Is the tech talent crunch over?

Is the tech talent crunch over?

Demand still outstrips supply, especially at firms outside the traditional tech sector

Is the tech talent crunch over?

Following numerous announcements of layoffs across the technology industry, many tech and business leaders have concluded that the tech talent crunch is over. Appearances can be deceiving, however.

In a recent survey by the tech research and consulting firm Gartner, 86% of chief information officers (CIOs) reported facing more competition for qualified candidates and 73% were worried about IT talent attrition.

The tech talent crunch is far from over. Current demand for tech talent greatly outstrips supply, which Gartner expects will be the case until at least 2026, based on forecast IT spending.

Contrary to what we're seeing in the headlines, many of those being affected by layoffs at tech firms are in business functions, rather than tech roles. Additionally, there are increasingly opportunities for IT jobs outside traditional tech companies, so it's important to look beyond just the tech provider community to truly grasp the state of the tech talent crunch.

Many of the reductions in headcount over the last several months were largely driven by listed companies seeking to optimise share prices and to satisfy shareholders' desire for reduced spending. While these layoffs have been described as an adjustment after overly optimistic hiring, data shows that new hires were not necessarily affected.

Instead, recent layoffs affected a broader range of employees as organisations prioritise key products and services to position themselves for specific market opportunities. In fact, Gartner research found that the companies behind the 10 largest layoffs in tech talent still employ over 150,000 more people in total than at the beginning of 2020.

It's critical that business and IT leaders don't misinterpret the current wave of layoffs. There will likely be more swings and volatility as the market works its way through economic turbulence, ongoing pandemic adjustments and a shift in prioritisation of skills. However, the tech talent crunch will continue long after the current turbulence has subsided.


Tech leaders responsible for creating growth through digitisation must look beyond the noise of headline-catching layoffs to see the signals coming from the market. The IT skills shortage is critical, with CIOs losing their talented employees faster than they can hire them.

In key functional areas -- such as data science, software engineering and cybersecurity -- the talent supply remains as tight or tighter than before. IT leaders should expect increased competition in many talent pools, meaning the cost of IT talent will continue to rise.

Delivering on digital growth opportunities will only be achievable with the recognition that the IT talent crunch continues unabated. While the overall supply of tech workers in the labour market has increased by only a few percentage points at most, CIOs can take advantage of the opportunity to strengthen their recruiting efforts. Now is the time for CIOs to take action to strategically acquire top IT talent, rather than stalling in response to market noise.

To attract and retain top talent, CIOs must be more intentional in applying proven practices that help them effectively attract top talent and quickly fill open positions. For example, nets should be cast wide to tap into a large pool of "passive" IT candidates.

Many IT hiring plans are designed to target active job seekers rather than passive ones, leaving an untapped opportunity to increase the quality and quantity of candidates.

Ramping up employee referral programmes or using talent intelligence capabilities that take advantage of artificial intelligence (AI), are great ways to source passive candidates from social search.

Skills not available in the IT labour market can also be acquired by targeting laid-off workers in adjacent tech categories and training them to build needed IT skills. For instance, it's hard to find data scientists, but there is a significant pool of data and business analysts available in the talent market, who could be trained on more technical skills.

CIOs should work with recruiting functions to adjust job posting requirements to include adjacent skills that are desirable for open roles.

Finally, organisations that can revamp their employee value propositions (EVP) for tech talent will be better positioned to capitalise on market opportunities for focused and efficient growth.

With opportunities in IT vastly exceeding what is available, companies that don't live up to employees' expectations may find that even if they are able to get candidates in the door, they leave as soon as a better offer comes along.

Focusing on factors other than compensation that employees care about, such as flexibility and growth opportunities, can improve the IT organisation's EVP to win current and future competition for talent.

Mbula Schoen is a Senior Director Analyst at Gartner.

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