’t have enough tools or don’t have access to the right ones. Fortunately, this trend is starting to pop up on MSPs’ radar. 30% of MSP professionals reported that they’re currently taking the necessary steps to prioritize improvements in their staff’s efficiency. This effort may help slow the exodus of employees from MSPs to the more prominent, corporate IT firms. For MSPs, the IT talent gap is coming at a very critical time. Business owners are pushing their MSPs to provide a broader range of services since more of their customers use a mix of online and offline channels. Privacy, data security, and compliance needs are also forcing MSPs to increase or improve the cybersecurity services they offer. Additionally, 25-30% of MSPs say they struggle to keep up with clients’ needs and expectations due to poor customer visibility. They fail to gain in-depth insight into clients’ needs and expectations and struggle to respond to their clients’ evolving needs and scale their sales funnels. With MSPs barely “treading water” to begin with, the IT talent gap only makes matters worse. To tackle these issues, MSPs may be forced to look inward for productivity improvements. Managed service professionals may need to employ innovative tools like PSA (professional service automation) and RMM (remote monitoring and management) to improve and refine existing tech stacks. To improve productivity, it’s also prudent to constantly revisit and update best practices – both internally and for the industry at large. A recent study also suggested an ideal sweet spot for endpoints a single TSP (technology service provider) has to service. Ideally, TSPs want to keep the number of terminals between 1200 and 1000 per technician. Another interesting insight is that your average TSP has a lot of room to grow in terms of productivity. On average, TSPs have 45 customers per technician, but this could go as high as 75 if the correct productivity regimens are in place. Cross-selling was also a key factor here, allowing for more revenue without adding more endpoints.
Next we'll explore what's causing the talent gap
Part 2: The Cause
What's widening the IT talent gap
Solving the IT talent gap begins looking at the root causes. Both companies and talent can agree that one of the most globally endemic issues is the lack of a sizable supply pool. Firms across the board recognize the need for a greater IT presence. This can stem from regulatory pressure for more cybersecurity or increased bandwidth needs due to a rise in work-from-home employees. While jobs are available, it’s becoming increasingly apparent that there aren’t enough skilled individuals to fill them all. Further complicating the issue are some of the struggles entry-level candidates have in the IT industry. 43% of college graduates don’t have a college-level job after leaving school. This is partially because a lot of the demand within the industry focuses on senior-level talent. A secondary reason is internships are replacing the role of an entry-level job, which means entry-level job candidates need to already have some experience to land those roles. We also can’t downplay the role of COVID-19 when looking at the tech talent shortage. The pandemic caused countless IT professionals to reevaluate their relationship with their employers. Additionally, considering the greater number of positions open, power has now shifted to the hands of the talent and many IT staffers are now considering moving jobs for more pay or better opportunities. In 2021, only 29% of IT employees said they intended to stay with their current employer. When you look at the subsection of employees ages 18-29, this number drops to 19.9%. But their reasons for leaving are different than you may think. Employees are starting to consider more beyond compensation, benefits, and growth opportunities. Social responsibility played a key role in workers’ job satisfaction. 61% of employees said they were more likely to switch jobs in favor of a company with more social responsibility. Employees who do good work want to know they’re doing good in the world as well. There are several facets to cover when it comes to the true source of the IT talent gap. And although it may be challenging to put an issue this large and complex into words, the most glaring problems that need solving are: + An overwhelming need for skilled professionals, creating a huge market for talent. + Talent reevaluating their priorities amid a massive paradigm shift in tech careers. + Companies failing to keep pace with expectations in areas like compensation, culture, and career path opportunities.
