Is it difficult to hire and retain tech talent?
87% of executives from large US employers will have difficulty hiring and retaining tech talent. 68% have a problem today.
A review of 2019 hiring surveys warned that tech talent was already hard to acquire. With over 1.1m open IT jobs in 2020, hiring is proving to be a very significant challenge for organizations this year. For companies with tech talent in place, the risk of losing that talent is high.
A 2019 DICE survey of over 25,000 US technologists indicated 38% of tech employees will likely change employers within the next year.
This figure was pre-COVID and did not account for the massive changes in long term and work from home policies from tech giants like Google, Twitter, and Amazon. While we won’t be able to quantify the exact effect of this for about a year, signs of a tech-xodus are currently beginning to show in the nation's largest tech hubs. An anonymous survey of 4,400 tech workers, conducted by Blind, found that two-thirds of employees would consider leaving the Bay Area if they had the option to work remotely.
When you look at the business cost and impact of hiring and retaining an employee pre-COVID the numbers are staggering. A single tech employee leaving a company:
Costs up to 200% of their yearly salary to replace
Takes an average of 3 months to replace and onboard
Disrupts projects, workflows, and team dynamics which compound into lost productivity (AAW)
Our 2020 Executive workforce study conducted on Fortune 1000 companies shows that 68% of employers with 500 or more employees report hiring and retaining tech talent as a problem today, and 19% saw this as a problem pre-COVID.
As mentioned in previous posts, but worth quickly revisiting, our study focused on New Tech companies in the Fortune 1000. Companies outside FAANG (Facebook, Apple Amazon, Netflix, and Google) who have matured in their digital journeys and require many of the tech roles as the traditional giants.
This means that companies who want to hire for their newly created tech roles are not only competing with high-paying FAANG companies and startups, but need to up their incentive packages since the trained talent can now work wherever they like.
Simply put, companies cannot acquire employees on the open market and those who can are at risk of even higher attrition rates now that remote working is becoming a norm. This impact will go beyond recruiting.
The low availability of talent is costly
Without enough skilled candidates for the number of tech roles in the U.S., business is bound to be impacted. The projects and company growth plans that these roles are intended for will be compromised.
To quantify this we asked companies what the business impact would be by not being able to fill roles with the right tech talent across six common challenges. We found that:
82% of large U.S. employers had projects slow down due to not having the right tech talent.
50% were freelancing domestically at higher cost
38% had projects not start, or had to reduce project requirements
29% had to stop existing projects or freelance overseas
What is the solution?
We believe companies can take charge of their own pipeline quickly and not have to rely on the traditional open market for talent. Many of the needed tech skills are not only trainable but do not require a four-year degree. Further the shelf life of trained tech skills is less than 5 years.
One of the many benefits of an apprenticeship training program is an organization can train for the competencies they need for a specific tech role at scale (e.g., 200 Jr. Data Analysts), while also imbuing their company culture, values, and ways of working through this innovative approach.
By cultivating the required technical skills with necessary cultural and soft skills, organizations can train more highly engaged and productive employees who have over a 90% retention rate.