The recent U.S. Bureau of Labor Statistics (BLS) data revealed that it shed an estimated 9,162 tech jobs in July 2024. Across the entire economy, tech occupations have declined by 14,000 positions. This hiring slowdown is due to many external and internal factors affecting the companies.1
Many tech companies prioritize cost efficiency and optimizing existing teams rather than expanding their tech workforce due to challenges from a slowing economy, rising inflation, and reduced venture capital funding, leading to significant reductions in hiring plans.
Layoffs Don’t Equal Talent Pool Boom
Although the tech industry has recently witnessed significant layoffs, with over 150,000 tech workers out of a job since early 2023, tech companies are still struggling to find talent for critical positions.2 Tech industry prowess is built on the back of tech workers possessing specialized skills, and the slowdown in the economy has not created a surplus of qualified talent for in-demand roles. A recent McKinsey study found that many in-demand skills had fewer than half the number of qualified candidates per job posting.3
Beyond Degrees: The Skills Gap Persists
Significant skills gaps exist in the labor market regarding finding the best tech talent, especially for specialized job postings. Businesses today need expertise in areas including AI, cloud services, and cybersecurity, which, unfortunately, traditional education systems are struggling to provide in the face of the lightning pace of tech advancement.
Employers continue to focus on skill-based hiring, with the data showing that 46% of the active tech job postings did not require a four-year degree requirement among candidates. Several critical occupations required even higher percentages, including network support specialists (87%), IT support specialists (72%), network and systems administrators (52%), and database administrators (50%).4
Rethinking Hiring Practices
The priorities of tech talent have shifted significantly. Today’s tech talent seeks well-paid positions, career advancements, and flexible working hours. Companies do not attract suitable candidates when these aspects are not communicated. Specifically, conventional recruiting approaches do not allow access to various talent sources. A lack of diversity can lead to a lack of creativity since a company becomes limited in addressing complex issues.
Tech companies have noted the changed priorities and are looking to rework their hiring practices. Many are working towards eliminating unclear job descriptions, endless interview rounds, and a lack of automation, which can frustrate candidates and lengthen their time to fill positions.
Even when tech companies have the right talent on board, they struggle to retain it longer. A recent Gartner survey shows that 73% of IT organizations’ Chief Information Officers (CIOs) are concerned about IT talent turnover, proving that retaining expertise is difficult.5
So, What Can Be Done?
The slowdown in hiring tech talent allows businesses to refine hiring practices and invest in talent development, especially regarding tech resources. Tech companies are increasingly looking for candidates with foundational skills that can be molded with proper training and mentorship to access a more diverse talent pool that has the potential and is willing to learn and grow with the company. Companies coming around to this fact will be better placed to deal with the challenges of tech talent and be better positioned to stay competitive. This is where tech-enabled outsourcing can be a game-changer.
Why Consider Tech-Enabled Outsourcing?
Partnering with a tech-enabled outsourcer can offer several advantages to companies facing a talent shortage:
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Access to a Wider Talent Pool
Your company can connect to skilled professionals globally as tech-enabled outsourcing partners can help you expand your reach beyond the limitations of your immediate area.
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Specialized Expertise
Tech-enabled outsourcers can also help you shortlist candidates with the specific skillsets your team requires, even for niche roles.
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Streamlined Hiring
The streamlined hiring process by automating tasks saves valuable time and resources.
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Training and Development
Developing talent is crucial nowadays, and tech-enabled outsourcers offer training and development programs that help bridge the skills gap for your outsourced team members.
The tech industry is experiencing a slowdown, impacting the number of recruits from various companies. However, that does not mean the demand for top tech talent has disappeared. By partnering with the right tech-enabled outsourcer, tech companies can overcome talent shortages and build teams that deliver exceptional results.
Contact Premier to learn how it can leverage its expertise in assembling the best tech talent for you and your team.
