The pandemic advanced digital adoption—among both individuals and organizations—by years in a matter of months. As teams transitioned to partially or entirely remote work, companies accelerated their globalization and digital transformation timelines, mostly out of necessity.
Now, as concerns about the Delta variant escalate, businesses are again faced with a changing landscape. Return-to-office plans are being delayed, mask mandates and social distancing guidelines are returning, and employers are recalibrating their workplace safety plans.
On top of the rollercoaster of a constantly evolving public health crisis, thousands of companies are in the midst of major, often years-long technology initiatives. Many of these initiatives were prompted by the pandemic, while others were halted in 2020 and accelerated in 2021 as the economy began to rebound.
To meet the demands of complex digital and tech projects, companies are aggressively hiring IT professionals across a range of specialties. This has led to a staggering projected growth rate for multiple tech occupations and an historically high demand for tech talent, particularly for candidates who have advanced degrees and technical skills.
It has also led to some unprecedented hiring challenges for companies looking to build up their tech teams this year.
Let’s explore some of the key trends and challenges in hiring IT and tech talent in the current labor market.
Many IT professionals are switching jobs
The U.S. labor force has seen record levels of employee resignations in 2021, with April bringing the highest rate of employee turnover in twenty years. The most recent data from the U.S. Bureau of Labor Statistics show June’s turnover rate reaching nearly the same level.
IT and tech occupations are seeing similar spikes. After resignations peaked in March and declined in April and May, June numbers show turnover in the information sector steadily increasing again.
What’s driving all these resignations? A perfect storm of labor market changes, the impact of the pandemic, and professional frustrations.
The shift to a remote work model increased productivity for companies’ IT teams, but the flexibility of the work-from-home (WFH) model has been quickly offset by the need to work longer hours on denser, more demanding projects. Teams’ days start earlier and end later, and workloads are seemingly endless. As a result, rates of burnout are significantly higher than they were pre-COVID, and a huge portion of high-potential workers are planning to leave their jobs in the coming months.
Burnout and increased workloads aren’t the only factors increasing the rate of employee churn this year.
The past year and a half has brought fundamental changes that companies either have never seen before or haven’t experienced in decades:
- “New normal” work arrangements: More companies are offering remote work opportunities and are hiring for remote positions. Similarly, many employees who adjusted to and enjoyed remote work during the pandemic are now seeing return-to-office plans that offer no flexibility. With so many more remote work opportunities available, employees may be tempted to search for positions that better meet their WFH needs and expectations.
- We saw the largest jump in the Consumer Price Index in 13 years: If the CPI remains high or continues increasing, employees may be more inclined to search for higher paying jobs, and companies will need to pay more to retain or attract top talent.
- Company culture is more important than ever: With so many teams working remotely, companies that have maintained or bolstered their culture during the pandemic have a competitive advantage in hiring and retaining outstanding employees. Recent surveys have even shown that employees value a good workplace culture over a higher salary.
If companies struggle to retain vital IT leaders and experts in the coming months, large-scale projects will face significant shortages—not only in the expertise needed to successfully complete the work, but also in the growing cost associated with finding and hiring replacement talent.
Because tech talent is at a premium, many businesses may struggle to find great candidates using their traditional channels or methods.
They’re also likely to find themselves competing with multiple companies when they’re finally ready to extend an offer letter or contract to an outstanding IT candidate.
As a leader in the tech recruiting space, Vaco is acutely aware of this trend. In fact, Steve Shoemake, Vaco Managing Partner of Technology Solutions, has seen the number of tech candidates with competing offers increase by 3 to 4 times in the first half of 2021 alone.
After repeatedly seeing their top candidates go to competitors, many companies are at a crossroads with their tech recruiting, hiring, and retention strategies—and it’s affecting the timelines for their most important technology initiatives.
Salaries for top tech professionals are increasing
Another trend impacting businesses as they recruit for tech positions in the coming months? Top-tier candidates are commanding higher salaries and hourly wages.
In software development roles, these salary increases began during the pandemic and have carried over into 2021. This is especially true in major tech hubs like New York, the Bay Area, and Toronto, where 2020 salaries for developers increased by 3%, 5%, and 7%, respectively.
A couple of issues have contributed to this salary spike: First, companies are hiring for more tech positions that are completely remote, so a company in San Francisco could be competing for the same remote candidate as a company in Ohio. For comparison, the mean annual wage for an information security analyst in San Francisco was $125,990 in May of 2020. The annual mean wage for the same role in Columbus, Ohio was $94,220.