Let's uncover the ramifications of the talent gap
What's widening the IT Talent gap
These root issues, and the hiring and retention issues they cause, translate into greater problems for the IT industry as a whole. One of the most obvious of these challenges is in the financial realm. Failure to retain talent has a very concrete cost. The average cost per hire in the U.S. is $4,129, and IT jobs are generally on the higher end of that spectrum. On top of that, new hires typically need 8-12 months on the job to reach peak productivity, with an average turnover rate of 19%. This leads to a situation where poor employee retention can actually hurt a company’s profitability since the company isn’t able to maximize the ROI from an employee’s work which, in turn, hurts overall production. Another ripple effect of the challenges surrounding the skills gap is their impact on future innovation in the field. Companies may be positioned to adopt emerging technology, but the lack of skilled talent prevents them from doing so. 64% of IT execs said this is precisely the case, compared to only 4% in 2020. Some of the key areas where the adoption of new technology is significantly affected by the IT labor shortage are: + Computer infrastructure + Platform services + Network + Security + Digital workplace + IT automation + Storage + Database systems Leaders in the industry claim this lack of skilled talent is the main risk factor preventing the adoption of 75% of IT automation technologies and 41% of digital workplace technologies. In the long-term, this lack of talent and the expensive, time-consuming hiring process led to reduced service delivery margins, inhibited growth, and a restricted ability to provide premium care.
Read on to discover how to solve the talent gap
Ramifications of the IT Talent gap
Part 3: The Solution
Bridging the IT talent gap
With the stakes this high, it’s essential that IT companies explore every possible option for bridging the IT talent gap. Employers need to begin thinking outside the box by employing traditional and innovative tactics to attract and retain new talent. We’ve profiled a few key methods, but it’s important to note that many IT firms are using some combination of these, as well as other methods, to handle their talent needs.
The diversity and inclusion topic can be a loaded one because it forces tech employers to take a good, hard look in the mirror. IT companies need to be honest about whether or not they’re taking advantage of the entire tech talent pool available. Many minority groups find themselves underrepresented in the IT world. Part of the problem may be that employees and executives in the space have a massive disconnect on this issue. Only 24% of women and minorities experience a feeling of belonging within the IT industry. When you compare this to 75% of executives who feel like they do belong, it’s easy to see why there might be a diversity issue. What can IT leadership do to make these individuals feel more comfortable? Mentorship is a valuable tool in this area. A senior-level employee taking a new, minority employee under their wing can go a long way toward making them feel included, accepted, and like they belong. This is especially true for higher management or C-level roles where there can be a lot of “office politics.” To achieve more diversity in IT roles, we need to improve the diversity of the talent pool as a whole. This means HR executives should be tapping into more diverse locations when recruiting talent. Take New York, for example. Out of 14,232 IT graduates in New York City, 1,210 were Black, 1,686 were Hispanic, 2,574 were Asian, and 3,969 were women. All told, that’s 9,439 minority graduates out of the total 14,232, or just around two-thirds of the total graduate population. Those numbers trend higher than the U.S. average, making New York City an untapped resource for IT execs looking to fill open positions. Other cities with similar statistics are Los Angeles, Atlanta, Baltimore, and Washington D.C. The most exciting news is that any business of any size can access these virtually undiscovered talent pools with our new work-from-home culture.
Keeping with the theme of employee satisfaction as a retention tool, it’s also important for companies to invest in an internal process for professional development opportunities. The benefits here are twofold: 1. It shows employees that their employers are invested in their long-term success. 2. Employers benefit from a workforce with new and improved capabilities that enable them to tackle a wider variety of tasks in the short term. The beauty of these programs is that they can be linked to specific needs or areas of specialization. For example, by linking cybersecurity training to specific requirements or career plans (CompTIA, ISC2, etc.), organizations can craft and mold existing talent to fit their needs. This is particularly essential in areas like cybersecurity where roles are significantly outstripping supply. A good example of this in action is our partnership with CompTIA. As a part of the Biden Administration’s Cybersecurity Apprenticeship Sprint, new IT professionals with CompTIA certifications will be partnered with IT businesses with hiring needs for Registered Apprenticeships. Companies like ConnectWise that service MSPs are uniquely attuned for their hiring needs, and a partnership like this is a natural fit, putting people eager to work with companies eager to hire. A challenge most MSPs face with implementing an internal training program is not knowing where to start. We’ve put together a quick list of tips to help you effectively launch your own internal training initiative: + Promote mobile learning + Facilitate peer learning + Adopt a learning management system (LMS) + Include gamification (quizzes, surveys, etc.) + Use professional courses Taking the time to develop internal training will not only sharpen the talent you have but will also attract new talent. When people hear your organization is an environment where they can learn, grow, and are cared about, you’ll place yourself as one of the front-runners for highly-skilled talent coming into the job market.
