The Global Labor Shortage and Developers: Why is it so Hard to Find Tech Talent?
A Global Crisis
Over the last two years, the COVID pandemic has created a crippling global labor shortage that shows no signs of easing up in the near future. As of 2021, the shortage amounts to more than 40 million skilled workers globally. By 2030, that shortage is predicted to reach as many as 85 million workers, according to a study by Korn Ferry. That would mean companies around the world would be missing out on a potential $8.4 trillion in revenue due to the lack of available talent. In the U.S. alone, there are five million less people working than there were pre-pandemic, and three million less people even seeking employment.
The lack of skilled workers has impacted nearly every industry, but is perhaps most acutely felt within the technology sector within companies seeking to hire software developers. According to the Occupational Outlook Handbook published by the U.S. Bureau of Labor Statistics (BLS), the demand for trained software engineers with a professional skill set continues to soar and is expected to grow an additional 22% by the end of the decade. This has left businesses scrambling to snatch up any qualified developer on the market and has changed the dynamics of the recruitment and hiring process.
Tech companies are really feeling the squeeze from an extremely competitive talent pool as businesses fight to fill desperately needed roles. CodinGame has published their latest developer survey, and the results are telling. Nearly 15,000 developers, HR managers, and recruiters were polled, and a whopping 61% of HR managers said finding qualified developer talent was their biggest challenge of 2021. Others indicated that finding developers on a tight timeline or being able to stand out from other companies during the hiring process were the biggest challenges they faced.
That same report indicated that 64% of companies surveyed intended to hire upwards of 50 developers in 2021 alone. Nearly 15% of them sought to hire between 50 and 100 developers, while just shy of 14% wanted to recruit more than 100. This has given developers on the market more leverage to pick and choose where they want to work while also being able to demand higher salaries and better benefits. Of the developers polled for the survey, 20% answered that having interesting, challenging, fulfilling work was their number one factor when considering a job offer. This was followed closely by a healthy work-life balance and flexible hours (~18%), a high salary (13%), and company culture and values (~11%). In essence, 2021 has been a wonderful year for job-seeking developers, but a tough year for the companies looking to hire them.
Developer’s Scarcity and Empowerment
The numbers are clear: there is a massive gap between the number of needed workers and the number of available workers. With software developers and engineers in such high demand, the dynamics of the hiring process have shifted dramatically. In the past, companies held the power and leverage during the negotiation process. Now in the wake of the pandemic, developers have become empowered to demand more from their prospective employers such as better pay, a 401(k), unlimited time off, stipends, and more. According to a study released by CodeSubmit, the median salary for a developer in 2000 was just shy of $68,000. Now in 2021 the median salary has risen to $107,500, as reported by the U.S. News. Based on statistics provided by the BLS, the growth in salary and in demand for developers is increasing at a rate approximately double that of those in other computer occupations.
The Shift to Remote Working
Another aspect of the pandemic that has shaken up the workforce was the large-scale switch to remote working. In the past, developer salaries reflected not only individual skill but also their geographic location and cost of living. A developer living and working in San Francisco could demand significantly more money than a developer living and working in Nashville. But with the shift to remote working, that Tennessee-based developer could now work for (and demand more money from) large development firms based out of major tech hubs. It will be interesting to see how this plays out long-term, but for now both businesses and prospective employees can cast a wider net in their searches.
Give Developers a Chance with New Technology
Moreover, a core issue at the heart of the labor shortage within the software industry is that many companies are looking to hire experienced developers in nascent technologies such as AI and machine learning. Despite there being over 4.5 million software developers in the U.S., these technologies are simply so new that it is next to impossible to find developers with adequate expertise. Talented engineers and developers applying for job listings with highly specific qualifications and massively overstated requirements may be overlooked in their entirety, simply because they haven’t yet had a chance to work with or learn this new technology.
Credentialism Versus Merit
In a perfect world, hiring managers would be able to thoroughly examine every application one-by-one and conduct in-depth interviews with each candidate in order to get a better feel for their qualifications. Realistically, that hiring manager probably has a tight deadline and a large stack of applications to sift through. This means they are likely giving each application a quick glance and making a snap judgement based only on that piece of paper.
“Prestige hiring, or credentialism, as it’s sometimes called, drastically reduces the total addressable market of candidates, and is likely one of the primary reasons for the ‘tech talent shortage’. We’re making false-positive decisions by hiring developers with name-brand employers on the CV, and we’re making false negative decisions by rejecting developers who don’t,” says top recruiting influencer Hung Lee. In short, if hiring companies can start to look beyond the resume they will find an abundance of perfectly suitable candidates.
A possible solution to this problem would be a reliance upon skill assessments rather than a flashy resume during the hiring process. If a company is hiring a developer or engineer for a specific purpose, providing some kind of test or skill assessment relevant to that role can help identify promising candidates whose resumes may have been passed over for lack of a degree from a prestigious university or previous employment at a Fortune 500 company.
Invest in Your Employees
Sometimes companies provide either insufficient or no training at all when it comes to upgrading or adopting new technologies. This encourages developers to look elsewhere for training in order to advance their development skills. A risky gamble for the businesses, as frustrated or dissatisfied developers may seek to pursue new avenues of professional growth altogether. However, this problem can be easily solved by businesses investing further into the training of their developers and keeping up with the latest tech trends. Staff should always feel like they are being actively invested in and have room for vertical career growth.
At Lithios we value outside opinions. This blog was written by one of our guest bloggers, Jonathan Baker, with feedback from the Lithios team.