Skills Shortage Threatens Growth of U.S. Tech Sector

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Sixty-one percent of U.S. businesses plan to increase their technology investments this year, while 60% expect to increase their tech-related headcount. Despite that, according to the 2021 Harvey Nash Group Digital Leadership Report, the technology sector’s dramatic growth may soon run into an obstacle it can’t avoid: the skills shortage.

Jason Pyle, president and managing director of Harvey Nash USA, said digital employers are “committed to increasing headcount and investing in technology talent.” At the same time, they’ve recognized that “building a productive, successful and satisfied workforce takes a new approach to broadening skillsets, increasing mental wellbeing and committing to diversity and inclusion initiatives.”

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Among the factors impacting the growth of the U.S. tech sector, said the report:

  • Record Tech Investment and Headcount: The number of digital leaders in the U.S. planning to boost their technology investment and headcount reached record levels, 30% and 36% respectively.
  • Impact of Skills Crisis on Business Growth: More than two-thirds, or 69%, of digital leaders are unable to keep pace with change because of they can’t find the talent they need.
  • Where Skills Shortages are Most Acute: Cybersecurity (43%) is the most in-demand tech skill, up by 11% in the last 12 months. It was followed by DevOps (39%) and big data/analytics (38%).
  • The Shortage of Developers is Rising: The shortage of developers (39%) saw the biggest increase compared with previous years. The shortage correlates with the report’s finding that companies are focused on creating new products and services, and need developers to do the necessary work.

In addition, the report found that post-pandemic life priorities are complicating digital leaders’ ability to match technology investment goals with talent. Eight in 10 said this mindset shift is making retention more difficult, and just four in 10 believe they can retain employees in key roles for as long as they’d like. Yet despite these retention challenges, only one in three organizations (29%) have redesigned their employee offers to make them more attractive.

Bridging the Gap

In response to these skills shortages, executives aim to broaden the skillsets of their tech teams. Over half (54%) plan to cross-train people in other parts of their organization. Also, the number of apprenticeships is expected to rise this year, with 28% of digital leaders saying they would be offering more internships in the months ahead.

Almost half (45%) of digital leaders have widened their geographical net to source new talent as hybrid working becomes more commonplace.

DEI Aids Quality of Hire

The report also revealed what’s working and what’s not when it comes to building a diverse technology workforce. Training, communication and support networks are key and are all part of the most successful approach.

The research found that six in 10 respondents believe their approach to D&I is improving the quality of their hires. They noted that the most successful strategy for promoting diversity involved creating the right culture rather than mandating shortlists or quotas.

This year, 21% of digital leaders identified as female, compared to 13% in 2020. The average proportion of women within the technology team is 28%, which shows promise for the leadership of the future.

In the meantime, mental wellbeing, staff engagement, collaboration and inclusivity have suffered, even though remote work has massively improved work-life balance and productivity. Over half (54%) of digital leaders reported a decrease in their tech team’s mental wellness. In response, 27% have increased their investment in health and well-being programs.

Finally, businesses are emerging from the pandemic with employees in disparate locations, more technology embedded within the cloud and their supply chains diffused. This makes it harder to delineate the ‘boundary’ of an organization and presents a new challenge for all digital leaders, the report said.

Harvey Nash compiles the report in collaboration with CIONET and Massachusetts Institute of Technology CISR.

Image: iStock

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