Several studies throughout the tech industry have found a lack of clearly-defined career goals and opportunities for advancement were the biggest reasons for IT professionals leaving their jobs. Pursuing a different career path can happen for several reasons, from employees feeling like a lack of career pathing hurts their earning potential within the company to feeling like the company is disorganized or poorly run. So, how can employers prevent their best talent from wanting to leave? One of the most straightforward solutions is mentorship. Leveraging the knowledge and experience of your senior employees allows you to implement a reliable career path program quickly. Their decades of insight are the perfect training source to help younger employees develop and grow. Industry resources like IT Nation Certify also expand that potential mentorship and community pool. Here are some questions you can ask employees about their preferred career paths: + What would you like to accomplish this year? + What professional job or career goals do you hope to achieve in three years? + What additional support can this organization provide so you can accomplish these goals? + Are there any projects you’d like to implement, expand, or join? + Do you think any of your current duties could benefit from additional resources or training? By asking these questions, you’ll gain much more insight into where your employees currently stand and where they want to go. You’ll also find your employees become much more engaged. Taking an interest in their growth makes them want to see the company succeed because, ultimately, it means they will succeed as well.
In some cases, IT companies might find it easier to tackle these problems together rather than independently. Through mergers and acquisitions, IT execs can attack talent issues directly by creating a larger talent team. The new, larger entity will typically be able to develop greater operational efficiency through increased role specialization. At a larger scale, it will also make it more affordable to add more tools to help automation. Mergers and acquisitions (M&A) are an important tactic for MSPs to consider since their ability to scale up services to serve more clients is incredibly important. If you consider this strategy to grow your MSP business, it’s essential to have a plan in place. When planning for M&A, several questions should be answered in advance of doing an acquisition. Here are a few to consider: As you can see, there are many factors that impact success with your mergers and acquisitions plan. Your team needs to analyze the pros and cons of the merger, create a plan that will allow for the combination of resources to succeed and meet critical goals, and execute. In some cases, organizations may know that a merger or acquisition is a good move for them, but aren’t sure exactly how to execute it. This is where industry support can be useful. Peer groups like those offered by IT Nation Evolve allow your team leadership to develop a comprehensive understanding of mergers and acquisitions, covering key elements in a face-to-face course setting like: + corporate strategy + valuation + due diligence + financing decisions + transaction structures + integration + emotional impact + lessons learned
While the previous methods can be effective, there may be some ramp-up time involved to get them off the ground. As a result, companies need to employ some sort of stopgap measure to fill the immediate needs for their daily operations. Many IT execs have turned to outsourcing and hiring freelancers to fill key roles in the short term. These methods can serve as an excellent bridge option while other, more long-term efforts bear fruit, but they also come with their own unique considerations. Outsourcing Expanding to a global talent pool can allow IT companies to take advantage of established talent pools and teams, often at a cheaper price point than most domestic teams. MSPs can also take advantage of outsourcing through dedicated techs. These professionals give MSPs access to the technical expertise necessary without the costs of hiring internally (401k, benefits, taxes, etc.). Their talents can be leveraged to handle everyday IT tasks like patch management, support tickets, backup management, etc. The fast pace and new issues brought on by the modern digital landscape sometimes require MSPs to push past conventional outsourcing methods in favor of a more innovative platform. Offerings like the ConnectWise Incident Response Service aim to provide this specialized outsourcing support to help MSPs move into the future of outsourcing technology. Using freelancers If the immediate talent need is more minor, there may also be freelance professionals that companies can task for specific projects or more extended engagements. With the increase in remote work over the past two years, it’s an easy transition for companies to adopt a hybrid freelancer model. In today’s digital age, finding freelance talent is a quick and simple process. Marketplaces like Upwork and Fiverr catalog freelancers with various specialties and skills and offer their services at a significant discount compared to hiring a full-time person to fill the same role. If you’re wondering what type of work you can outsource to a freelancer, here are some of the top tech skills you can search for: + WordPress + Web design + Web programming + Graphic design + API + Shopify + JavaScript + CSS + HTML + PHP Freelancers are a great resource to help you and your team achieve your goals. As long as you know exactly what you want from them and where to plug them in, they can be an invaluable resource to any IT company. Expert service support As valuable as freelancers are, their usefulness can taper off as your business and client list starts to grow. Their bandwidth is going to be finite, and creating an army of freelancers can be both difficult to manage and unreliable. This is where expert service support comes in, offering a more manageable and scalable way to outsource aspects of your workload. Help desk support In many cases, your internal techs are focused on the most complex and challenging problems, but you still have to deal with the day-to-day requests from clients. While these can be relatively easy to solve, they can also pile up over time. As your client list grows, these small ad-hoc requests and issues can eat up more and more of your internal team’s time. Finding a help desk service allows you to outsource a lot of those smaller, simpler tasks, so your internal techs can focus on the larger issues within your business. NOC services The issue of scale can also arise with the non-client facing sides of your team’s work. Things like patch management, system upgrades, and network monitoring are essential, but will become more and more of a time sink as your business grows. To avoid putting a cap on your success, consider looking into NOC services. By outsourcing items like patch deployment and device monitoring to teams that you can trust, you can continue to scale and hit revenue goals without worrying about talent shortages. SOC services Similar to NOC services, SOC expert services make it easier for MSPs to scale operations through support for baseline work. However, SOC services focus on cybersecurity support, including constant threat monitoring and response as well as research on the latest security concerns. With the cybersecurity segment acutely affected by the IT talent gap, SOC outsourcing could be a critical part of your business’s scaling plans.