Secondly, the number of job openings for tech and IT positions is rapidly increasing. The IT sector has seen job growth in each month of 2021 so far, and these numbers aren’t expected to slow down anytime soon. Jobs for software developers, quality assurance analysts and testers, for example, are projected to grow by 22 percent through 2029. For comparison, the average job growth for all occupations in the U.S. is just 4 percent.
With so many organizations needing highly skilled tech professionals, companies that want to land the very best candidates are offering significantly higher wages and salaries.
On the candidate side, Vaco has worked with numerous tech professionals who have gotten huge salary and wage bumps by switching jobs, mostly due to local companies competing for candidates on a national level.
“We have seen candidates get offers sometimes up to $50K more than they normally would see. The positions that have opened up in other markets have allowed for those salary expectations to change,” said Vaco associate technology recruiter Alyssa Belmondo on a recent Vaco LinkedIn Live.
Businesses that are committed to hiring great tech talent have to consider these increased salary expectations during recruiting and hiring. Entering negotiations with a top candidate without accurate information on both local and national salary expectations could mean losing great candidates to competitors. It also means stalling vital IT and tech projects while roles go unfilled.
If you don’t have a labor market expert in-house, an experienced talent acquisition firm can be your eyes and ears on the pulse of the tech hiring market. They can provide detailed information on salary trends, average timelines for recruiting and hiring, and candidate expectations. This information can be invaluable when beginning the hiring process for highly sought-after tech candidates.
Hiring timelines are shortening
In addition to higher salaries and turnover, many companies are losing out on top tech candidates because their interview process is simply too long.
Take software developers, for instance. These professionals are in short supply and high demand—and companies that insist on a slow, methodical, multi-stage hiring process to fill developer roles are not seeing as much success as companies that have condensed their interview process.
Companies experiencing success in the tech hiring space are taking chances on great candidates and moving the hiring process forward quickly. Sticking to rigid interview timelines can mean losing incredible talent to competitors who are moving faster.
There’s a technical skills shortage
Another trend rocking the tech hiring landscape is a long-running shortage of increasingly in-demand technical skills—a shortage that has been exacerbated by the changes brought by the pandemic.
Take cybersecurity roles, for instance. As the pandemic worsened and thousands of companies went remote, the need for highly skilled cybersecurity workers skyrocketed. There were over 350,000 unfilled cybersecurity roles in the U.S. in 2020; that’s nearly half of the U.S.’s entire current cybersecurity workforce (879,000 workers). Over the eight year period from 2013 to the end of 2021, the global number of unfilled cybersecurity roles was expected to increase by more than 300%.
The pandemic also impacted the number of qualified software developers on the market. As colleges shut down and enrollments in computer and information science programs were delayed, fewer skilled developers were able to enter the job market in 2021.
The shortage of qualified candidates poses another challenge for companies looking to hire: reevaluating their current hiring methods and channels. It may not be enough to field applications from candidates who are actively looking. There are thousands of highly skilled tech professionals who aren’t engaged in an active job search, but they may be open to attractive opportunities that match their skill set and professional goals.
One issue with finding great passive candidates is the time and insight it requires. Passive recruiting works best when you have a vast network of tech professionals and a deep understanding of their skills, experience, and professional desires.
Without an established, ongoing relationship, it can be difficult to get a passive candidate’s attention, let alone score an interview with them.
This is where talent acquisition services can make a huge difference. Experienced recruiters have a large network, typically composed of both active and passive candidates. They also usually recruit for specific skill sets, rather than roles, so they can bring more qualified candidates to the table from the beginning.
Experienced recruiters have established relationships with the professionals in their network. This gives them deep insight into a candidate’s unique wants and needs and more leverage with passive candidates who trust their recruiters to find the very best professional opportunities available.
Finding success in a competitive IT hiring market
If your company is struggling to fill vital IT positions this year, you aren’t alone. Organizations across industries are facing the same setbacks and challenges in this highly competitive market.
Fortunately, there are a variety of ways to fill your tech talent gaps. And Vaco can help you with all of them.
Whether you need direct hire services to fill long-term tech roles, need to outsource an ongoing tech function, or need an entire team on hand to complete a vital IT or transformation project, we can help you find professionals to get the job done. We fill remote, hybrid, and on-site roles, for contract, contract-to-hire, and long-term positions, so you get the talent you need when you need it.
Need tech consulting to get a huge initiative off the ground? Vaco’s network of tech consultants are subject matter experts with the specific competencies, deep experience, and cultural alignment you need.
With Vaco as your partner, you can face even the most challenging IT hiring market with confidence and peace of mind.
Contact our team today to get started on your next hiring project.
