Why talent scarcity is slowing innovation and stifling emerging tech

Company tech budgets are forecast to expand by 6.7% in 2022, yet it’s becoming increasingly difficult for software and equipment manufacturers to source the skills they need to drive innovation. Silicon Valley alone is facing an expected $162 billion shortfall in revenue as a result of the talent gap, according to global consultant Korn Ferry.

So, is talent scarcity holding back the global economy? In this article, we look at some of the ways a shortage of tech talent is impeding growth and discuss some solutions to this structural issue.

Are talent shortages the main barrier to innovation?

A recent Gartner survey found that IT executives see talent scarcity as a major barrier to the adoption of 64% of emerging technologies, compared to just 4% in 2020. This indicates the worries and concerns around talent scarcity are becoming worse.

Additionally, a 2021 CodinGame survey revealed that 61% of HR professionals and developers thought that finding qualified developers would present the biggest recruitment challenge that year. This means that unfilled jobs are preventing them from innovating in areas that will improve efficiency, increase profits, and drive forward growth plans.

Some advances are even more fundamental. Globally operating companies need the infrastructure and resources in place to work at scale and pace. To do this, they need cloud skills, artificial intelligence skills, and robotics and automation skills.

Furthermore, 64% of companies said they were increasing investment in security technologies in 2021, more than double that invested in the previous year.

The pandemic: a plague on tech hiring

The COVID-19 pandemic has exacerbated the problem in a pincer movement as people both work and carry out more business, leisure, and communication from their homes. On the one hand, 58% of respondents to the Gartner survey said they were increasing emerging tech investment last year, up from 29% in 2020, as they learned to do more in the cloud.

Companies also trust technology implementation more - 82% of IT leaders thought business leaders outside of tech functions were driving forward the adoption of new tech.

At the same time, the pandemic has made home-working more prevalent and given workers a taste of a new type of freedom. This, combined with increased hiring during 2021, has boosted talent scarcity.

But the talent gap was proving to be a problem in all six technology domains covered by the Gartner survey: computer infrastructure and platform services; network; security; digital workplace; IT automation; and storage and database.

Closing the talent gap: hiring contingent workers

To help close the talent gap, senior technology leadership can turn to the extended workforce, including developers and consultants. Companies can make use of talented contractors and other freelancers who do not want to return to the office.

There are plenty to choose from. Temporary jobs platform Zippia calculates there are more than 118,000 freelance developers in the US alone. It’s not clear what percentage of tech managers hire contingent workers, but a McKinsey survey of 800 global executives found that 70% planned to use more temporary workers and contractors than before the pandemic.

In addition to helping close skills gaps, hiring contingent workers gives companies access to fresh and untapped talent. Technology firms only need to employ temporary or freelance workers when they have a specific project to carry out, saving money. These tech workers tend to be highly specialised and professional since they thrive or fall on their reputations.

Let a vendor management system (VMS) help you manage freelance developers

A VMS is considered an extremely wise investment for technology companies hiring freelancers across various agencies. Such a platform can help employers understand how developers and consultants not on the payroll are performing on projects. It can also ensure that their employment complies with all applicable tax and labor regulations. It’s the ideal complement to managing a flexible workforce.

Beeline’s technology is founded on data analytics and AI. As well as helping you understand your contingent tech workforce better, you will gain insights to manage budgets, cut costs and assure quality work.

For more information, download our free guide.