The old adage of “if you want to go fast, go alone. If you want to go far, go together,” rings true when having a conversation about the IT talent gap. While it’s easy to get tunnel vision and focus on your business’s issues, many other companies in the industry either have already or are currently dealing with these same challenges. Don’t get hung up on trying to create a brand-new solution. There are many proven paths to success, and learning from your business community can set you on them. It’s very much the same mindset of reaching out to a friend or family member when you have a question on something. But with this said, what are some of the best options in terms of learning from and finding that business community?
The Impact of Community
Career Path Programs
Internal Training Programs
Expanding Hiring Pools
Mergers and Acquisitions
Outsourcing and Using Freelancers
We mentioned peer groups in passing before, but it bears repeating how valuable these can be. It’s tempting to put your nose to the grindstone and focus solely on your team, but you can learn so much from those that have had similar experiences. Learn from the successes and failures of others in key areas, including hiring and retention in IT. Another aspect of peer groups that doesn’t often get discussed is accountability. Meeting with peers outside of your organization ensures that you are getting unfiltered advice and feedback when you share your strategies and progress. IT Nation Evolve is an example of a peer group specifically targeting MSPs. It’s essential that you find a group of professionals in your niche so you can effectively learn from each other and make the most out of your time.
Peer Groups
Conferences
Conferences have always been a great way to meet like-minded professionals, but you may not be leveraging them as effectively as you could be. Many people go to them with the intention of networking, but conferences also make a great learning opportunity. Take a look at some of the industry talks and events scheduled and be ready to scout some of those for insight from experts. Do you know someone you want to learn from is at the conference? Don’t just make an introduction, try and pick their brain if time allows. It’s also important that the conferences you visit are catered to your niche. A conference only tangentially related to what you do means a lot of the insights that you get and people that you meet will only be tangentially useful to your business. MSP-focused conferences include IT Nation Connect and IT Nation Secure.
Is your company foundationally ready to do an acquisition? Even the best acquisitions are challenging. They add stress on your leadership, admin, sales, service teams and you want to make sure that you are ready for the challenge. One way to do that is to assess your Operational Maturity Level™ (OML™) by doing an OML Assessment in SLIQ. You will find out how high your OML is, on a scale of 1-5, and learn what you need to do to improve it. As a bonus, you will be able to determine the OML of the company you are looking at acquiring, which will help you understand if you are aligned operationally.
How are you performing financially and what impact will the acquisition have on your bottom line? At the end of the day, you are running a business and knowing how your business compares to other MSPs will help you understand where to improve. Before doing any acquisition, you need to understand what the financials of the MSP you are thinking of acquiring are telling you about their business. And, what will the combined entity look like financially after the two are integrated. MSPs that benchmark using the Service Leadership Index® know exactly how they compare to top performing MSPs and where they need to improve.
What are the cultures of the two companies like and will they line up? Employees are typically under no obligation to stay on after the MSPs combine, so it is critical to the success of the deal to know whether the combined company will be a place that the employees want to continue to work. After all, if a significant number of employees leave after the deal closes, there is no gain of talent.
