For years, organizations gave digital transformation lip service. However, when the pandemic hit in 2020, organizations were forced to pivot immediately as their workforces transitioned to remote work, forcing companies to embrace digital transformation. This transformation increased the demand for digital tech skills and opened more positions for skills related to critical technologies such as cybersecurity, cloud computing, AI and machine learning, IoT, and big data, by 5x times, creating a shortage of qualified talent. Today, the global workforce does not have enough skilled workers to fill this ever-increasing talent demand.
Global Attrition Rates are Skyrocketing
Attrition is something that keeps every employer up at night. In order to stay competitive in this environment, companies are offering higher salaries to skilled candidates to win the talent war and meet their talent requirements.
Drivers of Attrition
There are several reasons why people leave their positions, including:
- Individual. Career aspirations, personality factors
- Organizational. Culture, onboarding, compensation, lack of growth in career path, no flexibility and freedom, job stress or burnout
- Others. Peer pressure, poaching, work environment
On the other hand, many existing employees face the challenge of catching up with in-demand skills. This has caused high wage inflation, making it difficult for SMBs to compete with big enterprises. According to NASSCOM, the highest supply and demand gap in tech talent is in the U.S. at a whopping 29% in 2020-21.
Competitive Job Market
High-caliber candidates always have multiple offers. While big firms are ready to offer more competitive wages, it can be crippling for tech start-ups and SMEs to match the demand of the candidates. Since candidates know, they are in demand, more than one-third (34%) of hiring professionals deal with lofty salary expectations from candidates.
According to Forbes, “Companies are up against wage inflation and a competitive field that includes not just their backyard but the entire world.”
A Seismic Shift from Employer-Centricity to Employee-Centricity
Currently, the U.S. has the highest tech talent pool of 4.4 million people, followed by China with 4.2 million and India with 3.8 million people. With the growing demand for qualified candidates, there is an outright shift in the global job market leading to candidate/employee centricity. There is a change in how people view their work, expectations, and demands from a job. Adding to this, since the onset of the pandemic, there was an unprecedented shift in the focus of employees. Previously, job security and compensation might have been the only deciding factor for a candidate to change jobs. Now it is no longer so simple. Employees want more from employers, including knowing they are valued; they want work flexibility in terms of job location and work hours. To attract the perfect candidate, employers have to build an inclusive culture and rethink and revaluate their employee value proposition.
Reskilling & Upskilling the Workforce
According to research conducted by McKinsey & Company, 87% of companies are aware of the skill gaps that they have or expect to have in the next few years. To beat the competition and bridge the skill gap, organizations are heavily investing in reskilling their existing workforce. Global recruiting firms are adding reskilling employees to their strategy. But one of the major drawbacks of reskilling tech skills is that, no matter how much you upskill today or hire new employees, the skill will most likely become obsolete within the next five years. Technology is evolving at a stellar rate today. Hiring only skilled candidates is not enough. Employers need to find candidates who are long learners and understand the value of staying relevant in the future.
Rethinking Recruitment Strategy
The tech talent shortage is increasingly becoming a cost crunch for organizations across the globe. To be successful in a candidate-driven market, companies need to revisit their hiring strategies and culture to ensure they align with the needs of modern candidates. Recruitment is a long-drawn-out costly process. Organizations are adopting tech solutions like recruitment CRM to increase candidate engagement, remove biases and create a positive candidate experience. Organizations need to approach candidates and employees holistically to keep them interested in the job position.