If you’ve been looking to hire tech talent, you’ve likely come up short. Like so many other things, human resources are harder to find and more expensive than they were pre-pandemic.
While the tech talent shortage isn’t new — it’s been going on for years — the related salary increases are impacting IT budgets and project timelines. Experts with specialized skills are among the most sought after, such as those who know how to translate infrastructure into code and security specialists with specific competencies, but high demand for tech workers covers the entire IT spectrum.
Budgeting to recruit, train, and keep the tech talent you need is a critical priority when budgeting for IT in 2023 — it’s one of the five connected budgeting differences for the coming year.
Here’s why tech workers are in greater demand and some strategies you can use to help with budgeting for the changes.
A different kind of supply chain shortage
The pandemic threw a wrench into the available supply of new technology equipment and it’s done the same for tech talent.
The ManpowerGroup Employment Outlook Survey for the third quarter of 2022 found that technology skills are the most in demand in the US, with 31% of employers reporting having difficulty filling the roles. The data explains why:
“CompTIA, a nonprofit association for the IT industry, counted more than 443,000 employer job postings for tech positions in the US in April, bringing the total to 1.6 million so far in 2022. That’s a 40% increase in US tech positions over the same period in 2021. At the same time, CompTIA puts the US unemployment rate for technologists at 1.3%.” Mary Pratt, 10 Ways Inflation Will Impact IT, CIO magazine
Labor statistics show the job growth rate for IT workers remains flat because the number of available tech workers is not keeping up with market demand. Instead, many existing tech workers keep changing jobs.
Companies are competing with each other — and with MSPs and MSSPs
Recruitment is relentless and advanced online recruitment tools make it easier to do. Connecting with new opportunities, conducting midday interviews, and moving from one company to another is practically seamless when employees work remotely.
When you need to hire tech talent for internal IT positions, you’re not only competing with recruiters representing companies that are in the same boat as you, but you’re competing with a growing number of managed IT and tech companies.
Usually, MSPs, MSSPs, and tech companies can pay higher salaries and bigger signing and retention bonuses.
According to John-David Lovelock, research vice president for the General Managers team at Gartner, CIOs hiring for internal IT departments will likely lose this war for talent. Companies with internal IT departments are also turning to consultants to handle some of the strategy and workload — Lovelock refers to research that shows CIOs will likely spend an average of 11% more on IT consulting services this coming year.
That doesn’t bode well for companies in the coming year, but the good news is the extreme global tech talent shortage is expected to taper off by the end of 2023. By then, most companies will have completed their most pressing digital transformation projects and have had the time to train and retrain their IT staff.
Even in 2024, companies should still expect to pay about twice the inflation rate for salary increases compared to pre-pandemic.
Tech workers want more than money
While most surveys show that compensation is the top driver in attracting and retaining IT talent, there’s more to it. Today’s tech workers want balanced lives, not just health insurance and matching 401K contributions.
At Leapfrog, our growth, turnover, and wage increase rates are in line with other MSPs, and we’re seeing the key to finding and keeping tech workers is to offer benefits beyond monetary compensation, says Donna Krüger, Leapfrog Services Director of HR.
“The biggest hiring hurdle we’ve faced is a majority of post-pandemic employees who want to work 100% remotely to add flexibility to work-life balance,” says Krüger.
With the pandemic came a different set of priorities, leading to The Great Resignation. Hybrid work models like Leapfrog’s give people the opportunity to work remotely while still building in-person relationships with coworkers and participating in the company culture, which is an attractive option to a lot of top talent, but not all.
Companies that require their IT workers to show up at the office 100% of the time will have to look harder and work harder to stay fully staffed.
Training is more than a perk
Employees across all industries want to keep developing their skills through continuous learning. Staying current is especially important to tech workers and vital for their growth and career advancement, Krüger says.
Companies that budget for training (and retraining) their IT staff are investing in their employees’ and the company’s future. However, to train well, you need to know what to train for. Understanding what’s coming down the pipeline with new technologies, finding an appropriate training program for each development or change, and signing up workers before all the spots are taken, is a nonstop process.
Without providing the appropriate training, companies can quickly fall behind. A company’s primary adoption barrier to emerging tech is the lack of talent that knows how to use it.
Ownership from the inside
Some companies with internal IT departments are taking a novel approach to filling openings typically filled by technology specialists. They’re placing people on their IT teams who are already in the organization but within other departments, such as the accounting department.
Moving a person who knows the business to a position that focuses on how applications can drive the business forward is a strategy that can deliver better and faster results than recruiting and training.
Leapfrog has seen it firsthand with our clients multiple times. Internal IT system owners need to understand business strategy and goals, not how to maintain IT infrastructure.
Can you reduce labor cost by investing in better technology?
Investing in a modern IT environment gives you the foundation you need for a more effective and sustainable business — and you may be able to run it with fewer workers. New technologies offer efficiencies and can deliver better ROI.
“The costs of tech won’t be going down, but the more spent on tech, especially tech that increases productivity, the greater the potential savings on labor cost, so the net outcome can be less overall spend. At a time when the cost of acquiring and training talent, and then retaining it is high, this adds to the deflationary case for tech investments even if a company is spending a higher proportion on tech.” Eric Rosenbaum, The corporate spending that can’t wait for a recession to pass, CNBC.com
But you will also need tech workers who are trained to operate a modernized environment.
What’s more, as companies continue to automate jobs involving repetitive, structured, non-creative tasks — such as those in manufacturing, retail, logistics, and some professional fields — they create new jobs simultaneously. The machines that do the work need people to run them, and those people are technology workers. Automation further exacerbates the tech talent crunch as a result.
Budget advice and caveats
There’s no silver bullet for budgeting to find, hire, and retain the IT workers you need — demand and talent supply are out of balance.
For your 2023 IT budget, you’ll need a talent strategy that includes higher salaries, more perks, continual training, and creative thinking. Leapfrog recommends that you:
- Be realistic about your ability to find, train, and retain — plan your timelines accordingly
- Look for talent that will drive your business forward rather than replace former employees
- Avoid overstretching your current employees
- Reward your top talent
- Hire internal IT resources to gain a competitive edge and outsource your day-to-day management activities
It’s also helpful to understand what’s to come. It’s highly unlikely that the need for tech workers will diminish as technology continues to advance.
One of the benefits of partnering with Leapfrog is you can offload the process of tech worker hiring and retention. Leapfrog constantly recruits and trains, promotes from within, and maintains a deep bench of experts in every area of IT — it’s part of our responsibility to deliver consistent, secure, and high-performing IT.For a deeper discussion of the five key budget changes and how they impact your 2023 budget, download Leapfrog’s report, Making Sense of What’s Different for IT Budgeting in 2023.