What will be required to integrate the two businesses? Most buyers focus their attention on negotiating the deal, but in reality, the success of the acquisition longer term will be determined by how effectively the buyer integrated the seller, or in the case of a merger, how effectively the two companies integrated. The first ninety days are especially important and should be planned in detail, in advance of the closing date.
Scaling your service delivery through automation and employee utilization are effective tools for companies struggling with talent needs. With the severity of the IT talent gap being what it is today, using the people you have effectively, or relying less on people in general, should be top of mind for IT execs. Automation The idea behind automation and the technology skills gap is to reduce the demand for talent by reducing the reliance on people. This can be especially effective in the security world, where things like patching, disaster recovery, and threat detection can all be automated and reduce the need for specialized talent. It’s true that automation can reduce the need for specialized talent, but IT execs and MSPs need to be careful not to fall into the trap of relying solely on it. Some highly-skilled talent will still be needed to run and monitor these systems. So, while automation does relieve some of the pressure of the IT labor shortage, it doesn’t solve it completely – at least not yet. Budgets and expenses also limit the deployment of automation platforms throughout the industry. While this technology is becoming more and more established by the day, it’s still relatively new. IT execs will need to carefully examine AI/automation platforms to see what they can afford and what services will be most impactful to their business. Here are just a few ways IT companies are using automation to their advantage: + Offer customers 24/7 support solutions + Streamline project management and automate routine tasks to increase employee satisfaction + Improve business insights through real-time data capture and analysis + Decrease unnecessary service calls + Manage inventory + Speed up threat detection and response times Talented IT professionals are continuously working on improving the artificial intelligence and deep learning that are necessary for complex automation technology. While the list above is a great start, AI technology will continue to take on more responsibility in the future and hopefully drastically reduce the global pain felt by the IT skills gap. Employee Utilization Earlier, we mentioned how many IT professionals are frustrated with an overabundance of tools that hampers their ability to do their jobs. This feeling of overwhelm is a symptom of a larger issue. When companies struggle to achieve effective staff utilization, it can lead to employees wanting to leave. In the current IT environment, skilled tech employees should have little difficulty finding another job. Tech employers need a method for determining how productive their internal systems are and how productive employees can be under the current framework they’ve provided. Employee utilization is the process of looking at employee hours and figuring out how much time is spent on billable work vs. administrative tasks. By using this method, managers can reach their most effective staff utilization, and employees will be less frustrated by time distractions. There are two key metrics employers need to track to calculate utilization rate: billable hours and total hours. This shouldn't be too difficult if you’re using any type of time management or project management software. Once you have these numbers tracked, the formula to calculate the utilization rate is as follows: Total billable hours / Total hours available Most companies will have a target utilization rate their employees should keep as a goal. That target will be different for each organization depending on their industry and their specific deliverable, but taking the time to calculate these numbers can offer you a new level of insight into your team and offer employees a new level of productivity and satisfaction.
Automation and Employee Utilization
Bridging the IT Talent gap
With the stakes this high, it’s essential that IT companies explore every possible option for bridging the IT talent gap. Employers need to begin thinking outside the box by employing traditional and innovative tactics to attract and retain new talent. Click the arrows below to flip through a few key methods. It’s important to note that many IT firms are using some combination of these, as well as other methods, to handle their talent needs.
Building a talent foundation in IT
The IT talent gap is becoming an increasing problem for both the world’s largest tech firms and boutique organizations trying to attract, develop, and retain new talent. There are a few key reasons for this phenomenon: + Rapidly growing IT and security needs have created a demand growing faster than skilled professionals can enter the workforce. + Entry-level professionals are finding difficulty getting the opportunities and support they need to expand their skillsets. + More seasoned professionals are grappling with burnout, internal inefficiencies, and a market flooded with opportunities – creating a “grass is greener” situation. IT firms and MSPs need to think long and hard about the workplace systems and environment they’re creating, and whether or not they’re setting themselves up to attract new talent. In addition, they also need to consider implementing tools and strategies that allow their existing teams to be as productive as possible. Navigating this is the only way to keep your business best-in-class as we move into the future of the IT landscape and help reverse the trend of this growing global IT talent gap.
