The Skills Gap in Tech Is Poised to Expand. Employers, What’s Your Action Plan?

By Ryan M. Sutton, Executive Director, Technology Practice Group, Robert Half

Much has changed in the world in recent years, but the shortage of skilled technology talent available in the job market has been, and remains, a constant.

It’s a significant issue for businesses across industries, especially for those hoping to recruit professionals with skills in rapidly evolving areas of technology like artificial intelligence (AI) and data science. In a recent Robert Half survey, 95% of technology managers face challenges finding skilled talent. Sixty-nine percent said they are hiring for new positions, while 29% reported that they are recruiting talent for vacated roles.

The struggle to address tech skills gaps in their workforce could set companies back in their plans to innovate and pursue new business opportunities. It could also prevent them from meeting the needs of their customers.

Consider that 62% of tech hiring managers who told us they plan to expand their teams in the first half of this year said that business growth is influencing their hiring decisions. Meanwhile, 48% said they are hiring new talent because their current employees lack the requisite skills. And 46% of tech hiring managers told us they need to staff roles sitting open due to employee turnover.

Many technology business leaders are worried about a persistent and growing tech talent shortage: In the latest Executive Perspectives on Top Risks survey from global consulting firm, Protiviti, a Robert Half subsidiary, industry executives noted that the ability to attract, develop and retain top talent was a top risk for their business not only this year — but over the next decade.

For more insight on tech hiring challenges, read the latest Demand for Skilled Talent report from Robert Half.

Where are some of the critical skills gaps in tech?

Where are businesses struggling the most right now to secure in-demand technology talent? Based on Robert Half’s research, the top five areas for U.S. tech employers are, respectively:

Cloud architecture and operation
Security, privacy and compliance
Software and application development
Technology process automation
Data science and database administration

Digital transformation is driving the need for these and other skills in many organizations — including AI skills. That trend will likely continue, given that global spending on digital transformation is expected to reach $3.4 trillion within the next three years, according to IDC. And for many businesses now, these initiatives are no longer about catching up — but getting ahead.

Many firms needed to accelerate digital transformation during the pandemic to accommodate a massive shift to virtual ways of working and operating. But they’re starting to look forward. That’s why many digital transformation projects are specifically intended to help companies prepare to adopt and work with AI. To be agile in a cloud-first, data-driven world where AI is infused into almost everything we do — and interacting with us in more natural ways — future-focused business leaders understand that time is waning fast to build a tech foundation to help their organization succeed in that future.

To help underscore the sense of urgency, I suggest that employers — and any professional interested in how AI is poised to change the nature of everyday work — check out the keynote presentation from Microsoft Inspire 2023.* As Microsoft CEO Satya Nadella told the audience, “There is no question we are in the midst of a massive platform shift with the new generation of AI that’s going to transform pretty much every sector, every category of computing.”

Nadella, along with several of his colleagues, used the keynote segment to demonstrate just how transformative AI is going to be as a workplace helper. I attended Microsoft Inspire, and I can tell you that I was truly inspired to see many of the Microsoft AI platform innovations introduced at the event.

4 strategies to help overcome tech hiring challenges and skills gaps

With all this AI-driven change coming to the workplace soon, I urge employers to move fast to hire talented technology professionals when they find them. Robert Half’s research shows that 83% of hiring managers have missed out on a good hire in the past year — and nearly one-third cited a lengthy hiring process as the reason they missed out.

Also, for those employers assuming that recent layoffs in the tech sector have deepened the pool of candidates for hire, know that most of this talent is already out of the hiring market. According to McKinsey, 80% of laid-off tech pros found new jobs within two to four months. And keep in mind that layoff activity has slowed dramatically since early 2023. Our own research indicates that just 1% of technology managers expect to eliminate roles through the end of this year.

Now, with all that in mind, here’s a look at four ways your business can manage technology skills gaps more effectively. These strategies can help you shape an action plan that’s best suited to the talent needs of your organization and aligns with your business objectives and available resources:

1. Create internal professional development programs and training for employees

Employers can become so focused on trying to recruit new employees that they overlook the strengths and potential of their current team. This is a missed opportunity — and it can undermine retention, too.

Robert Half’s research suggests that 45% of technology professionals are either looking now or planning to look for a new job in the first half of 2024. Give valued employees more reason to stay by providing them with meaningful opportunities for professional development that will benefit them — and your business.

Another strategy for growing talent from within is to recruit high-potential candidates and give them on-the-job training and mentoring. This investment can also help you build a reputation as an employer of choice and attract strong hires.

2. Support employees’ participation in external upskilling programs offered by third parties or technology companies

It’s unlikely your business can provide all the training in-house that your tech team needs to be future-fit. So, look to outside resources that provide online courses, tutorials and workshops that can help your employees to upskill or even reskill. Microsoft, as an example, offers an AI Skills Initiative with free coursework to help professionals learn introductory concepts of AI.

3. Increase salaries to recruit job candidates with in-demand technical skills

Through our recent surveys of tech hiring managers, we have learned that many businesses are prepared to offer higher salaries to professionals with in-demand skills.

For example, 55% of tech hiring managers told Robert Half they’d bump up compensation for top talent in cybersecurity, and 51% said they’d step up salary offers to candidates with in-demand cloud skills. Also, nearly half of respondents (46%) told us they would boost salaries for new hires with AI and machine learning skills.

4. Embrace a flexible staffing model

One additional strategy to consider adding to your action plan is to embrace a flexible staffing model. This approach will allow you to engage highly skilled tech talent when and for as long as your business needs them.

Many experienced professionals in the tech field choose to work on a contract basis because they enjoy the diversity of work. And these arrangements can help you keep projects moving forward while you search for new hires or expand the skill sets of your current staff. In many cases, we see employers decide to keep contract staff in place for full-time engagements or invite them to become part of their permanent team.

If there was a quick fix to address the dearth of skilled tech talent available for hire, I’d be delighted to offer it here. The reality is that it will take hard work and, no doubt, many years to resolve the issue, and it will also require focused effort by schools, businesses, the technology community and others to drive positive change. But the four strategies outlined above can be tactical solutions for employers looking to ease tech skills gaps in their businesses today — while also preparing for the AI-powered future of work.

To learn more about the flexible staffing model and how this approach can help your organization address its tech skills gaps, get in touch with Robert Half today.

Ryan M. Sutton is an executive director at Robert Half, leading the technology practice for the firm. He joined the company in 1999 as a recruiter and has been promoted multiple times to roles of increasing visibility. Prior to joining Robert Half, he worked in public accounting.

Follow Ryan on LinkedIn and Twitter.

*Microsoft Inspire is a conference for Microsoft’s partner community. Robert Half and Protiviti are members of the Microsoft AI Cloud Partner Program.